4.	Share-Based Compensation

Share-based compensation expense was recorded net of estimated forfeitures for 2011, 2010 and 2009, such that expense was recorded only for those share-based awards that are expected to vest. In 2011, 2010 and 2009, we recorded share-based compensation and related benefits as follows:


	Year ended December 31,
(Dollars in thousands)	2011			2010			2009
Share-based compensation expense	$	18,221		$	13,761		$	14,784
Income tax benefit related to share-based compensation expense		(4,833	)		(3,400	)		(3,289	)
Capitalized compensation costs		1,466			996			895

Equity Incentive Plans

On May 11, 2006, our stockholders approved the 2006 Equity Incentive Plan (the “2006 Incentive Plan”). Our previous 1997 Equity Incentive Plan expired in December 2006. The 2006 Incentive Plan provides for the grant of various types of incentive awards, of which the following have been granted: (i) stock options; (ii) restricted stock awards; (iii) restricted stock units; and (iv) other cash or stock settled equity awards.

Subject to the provisions of Section 14 of the 2006 Incentive Plan, the maximum aggregate number of shares that may be awarded and sold was initially 3,000,000 shares plus: (i) shares that have been reserved but not issued under our 1997 Equity Incentive Plan as of May 11, 2006; and (ii) shares subject to stock options or similar awards granted under the 1997 Equity Incentive Plan that expire or otherwise terminate without having been exercised in full and shares issued pursuant to awards granted under the 1997 Equity Incentive Plan that are forfeited or repurchased by us. No further awards may be made under the 1997 Equity Incentive Plan, but it will continue to govern awards previously granted thereunder. In April 2011, our stockholders approved an increase of 425,000 shares to the plan reserve.

Restricted stock awards and restricted stock units will be counted against the numerical limits of the 2006 Incentive Plan as two shares for every one share awarded. Further, if shares acquired under any such award are forfeited or repurchased by us and would otherwise return to the 2006 Incentive Plan, two times the number of such forfeited or repurchased shares will return to the 2006 Incentive Plan and will again become available for issuance.

Eligible participants in the 2006 Incentive Plan include directors, employees, and consultants. Options granted under the 2006 Incentive Plan generally expire seven years after the grant date. Options generally become exercisable over various periods, typically four years, from the grant date based on continued employment, and typically vest annually. Restricted stock awards and units generally vest over the passage of time and require continued employment or other service through the vesting period. Performance-based restricted stock units generally vest upon meeting certain performance-based objectives or the passage of time, or a combination of both, and require continued employment or other service through the vesting period. The vesting period for restricted stock units cannot be less than three years unless they are subject to certain performance-based objectives, in which case the vesting period can be 12 months or longer.

Employee Stock Purchase Plan (“ESPP”)

We maintain an employee stock purchase plan under which participating employees may annually contribute up to 10 percent of their gross compensation (not to exceed $25,000) to purchase shares of our common stock at 85 percent of its fair market value at either the beginning or end of each six-month offering period, whichever price is less. To be eligible to participate in the ESPP, an employee must, among other requirements, be employed by the Company on both the date of offering and date of purchase, and be employed customarily for at least 20 hours per week and at least five months per calendar year. We issued 149,327 shares and received $6.6 million in cash under the ESPP in 2011. At December 31, 2011, a total of 1,075,421 shares of our common stock were still available for future issuance under the ESPP. The next purchase will be on June 30, 2012 at the end of the current six-month offering period.

Unrecognized Compensation Expense

As of December 31, 2011 unrecognized share-based compensation expense was as follows:


(Dollars in thousands)	Unrecognized Expense		Average Expected Recognition Period- in Years
Stock options	$	13,102		2.67
Restricted stock units		17,170		2.74

Total unrecognized share-based compensation expense	$	30,272

Valuation Assumptions

The fair values of share-based awards for employee stock options and employee stock purchases made under our ESPP were estimated using the Black-Scholes option pricing model. The fair values of restricted stock units were based on our closing stock price on the date of grant. The following weighted average assumptions and fair values were used for our employee stock options and restricted stock units:


