Stock-Based Compensation And Earnings Per Share

9 Months Ended

Sep. 30, 2011

Stock-Based Compensation And Earnings Per Share [Abstract]

Stock-Based Compensation And Earnings Per Share

 2. Stock-Based Compensation and Earnings Per Share

     On May 12, 2009, the Company adopted The St. Joe Company 2009 Equity Incentive Plan whereby options, stock appreciation rights, restricted stock, restricted stock units and performance awards may be granted to directors and employees. The 2009 Equity Incentive Plan provides for the issuance of a maximum of 2.0 million shares of the Company's common stock. As of September 30, 2011, 1.5 million shares remained available for issuance under the 2009 Equity Incentive Plan.

Stock-Based Compensation

     Stock-based compensation cost is measured at the grant date based on the fair value of the award and is typically recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. Stock-based compensation cost may be recognized over a shorter requisite service period if an employee meets retirement eligibility requirements. Upon exercise of stock options, the Company will issue new common stock. Additionally, the 15% discount at which employees purchased the Company's common stock through payroll deductions was recognized as compensation expense. The Company discontinued the employee stock purchase plan as of July 1, 2011.

     The changes to the composition of the Company's board of directors which occurred during the first quarter of 2011 constituted a "change in control event" under the terms of certain of our incentive plans. As a result, during March 2011, the Company accelerated the vesting of approximately 300,000 restricted stock units resulting in $6.2 million in accelerated stock compensation expense.

Service-Based Grants

     A summary of service-based restricted stock unit activity as of September 30, 2011 and changes during the six month period are presented below:

				Weighted Average
	Number of			Grant Date Fair
Service-Based Restricted Stock Units	Units			Value
Balance at December 31, 2010		266,659		$	30.91
Granted		107,696			28.01
Vested		(289,269	)		30.30
Forfeited		(20,900	)		28.55
Balance at September 30, 2011		64,186		$	29.59

     As of September 30, 2011, there was $0.3 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to restricted stock unit and stock option compensation arrangements which will be recognized over a weighted average period of four years.

Market Condition Grants

     The Company has granted to select executives and other key employees restricted stock units whose vesting is based upon the achievement of certain market conditions which are defined as the Company's total shareholder return as compared to the total shareholder return of certain peer groups during a three year performance period.

     The Company used a Monte Carlo simulation pricing model to determine the fair value of its market condition awards. The determination of the fair value of market condition awards is affected by the stock price as well as by assumptions regarding a number of other variables. These variables included expected stock price volatility over the requisite performance term of the awards, the relative performance of the Company's stock price and shareholder returns to those companies in its peer groups and a risk-free interest rate assumption. Compensation cost is recognized regardless of the achievement of the market condition, provided the requisite service period is met.

     A summary of the activity for market condition restricted stock units during the nine months ended September 30, 2011 is presented below:

				Weighted Average
	Number of			Grant Date Fair
Market Condition Restricted Stock Units	Units			Value
Balance at December 31, 2010		562,531		$	23.17
Granted		154,424			21.10
Vested		(291,304	)		19.12
Forfeited		(397,586	)		23.35
Balance at September 30, 2011		28,065		$	15.69

     As of September 30, 2011, there was $0.3 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to market condition restricted stock units which will be recognized over a weighted average period of three years.

     Total stock-based compensation recognized in the consolidated statements of operations was as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Stock-based compensation expense	$	225	$	1,911	$	8,609	$	4,730

     The Company is evaluating alternatives to its existing stock-based compensation programs.

Earnings (Loss) Per Share

     Basic earnings (loss) per share is calculated by dividing net income (loss) by the average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period, including all potentially dilutive shares issuable under outstanding stock options and service-based restricted stock units. Stock options and restricted stock units are not considered in any diluted earnings per share calculations when the Company has a loss from continuing operations. Restricted stock units subject to vesting based on the achievement of market conditions are treated as contingently issuable shares and are issued and outstanding only upon the satisfaction of the market conditions.

     The following table presents a reconciliation of average shares outstanding:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Basic average shares outstanding		92,190,064		91,773,482		92,243,345		91,635,193
Net effect of stock options assumed to be exercised		—		—		—		—
Diluted average shares outstanding		92,190,064		91,773,482		92,243,345		91,635,193

     Zero and less than 0.1 million shares were excluded from the computation of diluted earnings (loss) per share during the three months ended September 30, 2011 and 2010, respectively, and less than 0.1 million shares during the nine months ended September 30, 2011 and 2010, respectively, as the effect would have been anti-dilutive.