Stock-Based Compensation

9 Months Ended

Sep. 30, 2011

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

12. STOCK-BASED COMPENSATION

The Company applies the provisions of ASC 718, "Compensation – Stock Compensation," to account for the Company's share-based compensation.  Share-based compensation cost is measured at the grant date based on the calculated fair value of the award and is recognized over the employees' requisite service period.  The Company recorded stock compensation expense of $465,000 and $400,000 for the three month periods ended September 30, 2011 and 2010, respectively, and $1,720,000 and $1,199,000 for the nine month periods ended September 30, 2011 and 2010, respectively, related to restricted stock awards and performance unit awards as discussed below.

Stock Option Awards

The Company recorded no stock compensation expense related to stock option awards for the three or nine month periods ended September 30, 2011 and 2010.  There were no nonvested awards at September 30, 2011 and 2010.  There were no stock options granted during the first nine months of 2011 or 2010.

At September 30, 2011, common stock options outstanding under the plans had option prices ranging from $4.10 to $14.77, with a weighted average exercise price of $8.83 per share.  At September 30, 2010, common stock options outstanding under the plans had option prices ranging from $2.75 to $14.77, with a weighted average exercise price of $6.68 per share.

The weighted average remaining contractual life of the stock options outstanding at September 30, 2011 and 2010 was 3.1 and 2.8 years, respectively.

Options exercised during the three month period ended September 30, 2011 totaled 10,000 shares.  The weighted average exercise price per share of the options exercised during the three month period ended September 30, 2011 was $4.87.  The total intrinsic value of options exercised during the three month period ended September 30, 2011 was $154,000.  There were no options exercised during the three month period ended September 30, 2010.

Options exercised during the nine month periods ended September 30, 2011 and 2010 totaled 31,000 and 70,000 shares, respectively.  The weighted average exercise price per share of the options exercised during the nine month periods ended September 30, 2011 and 2010 were $3.93 and $3.90, respectively.  The total intrinsic value of options exercised during the nine month periods ended September 30, 2011 and 2010 were $909,000 and $1,638,000, respectively.

A summary of the option activity as of September 30, 2011 is presented below.

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value
Outstanding and Exercisable at January 1, 2011		80,950		$	6.95		2.7
Granted		-			-		-
Canceled		-			-		-
Exercised		(31,000	)		3.93		-
Outstanding and Exercisable at September 30, 2011		49,950		$	8.83		3.1	$669,330

The total intrinsic value of options outstanding and exercisable at September 30, 2010 was $2,470,000.

Shares issued as a result of stock option exercises generally are previously issued shares which have been reacquired by the Company and held as Treasury shares or authorized but previously unissued common stock.

Restricted Stock Awards

During the nine month periods ended September 30, 2011 and 2010 there were 10,500 and 12,000, respectively, fully vested restricted stock awards granted to the outside directors of the Company.  The weighted average fair value per share of these restricted stock awards was $35.24 and $28.32, respectively.  Compensation expense recorded by the Company related to these restricted stock awards was approximately $370,000 and $340,000, respectively, for the nine month periods ended September 30, 2011 and 2010.

For the nine month periods ended September 30, 2011 and 2010, the Company granted approximately 46,000 and 32,000 shares, respectively, of restricted stock to individuals who are not outside directors:

					Aggregate
			Grant Date		Fair
Grant Date	Units		Fair Value		Value		Vesting Date
March 3, 2010		12,185	$	31.92	$	388,945	March 3, 2014
May 28, 2010		2,500		28.07		70,175	February 28,2012
May 28, 2010		17,500		28.07		491,225	May 28, 2014
March 15, 2011		24,836		38.46		955,193	March 15, 2015
July 21, 2011		16,600		38.44		638,104	July 21, 2015
August 29, 2011		5,000		24.50		122,500	August 29,2014

These awards are subject to forfeiture and cannot be transferred until four years after their grant date, unless indicated otherwise by the underlying agreement.  These forfeitable restricted stock awards time-vest after a four year holding period, unless indicated otherwise by the underlying agreement.

Performance Unit Awards

Under separate three year incentive programs pursuant to the 2006 Omnibus Incentive Plan, as amended, the Company granted the following performance units during the nine month periods ended September 30:

							Aggregate
Incentive					Grant Date		Fair
Plan		Grant Date	Units		Fair Value		Value		Vesting Date
	2009 – 2011	March 3, 2009		52,672	$	20.63	$	1,086,623	March 3, 2012
	2010 – 2012	March 2, 2010		36,541		31.83		1,163,100	March 2, 2013
	2011 – 2013	March 15, 2011		34,002		38.46		1,046,174	March 15, 2014

On March 15, 2011, the Company awarded pursuant to the 2006 Omnibus Incentive Plan, as Amended and Restated, 1,500 shares of special performance units to an employee director.  Based on the fiscal 2012 performance of the Company's newly acquired subsidiary, these units may be converted into up to 3,000 shares of the Company's common stock on March 15, 2012.  The grant date fair value of these awards was $38.46 and the aggregate fair value was $58,000.  Also on March 15, 2011, the Company awarded pursuant to the 2006 Omnibus Incentive Plan, as Amended and Restated, 1,000 shares of special performance units to an employee with a vesting date of March 15, 2013.  The grant date fair value of these awards was $38.46 and the aggregate fair value was $38,000.

These awards can be earned based upon the Company's performance relative to performance conditions established under the programs.  These awards are subject to forfeiture, cannot be transferred until three years after their grant date and will be converted into common stock of the Company based upon conversion multiples as defined in the underlying plan.  These forfeitable performance share unit awards vest after a three year holding period, unless indicated otherwise by the underlying agreement.    The aggregate fair value in the above table is based upon reaching 100% of the performance targets as defined in the underlying plan.   The number of shares awarded under the 2009 – 2011 Three Year Incentive Plan was determined using an average grant date fair value of $23.21 over a ten day period in February 2009.  The number of shares awarded under the 2010 – 2012 Three Year Incentive Plan was determined using an average grant date fair value of $29.39 over a ten day period in February 2010.  The number of shares awarded under the 2011 – 2013 Three Year Incentive Plan was determined using an average grant date fair value of $40.25 over a ten day period in February 2011.

For restricted stock and performance awards granted to employees, the Company recorded compensation expense of $465,000 and $400,000, respectively, for the three month periods ended September 30, 2011 and 2010.  For the nine months ended September 30, 2011 and 2010, the Company recorded compensation expense of $1,350,000 and $859,000, respectively, for these awards.  Shares issued as a result of restricted stock awards generally are previously issued shares which have been reacquired by the Company and held as Treasury shares or authorized but previously unissued common stock.

The excess tax benefit realized for the tax deduction from stock-based compensation approximated $389,000 and $623,000 for the nine months ended September 30, 2011 and 2010, respectively.  This excess tax benefit is included in cash flows from financing activities in the Condensed Consolidated Statements of Cash Flows.