STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2011

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

NOTE K - STOCK-BASED COMPENSATION

The Company utilizes the authoritative guidance using the modified prospective method. Under the modified prospective method, compensation expense related to awards granted prior to and unvested as of the adoption of the authoritative guidance is calculated in accordance with the authoritative guidance and recognized in the consolidated statements of operations over the requisite remaining service period. Compensation expense for all awards granted after the adoption of the authoritative guidance is calculated according to the provisions of such guidance.

On May 13, 2010, the stockholders of the Company approved the 2010 Omnibus Incentive Plan (the “2010 Plan”) and terminated the Amended and Restated 2002 Stock Incentive and Bonus Plan (the “2002 Plan”) and the 2003 Non-Employee Directors’ Stock Incentive Plan (the “2003 Plan”). No new awards will be granted under the 2002 Plan or the 2003 Plan; however, awards granted under either the 2002 Plan or the 2003 Plan that were outstanding on May 13, 2010 remain outstanding and continue to be subject to all of the terms and conditions of the 2002 Plan or the 2003 Plan, as applicable.

The 2010 Plan provides that 2.5 million shares of Common Stock are reserved for issuance, subject to adjustment as set forth in the 2010 Plan; provided, however, that only 1.5 million shares may be issued pursuant to the exercise of incentive stock options. Of these 2.5 million shares, 2.0 million are shares that are newly authorized for issuance under the 2010 Plan and 0.5 million are unissued shares not subject to awards that have been carried over from the shares previously authorized for issuance under the terms of the 2002 Plan and the 2003 Plan. Unless earlier terminated by the Board of Directors, the 2010 Plan will remain in effect until the earlier of (i) the date that is ten years from the date the plan is approved by the Company’s stockholders, which is the effective date for the plan, namely May 13, 2020, or (ii) the date all shares reserved for issuance have been issued.

As of June 30, 2011, of the 2.5 million shares of common stock authorized for issuance under the Company’s 2010 Plan, approximately 589,000 shares have been issued. During the first quarter of 2011, the Company issued approximately 437,000 shares of restricted stock under the 2010 Plan. The fair value on the date of grant was $11.4 million. In the second quarter of 2011, the Company granted approximately 60,000 shares at a fair value of approximately $1.5 million on grant date. Total unrecognized share-based compensation cost related to unvested restricted stock awards was approximately $18.4 million as of June 30, 2011 and is expected to be expensed as compensation expense over approximately four years.

During the six months ended June 30, 2011 and 2010, no options were cancelled under the 2002 Plan. There were no 2003 Plan option cancellations during the six months ended June 30, 2011 and 2010.

For the six months ended June 30, 2011 and 2010, the Company has included approximately $3.9 million and $4.3 million, respectively, for share-based compensation cost in the accompanying condensed consolidated statements of income for the 2002, 2003, and 2010 Plans. Compensation expense relates to restricted share grants. The Company calculates the fair value of stock options using the Black-Scholes model. The total value of the stock option awards is expensed ratably over the requisite service period of the employees receiving the awards. The Company had no unrecognized expense related to its stock option grants for the periods ended June 30, 2011 and 2010.