Shareholders' Equity Transactions

6 Months Ended

Jun. 30, 2012

Stockholders' Equity Note [Abstract]

Shareholders' Equity Transactions

Shareholders’ Equity Transactions

The Amended and Restated 2003 Performance Plan, (the “2003 Plan”), allows the Compensation and Management Development Committee of the Board of Directors (the “Committee”) to grant up to 6,800,000 Common Shares in connection with incentive stock options, non-qualified stock options, stock appreciation rights and stock awards (including the use of restricted stock), which includes the addition of 3,000,000 Common Shares authorized for issuance under the 2003 Plan, as approved by the company’s shareholders on May 21, 2009. The maximum aggregate number of Common Shares that may be granted during the term of the 2003 Plan pursuant to all awards, other than stock options, is 1,300,000 Common Shares. The Committee has the authority to determine which participants will receive awards, the amount of the awards and the other terms and conditions of the awards. 

During the six months ended June 30, 2012, the Committee granted 11,542 non-qualified stock options under the 2003 Plan, each having a term of ten years and generally granted at the fair market value of the company’s Common Shares on the date of grant. In addition, restricted stock awards for 1,000 shares were granted without cost to the recipients which vest ratably over the four years after the award date. Compensation expense of $1,160,000 was recognized during the quarter ended June 30, 2012 related to restricted stock awards and there were outstanding restricted stock awards totaling 246,799 shares that were not vested.

As of June 30, 2012, there was $12,729,000 of total unrecognized compensation cost from stock-based compensation arrangements granted under the plans, which is related to non-vested options and shares, and includes $4,039,000 related to restricted stock awards. The company expects the compensation expense to be recognized over a weighted-average period of approximately two years. Prior to the adoption of ASC 718, Compensation—Stock Compensation, the company presented all tax benefit deductions resulting from the exercise of stock options as a component of operating cash flows in the Consolidated Statement of Cash Flows. In accordance with ASC 718, any tax benefits resulting from tax deductions in excess of the compensation expense recognized for those options is classified as a component of financing cash flows.

The following table summarizes information about stock option activity for the six months ended June 30, 2012:

	June 30, 2012			Weighted Average Exercise Price
Options outstanding at January 1, 2012	4,455,365			28.99
Granted	11,542			17.54
Exercised	—			0.00
Canceled	(112,762		)	26.74
Options outstanding at June 30, 2012	4,354,145			29.03
Options exercise price range at June 30, 2012	14.89 to
	$	47.80
Options exercisable at June 30, 2012	2,914,602
Options available for grant at June 30, 2012*	2,004,434

 ________________________

 * Options available for grant as of June 30, 2012 reduced by net restricted stock award activity of 583,307.

The following table summarizes information about stock options outstanding at June 30, 2012:

	Options Outstanding				Options Exercisable
Exercise Prices	Number Outstanding At 6/30/12	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable At 6/30/12	Weighted Average Exercise Price
$ 14.89 – $15.00	15,153	3.5 years	$	12.10	10,153	$	10.70
$ 15.01 – $25.00	1,817,426	6.9	22.51		925,444	22.11
$ 25.01 – $35.00	1,192,975	6.4	26.25		650,414	26.83
$ 35.01 – $47.80	1,328,591	1.8	40.63		1,328,591	40.63
Total	4,354,145	5.2	$	29.03	2,914,602	$	31.56

When stock options are awarded, they generally become exercisable over a four-year vesting period whereby options vest in equal installments each year. Options granted with graded vesting are accounted for as single options. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with assumptions for expected dividend yield, expected stock price volatility, risk-free interest rate and expected life. The assumed expected life is based on the company's historical analysis of option history. The expected stock price volatility is also based on actual historical volatility, and expected dividend yield is based on historical dividends as the company has no current intention of changing its dividend policy.

The 2003 Plan provides that shares granted come from the company's authorized but unissued Common Shares or treasury shares. In addition, the company's stock-based compensation plans allow employee participants to exchange shares for minimum withholding taxes, which results in the company acquiring treasury shares.