	2011			2010			2009
Equity incentive plan awards
Weighted average expected term of options in years		4.6			4.5			4.5
Weighted average expected volatility of the Company’s underlying common stock		48.7	%		45.1	%		58.8	%
Risk-free interest rate		2.00			2.23			2.00
Expected dividend yield		—			—			—
Weighted average grant date fair value-stock options	$	25.12		$	19.15		$	10.83
Weighted average grant date fair value-restricted stock units		59.69			46.96			24.61

The following weighted average assumptions and fair values were used for our ESPP:


	2011			2010			2009
ESPP
Expected term in years		0.5			0.5			0.5
Weighted average expected volatility of the Company’s underlying common stock		27.3	%		36.7	%		90.0	%
Risk-free interest rate		0.15			0.22			0.30
Expected dividend yield		—			—			—
Weighted average fair value	$	13.02		$	10.22		$	10.53

The expected term is based on the implied term of the stock options using factors based on historical exercise behavior. The expected volatilities are based on a blended rate consisting of our historic volatility and our expected volatility over a five-year term which is an indicator of expected volatility and future stock price trends. For 2011, 2010 and 2009, expected volatilities for the ESPP were equal to the historical volatility for the previous six-month periods. The expected risk-free interest rates were based on the yields of Treasury Securities, as reported by the Federal Reserve Bank of New York, with maturities equal to the expected terms of the employee stock options.

Share-Based Payment Award Activity

The table below provides stock option information related to the 1997 Equity Incentive Plan and the 2006 Incentive Plan for the year ended December 31, 2011:


	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value of In- The-Money Options
Outstanding at December 31, 2010		3,112,253		$	37.88
Granted		385,645			59.17
Exercised		(985,143	)		33.96
Forfeited		(68,444	)		44.31
Expired		(4,951	)		38.31

Outstanding at December 31, 2011		2,439,360			42.64		3.51	$	18,838,493

Vested and expected to vest at December 31, 2011		2,332,192			42.31		3.41		18,412,929

Exercisable at December 31, 2011		1,404,132			40.09		2.17		12,326,931

The aggregate intrinsic value of outstanding options shown in the table above represents the pretax intrinsic value based on our closing stock price of $47.69 as of December 31, 2011. The following table summarizes information regarding stock options outstanding as of December 31, 2011:


	Outstanding Options						Exercisable Options
Range of Exercise Prices	Shares		Weighted Average Remaining Contractual Life in Years		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
$15.15-19.67		393,436		3.36	$	18.91		225,606	$	18.49
19.68-32.15		311,340		1.83		27.72		250,499		27.79
32.16-45.23		267,747		3.62		43.44		142,986		43.44
45.24-48.26		255,025		1.91		47.29		234,579		47.31
48.27-48.85		292,112		3.24		48.75		215,232		48.74
48.86-49.41		270,807		5.31		49.18		63,561		49.17
49.42-53.07		170,434		2.23		51.33		154,266		51.46
53.08-60.14		154,426		2.56		54.32		117,403		53.66
$60.15-60.65		324,033		6.32		60.37		—		—

		2,439,360		3.51		42.64		1,404,132		40.09

We expect to satisfy the exercise of stock options by issuing new shares registered under the 1997 Equity Incentive Plan and the 2006 Incentive Plan, as applicable. All future awards of stock options and restricted stock will be issued from the 2006 Incentive Plan. At December 31, 2011, 1,386,360 shares were available for future issuance.

The table below provides information for restricted stock units under the 2006 Incentive Plan for the year ended December 31, 2011:


	Shares			Weighted Average Grant Date Fair Value
Nonvested at December 31, 2010		395,950		$	43.49
Granted		325,447			59.69
Vested		(167,414	)		43.24
Forfeited		(54,864	)		56.36

Nonvested at December 31, 2011		499,119			52.72

The following table summarizes information regarding stock option and restricted stock activity during 2011, 2010 and 2009:


	Year ended December 31,
(Dollars in thousands)	2011		2010		2009
Total intrinsic value of stock options exercised	$	20,772	$	11,871	$	1,399
Total fair value of stock options vested		14,771		12,086		15,214
Total intrinsic value of restricted stock vested		9,142		6,313		5,160
Total fair value of restricted stock vested		7,240		5,522		8,721