Stock-Based Compensation

6 Months Ended

Jun. 30, 2011

Stock-Based Compensation

Note 5. Stock-Based Compensation

Stock-based compensation granted under the Company’s stock plans is expensed in tranches over the vesting period. Options and non-performance based grants generally vest equally over a four year period and the options have a maximum term of ten years. Certain non-performance based grants vest over five years with one-third vesting in each of the third, fourth and fifth years. The Company’s performance based share grants generally consist of two types of awards. The restricted stock units issued in 2011 will cliff vest in three years, generally with 50% vesting in full, while the vesting of the remaining 50% will be dependent on the compound annual growth in book value per share for the three years immediately prior to the vesting date, with actual shares that vest ranging between 150% to 0% of that portion of the original award. Those issued prior to 2011 generally vest over five years with one-third vesting in each of the third, fourth and fifth years, dependent on the rolling three-year average return on equity based on the three years prior to the year in which the vesting occurs, with actual shares that vest ranging between 150% to 0% of the original award.

The amounts charged to expense for stock-based compensation were $0.5 million and $0.7 million for the three months ended June 30, 2011 and 2010, respectively, and were $1.5 million and $2.7 million for the six months ended June 30, 2011 and 2010.

The Company expensed $67,700 and $49,000 for the three months ended June 30, 2011 and 2010, respectively, and $122,900 and $96,000 for the six months ended June 30, 2011 and 2010, respectively, related to our Employee Stock Purchase Plan. In addition, $60,000 and $45,000 were expensed for the three months ended June 30, 2011 and 2010, respectively, and $120,000 and $90,000 were expensed for the six months ended June 30, 2011 and 2010, respectively, related to stock compensation to non-employee directors as part of their directors’ compensation for serving on the Parent Company’s Board of Directors.