Share-Based Compensation

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Note 15.  Share-Based Compensation

The Company has share-based compensation plans which allow grants of stock options, restricted stock, stock appreciation rights, and restricted stock units to its employees and non-employee directors. The Company's employee stock option plans are shareholder approved and administered by the Human Resources and Compensation Committee of the Board of Directors. Stock options provide grantees the option to purchase shares of the Parent's common stock at a specified exercise price and, generally, expire 10 years from the date of grant. Stock option grants include incentive and non-qualified stock options whose vesting may be based on a service period and/or achievement of Company performance measures. Stock option exercise prices were equal to the quoted market price of the Parent's common stock on the date of grant. Restricted stock provides grantees with rights to shares of common stock upon completion of a service period and/or achievement of Company performance measures. During the restriction period, all shares are considered outstanding and dividends are paid on the restricted stock. Generally, restricted stock vests over periods ranging from one to five years from the date of grant, although accelerated vesting was provided for in certain grants, based on the attainment of defined Company performance measures. Restricted stock is forfeited if an employee terminates prior to vesting.

As of December 31, 2012, total shares authorized under the plans were 4.7 million shares, of which 2.7 million shares were available for future grants of stock options or restricted stock.

The Company recognizes compensation expense, measured as the fair value of the share-based award on the date of grant, on a straight-line basis over the vesting period. Share-based compensation is recorded in the statements of income as a component of salaries and benefits for employees and as a component of other noninterest expense for non-employee directors, with a corresponding increase to capital surplus in shareholders' equity. For the years ended December 31, 2012, 2011, and 2010, compensation expense and the related income tax benefit recognized for all share-based awards were as follows:

(dollars in thousands)	2012		2011		2010
Compensation Expense	$	7,537	$	6,216	$	3,841
Income Tax Benefit	2,972		2,668		1,648

Stock Options

Stock options granted to employees during the year ended December 31, 2012 vest in February 2013 based on service through December 31, 2012 and achieving certain 2012 Company performance measures. Stock options granted to employees during the year ended December 31, 2011 were fully vested as of December 31, 2011. There were no stock options granted for the year ended December 31, 2010. The Company reissues treasury stock to satisfy stock option exercises. The Company used the Black-Scholes option pricing model to estimate the fair value of stock options granted. The weighted average fair value of stock option grants and the assumptions that were used in calculating such fair values were based on estimates at the date of grant as follows:

	2012			2011
Weighted Average Fair Value of Stock Options
Granted During the Year	$	9.81		$	10.47
Stock Options Granted During the Year	341,665			341,629
Assumptions:
Average Risk-Free Interest Rate	1.13		%	0.96		%
Average Expected Volatility	33.14		%	39.94		%
Expected Dividend Yield	3.77		%	3.87		%
Expected Life	5.46 years			5.22 years

The following table presents the activity related to stock options under all plans for the year ended December 31, 2012.

	Stock Options		Weighted Average Exercise Price			Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Stock Options Outstanding as of January 1, 2012	1,021,190			$	39.88
Granted	341,665			47.72
Exercised	(245,199	)		30.59
Expired	(16,715	)		50.72
Forfeited	(15,000	)		47.72
Stock Options Outstanding as of December 31, 2012	1,085,941			44.17		6.1		$	2,385
Stock Options Vested and Exercisable as of December 31, 2012	759,276			42.65		4.8		2,385

The following summarizes certain stock option activity of the Company for the years ended December 31, 2012, 2011, and 2010:

(dollars in thousands)	2012		2011		2010
Intrinsic Value of Stock Options Exercised	$	3,907	$	3,790	$	9,507
Cash Received from Stock Options Exercised	7,500		6,044		9,628
Tax Benefits Realized from Stock Options Exercised	904		888		2,983
Total Fair Value of Stock Options that Vested	—		3,578		—

Restricted Stock

As of December 31, 2012, unrecognized compensation cost related to unvested restricted stock was $6.0 million. The unrecognized compensation cost is expected to be recognized over a weighted average period of 2.0 years.

The following table presents the activity for all restricted stock awards:

	Number of Shares		Weighted Average Grant Date Fair Value			Grant Date Fair Value of Restricted Stock that Vested During the Year (in thousands)
Unvested as of December 31, 2009	143,965			$	50.84
Granted	88,404			52.50
Vested	(104,128	)		50.40			$	5,248
Forfeited	(1,356	)		53.42
Unvested as of December 31, 2010	126,885			$	52.34
Granted	20,831			47.58
Vested	(65,226	)		52.28			$	3,410
Forfeited	(1,648	)		52.69
Unvested as of December 31, 2011	80,842			$	51.15
Granted	187,514			47.42
Vested	(54,198	)		51.01			$	2,764
Forfeited	(2,632	)		48.86
Unvested as of December 31, 2012	211,526			$	47.91