Stock Compensation

6 Months Ended

Jun. 30, 2012

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

Stock Compensation

Stock Compensation

The Company’s 2008 Incentive Stock Plan (the “2008 Plan”) authorizes the Compensation Committee of the Board of Directors to issue up to 3,000,000 shares of various types of stock based awards including stock options, restricted stock and stock appreciation rights to key employees and directors. In general, options granted and outstanding vest over a three year period and expire ten years from the date of grant.

Stock compensation expense reduced income before taxes approximately $0.9 million and $1.0 million for the three months ended June 30, 2012 and 2011, respectively. Stock compensation expense reduced income before taxes approximately $1.6 million for both the six month periods ended June 30, 2012 and 2011. These expenses are included in selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited). Total unrecognized compensation cost related to non-vested share based compensation arrangements at June 30, 2012 was approximately $4.3 million which will be recognized over the next three years.

On March 2, 2012, stock options for 323,950 shares were granted with a three year vesting period. The fair value of options granted is estimated using a binomial lattice option pricing model based on assumptions set forth in the following table. The Company uses historical data to estimate employee exercise and departure behavior. The risk free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant and through the expected term. The dividend yield rate is based on the Company’s historical dividend yield. The expected volatility is derived from historical volatility of the Company’s shares and those of similar companies measured against the market as a whole.

Model
Risk free interest rate	2.00		%
Expected dividend yield	2.20		%
Expected life of award (years)	5.4
Expected volatility	50.00		%
Fair value per option share	$	4.93

The following table provides a summary of stock option activity for the period ended June 30, 2012:

	Shares		Average Exercise Price		Weighted Average Life
Outstanding at January 1, 2012	1,997,778		$	11.33
Options Granted	323,950		12.96
Options Exercised	(265,662	)	10.86
Cancelled or Forfeited	(23,516	)	10.05
Outstanding at June 30, 2012	2,032,550		$	11.61	6.82 years
Exercisable at June 30, 2012	1,376,244		$	11.62

The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. The total intrinsic value of all stock options exercised during the six months ended June 30, 2012 and 2011 was approximately $1,380 thousand and $4 thousand, respectively.

On March 2, 2012, 90,495 shares of restricted stock were granted with a three year vesting period. The restricted stock had a grant date fair value of $12.96 per share, which was the closing price of the common stock on the date of grant.

The following table provides a summary of restricted stock activity for the period ended June 30, 2012:

	Shares		Average Grant-Date Fair Value
Unvested shares at January 1, 2012	288,500
Granted	90,495		$	12.96
Vested	(40,500	)	—
Forfeited	(5,000	)	10.03
Unvested shares at June 30, 2012	333,495		$	11.01

The restricted stock awards are rights to receive shares of common stock, subject to forfeiture and other restrictions, which generally vest over a three to four year period. Restricted shares are considered to be non-vested shares under the accounting guidance for share-based payment and are not reflected as issued and outstanding shares until the restrictions lapse. At that time, the shares are released to the grantee and the Company records the issuance of the shares. Restricted shares are valued based on the market price of the underlying shares on the grant date. At June 30, 2012, shares of restricted stock had vesting periods up through March 2015.