Stock-Based Compensation

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation

4. Stock-Based Compensation

In October 1999, the Company adopted a long-term equity incentive plan, which allows for grants of stock options, stock appreciation rights, restricted stock and performance awards to directors, officers and employees of PCA, as well as others who engage in services for PCA. Restricted stock awards granted to officers and employees generally vest at the end of a four-year period, and restricted stock awards granted to directors vest immediately. The Company has not granted any option awards since 2007. The plan, which will terminate on October 19, 2014, provides for the issuance of up to 8,550,000 shares of common stock over the life of the plan. As of September 30, 2012, options and restricted stock for 8,043,988 shares have been granted, net of forfeitures. Forfeitures are added back to the pool of shares of common stock available to be granted at a future date.

A summary of the Company’s stock option activity and related information follows:

	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
								(In thousands)
Outstanding at December 31, 2011		1,224,699		$	21.64
Exercised		(771,809	)		20.88
Forfeited		(1,250	)		23.09
Outstanding and exercisable at September 30, 2012		451,640		$	22.95		1.3	$	6,030

The total intrinsic value of options exercised during the three months ended September 30, 2012 and 2011 was $2.6 million and $0.1 million, respectively, and during the nine months ended September 30, 2012 and 2011 was $7.0 million and $2.7 million, respectively. As of September 30, 2012, there is no unrecognized compensation cost related to stock option awards granted under the Company’s equity incentive plan as all outstanding awards have vested.

A summary of the Company’s restricted stock activity follows:

	2012						2011
	Shares			Fair Market Value at Date of Grant			Shares			Fair Market Value at Date of Grant
(Dollars in thousands)
Restricted stock at January 1		1,817,745		$	40,655			1,478,000		$	30,600
Granted		394,928			10,846			575,694			16,005
Vested		(405,309	)		(9,185	)		(219,469	)		(5,608	)
Cancellations		(8,945	)		(188	)		(4,340	)		(96	)
Restricted stock at September 30		1,798,419		$	42,128			1,829,885		$	40,901

Compensation expense for restricted stock recognized in the condensed consolidated statements of income for the three- and nine-month periods ended September 30, 2012 and 2011 was as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
(In thousands)
Impact on income before income taxes	$	(2,746	)	$	(2,487	)	$	(8,477	)	$	(7,191	)
Income tax benefit		1,068			968			3,296			2,798
Impact on net income	$	(1,678	)	$	(1,519	)	$	(5,181	)	$	(4,393	)

The fair value of restricted stock is determined based on the closing price of the Company’s common stock on the grant date.

The Company generally recognizes compensation expense associated with restricted stock awards ratably over their vesting periods. As PCA’s Board of Directors has the ability to accelerate vesting of restricted stock upon an employee’s retirement, the Company accelerates the recognition of compensation expense for certain employees approaching normal retirement age. As of September 30, 2012, there was $24.0 million of total unrecognized compensation costs related to restricted stock awards. The Company expects to recognize the cost of these stock awards over a weighted-average period of 2.7 years.