STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2011

STOCK-BASED COMPENSATION [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

Stock-based compensation expense was allocated to the operating segments for the portion related to employees whose compensation would be included in cost of goods sold with the remainder recognized in corporate/other.  There were no significant capitalized stock-based compensation costs.  Stock-based compensation granted includes stock options, performance stock awards, restricted stock awards, and deferred directors' compensation.  Stock-based compensation expense was as follows:

	Years ended December 31,
	2011			2010		2009
	($ in millions)
Stock-based compensation	$	8.8		$	10.1	$	8.6
Mark-to-market adjustments		(0.5	)		1.2		0.8
Total expense	$	8.3		$	11.3	$	9.4

Stock Plans

Under the stock option and long-term incentive plans, options may be granted to purchase shares of our common stock at an exercise price not less than fair market value at the date of grant, and are exercisable for a period not exceeding ten years from that date.  Stock options, restricted stock and performance shares typically vest over three years.  We issue shares to settle stock options, restricted stock, and share-based performance awards.  On April 23, 2009, the shareholders approved the 2009 Long Term Incentive Plan which authorized an additional 3.0 million shares available for grant.  In 2011, 2010, and 2009 long-term incentive awards included stock options, performance share awards, and restricted stock.  The stock option exercise price was set at the fair market value of common stock on the date of the grant, and the options have a ten-year term.

Stock option transactions were as follows:

								Exercisable
	Shares			Option Price		Weighted Average Option Price		Options		Weighted Average Exercise Price
Outstanding at January 1, 2011		3,849,411		$	6.98-23.78	$	17.53		2,336,195	$	18.73
Granted		575,000			18.78		18.78
Exercised		(508,247	)		6.98-23.78		16.59
Canceled		(151,294	)		6.98-20.67		17.69
Outstanding at December 31, 2011		3,764,870		$	14.28-23.78	$	17.84		2,415,347	$	18.46

At December 31, 2011, the average exercise period for all outstanding and exercisable options was 74 months and 59 months, respectively.  At December 31, 2011, the aggregate intrinsic value (the difference between the exercise price and market value) for outstanding options was $9.1 million and exercisable options was $4.9 million.  The total intrinsic value of options exercised during the years ended December 31, 2011 and 2010 was $4.2 million and $0.9 million, respectively.

The total unrecognized compensation cost related to unvested stock options at December 31, 2011 was $3.4 million and was expected to be recognized over a weighted average period of 1.2 years.

The following table provides certain information with respect to stock options exercisable at December 31, 2011:

Range of Exercise Prices		Options Exercisable		Weighted Average Exercise Price		Options Outstanding		Weighted Average Exercise Price
Under $16.00			669,241	$	14.83		1,443,764	$	15.03
	$16.00 - $20.00		586,914	$	16.99		1,161,914	$	17.88
Over $20.00			1,159,192	$	21.30		1,159,192	$	21.30
			2,415,347				3,764,870

At December 31, 2011, common shares reserved for issuance and available for grant or purchase under the following plans consisted of:

	Number of Shares
Stock Option Plans	Reserved for Issuance		Available for Grant or Purchase(1)
2000 long term incentive plan		629,563		24,780
2003 long term incentive plan		919,496		63,676
2006 long term incentive plan		2,456,127		122,516
2009 long term incentive plan		3,000,000		2,425,000
		7,005,186		2,635,972
1996 stock option plan (plan expired)		66,536		-
Total under stock option plans		7,071,722		2,635,972

	Number of Shares
Stock Purchase Plans	Reserved for Issuance		Available for Grant or Purchase
1997 stock plan for non-employee directors		603,507		269,763
Employee deferral plan		46,561		45,669
Total under stock purchase plans		650,068		315,432

(1) All available to be issued as stock options, but includes a sub-limit for all types of stock awards of 1,710,972 shares.

Under the stock purchase plans, our non-employee directors may defer certain elements of their compensation into shares of our common stock based on fair market value of the shares at the time of deferral.  Non-employee directors annually receive stock grants as a portion of their director compensation.  Of the shares reserved under the stock purchase plans at December 31, 2011, 334,631 shares were committed.

Performance share awards are denominated in shares of our stock and are paid half in cash and half in stock.  Payouts are based on Olin's average annual return on capital over a three-year performance cycle in relation to the average annual return on capital over the same period among a portfolio of public companies which are selected in concert with outside compensation consultants.  The expense associated with performance shares is recorded based on our estimate of our performance relative to the respective target.  If an employee leaves the company before the end of the performance cycle, the performance shares may be prorated based on the number of months of the performance cycle worked and are settled in cash instead of half in cash and half in stock when the three-year performance cycle is completed.  Performance share transactions were as follows:

	To Settle in Cash					To Settle in Shares
	Shares			Weighted Average Fair Value per Share		Shares			Weighted Average Fair Value per Share
Outstanding at January 1, 2011		312,625		$	20.65		303,875		$	16.71
Granted		65,250			18.78		65,250			18.78
Paid/Issued		(112,083	)		20.65		(105,000	)		20.29
Converted from shares to cash		5,972			14.62		(5,972	)		14.62
Canceled		(4,028	)		20.65		(4,028	)		15.08
Outstanding at December 31, 2011		267,736		$	19.78		254,125		$	15.83
Total vested at December 31, 2011		200,236		$	19.78		186,625		$	15.16

The summary of the status of our unvested performance shares to be settled in cash were as follows:

	Shares			Weighted Average Fair Value per Share
Unvested at January 1, 2011		91,542		$	20.65
Granted		65,250			18.78
Vested		(85,264	)		19.78
Canceled		(4,028	)		20.65
Unvested at December 31, 2011		67,500		$	19.78

At December 31, 2011, the liability recorded for performance shares to be settled in cash totaled $4.0 million.  The total unrecognized compensation cost related to unvested performance shares at December 31, 2011 was $2.5 million and was expected to be recognized over a weighted average period of 1.1 years.