17. Stock Options and Incentive Plans

We recognized no stock option expense during 2011 or 2010, and $0.1 million in 2009, which was recorded in selling and general expenses. There are currently no remaining unvested options for which stock-option compensation costs will be recognized in future periods.

We have no stock option plan under which options may be granted. Options issued under previous plans and still outstanding were exercisable in five cumulative annual amounts beginning twelve months after date of grant. Option exercise prices were normally equal to and were not permitted to be less than the market value on the date of grant.

Unexercised options generally terminate twenty years after the date of grant for all plans, and must be exercised within ten years of retirement.

In 1997, the Board of Directors granted one option for 250,000 shares of Class A Common Stock. This option was not exercisable unless the Company's share price reached $48 per share, and exercise was then limited by certain terms as well as required continued employment at the Company. The option was canceled in August 2009. As a result, there are no remaining unrecognized compensation costs related to stock option grants.

There have been no stock options granted since November 2002. For options granted, the fair value of each option granted was estimated on the grant date using the Black-Scholes option-pricing model. No adjustments were made for certain factors that are generally recognized to reduce the value of option contracts because such impact was not considered material. These factors include limited transferability, a 20% per year vesting schedule, a share price threshold with vesting based on years of employment, and the risk of forfeiture of the nonvested portion if employment were terminated. The expected life of the options was based on employee groups and ranged from 11 to 20 years.

Activity with respect to these plans is as follows:

	2011	2010	2009
Shares under option January 1	639,163	651,143	910,863
Options canceled	400	4,750	258,200
Options exercised	41,450	7,230	1,520
Shares under option at December 31	597,313	639,163	651,143
Options exercisable at December 31	597,313	639,163	651,143

The weighted average exercise price is as follows:

	2011	2010	2009
Shares under option January 1	$19.51	$19.50	$21.15
Options granted	-	-	-
Options canceled	20.54	21.98	25.33
Options exercised	19.03	17.66	15.77
Shares under option December 31	19.54	19.51	19.50
Options exercisable December 31	19.54	19.51	19.50

There were no remaining nonvested option shares as of December 31, 2011 and 2010.

As of December 31, 2011, the aggregate intrinsic value of vested options was $2.8 million. The aggregate intrinsic value of options exercised was $0.3 million in 2011, and was insignificant in 2010.

In 2011, shareholders approved the Albany International 2011 Incentive Plan, replacing the similar 2005 Incentive Plan approved by shareholders in 2005. Awards granted to date under these plans provide key members of management with incentive compensation based on achieving certain performance targets. Such awards are paid out over periods of from one to three years, partly in cash and partly in shares of Class A Common Stock. In March 2011, we issued 32,177 shares and made cash payments totaling $0.8 million, and in March 2010, we issued 22,844 shares and made cash payments totaling $1.1 million under these plans. Shares that are expected to be paid out are included in the calculation of diluted earnings per share. If a person terminates employment prior to the award becoming fully vested, the person will forfeit all or a portion of the incentive compensation award. Expense associated with this these awards is recognized over the vesting period, which includes the year for which performance targets are measured and may, if payment is made over three years, include the two subsequent years. The amount of compensation expense is subject to changes in the market price of the Company's stock. In connection with this plan, we recognized expense of $2.4 million in 2011, $1.5 million in 2010, and $1.6 million in 2009.

In November 2003, the Company adopted a Restricted Stock Program under which certain key employees are awarded restricted stock units. Such units generally vest over a five-year period and are paid annually in cash based on current market prices of the Company's stock. The amount of compensation expense is subject to changes in the market price of the Company's stock. The amount of compensation cost attributable to such units is recorded in Selling and general expenses and was $2.5 million in 2011, $2.8 million in 2010, and $2.6 million in 2009.

In 2008, the Company granted additional restricted stock units to certain executives. Upon vesting, each restricted stock unit is payable in cash. These grants will vest in increments of 25% in March and September of 2011, and March and September of 2012. Expense recognized for these grants was $1.3 million in 2011, $1.5 million in 2010, and $1.6 million in 2009. The amount of compensation expense is subject to changes in the market price of the Company's stock and is recorded in Selling and general expenses.

Certain retired employees are entitled to amounts under deferred compensation plans in effect in prior years. The remaining deferred compensation liability was included in the caption other noncurrent liabilities and was $1.1 million and $1.7 million at December 31, 2011 and 2010, respectively. The Company's expense for all plans was $0.1 million in 2011, $0.2 million in 2010, and $0.3 million in 2009, and is included in Selling and general expenses.

The Company maintains a voluntary savings plan covering substantially all employees in the United States. The Plan, known as the ProsperityPlus Savings Plan, is a qualified plan under section 401(k) of the U.S. Internal Revenue Code. Under the plan, employees may make contributions of 1% to 15% of their wages, subject to contribution limitations specified in the Internal Revenue Code. The Company matches between 50% and 100% of each dollar contributed by employees up to a maximum of 5% of pretax income, in the form of Class A Common Stock, which is contributed to an Employee Stock Ownership Plan. The investment of employee contributions to the plan is self-directed. The Company's cost of the plan amounted to $3.7 million for each of 2011, 2010 and 2009.

The Company's profit-sharing plan covers substantially all employees in the United States. After the close of each year, the Board of Directors determines the amount of the profit-sharing contribution and whether the contribution will be made in cash or in shares of the Company's Class A Common Stock. Contributions are generally made in shares to the accounts of active participants in Prosperity Plus. The expense recorded for this plan was $2.3 million in both 2011 and 2010, and $1.6 million in 2009.