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Stock Compensation Plans
12 Months Ended
Dec. 31, 2011
Stock Compensation Plans [Abstract]  
Stock Compensation Plans

14. Stock Compensation Plans

The Company's 2005 Long-Term Performance Compensation Plan, dated May 6, 2005 (the "LT Plan"), authorizes the Board of Directors to grant options, stock appreciation rights, performance shares and share awards to employees and outside directors for up to 400,000 of the Company's common shares plus 426,000 common shares that remained available under a prior plan. In 2008, shareholders approved an additional 500,000 of the Company's common shares to be available under the LT Plan. As of December 31, 2011, approximately 396,000 shares remain available for grant under the LT Plan. Options granted have a maximum term of 10 years.

Stock-based compensation expense for all stock-based compensation awards are based on the grant-date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award. Total compensation expense recognized in the Consolidated Statement of Income for all stock compensation programs was $4.1 million, $2.6 million and $2.7 million in 2011, 2010 and 2009, respectively.

Stock Only Stock Appreciation Rights ("SOSARs") and Stock Options

Beginning in 2006, the Company discontinued granting options to directors and management and instead began granting SOSARs. SOSARs granted to directors and management personnel under the LT Plan beginning in 2008 have a term of five-years and have three year graded vesting. The SOSARs granted in 2006 and 2007 have a term of five years and vest after three years. SOSARs granted under the LT Plan are structured as fixed grants with the exercise price equal to the market value of the underlying stock on the date of the grant. The related compensation expense is recognized on a straight-line basis over the service period.

Beginning in 2011, the Company replaced the SOSAR equity awards with full value Restricted Stock Awards ("RSAs"). No SOSAR equity awards were granted in 2011.

The fair value for SOSARs granted in previous years was estimated at the date of grant, using a Black-Scholes option pricing model with the weighted average assumptions listed below. Volatility was estimated based on the historical volatility of the Company's common shares over the past five years. The average expected life was based on the contractual term of the award and expected employee exercise and post-vesting employment termination trends. The risk-free rate is based on U.S. Treasury issues with a term equal to the expected life assumed at the date of grant. Forfeitures are estimated at the date of grant based on historical experience.

 

     2011      2010     2009  

Risk free interest rate

     —           1.96     1.89

Dividend yield

     —           1.10     3.18

Volatility factor of the expected market price of the Company's common shares

     —           .560        .520   

Expected life for the options (in years)

     —           4.10        4.10   

 

A reconciliation of the number of SOSARs and stock options outstanding and exercisable under the Long-Term Performance Compensation Plan as of December 31, 2011, and changes during the period then ended is as follows:

 

$000,00 $000,00 $000,00 $000,00
     Shares
(000)'s
    Weighted-
Average
Exercise

Price
     Weighted-
Average
Remaining
Contractual
Term
     Aggregate
Intrinsic
Value

($000)
 

Options & SOSARs outstanding at January 1, 2011

     851      $ 33.38         

SOSARs granted

     —          —           

Options exercised

     (329     35.66         

Options & SOSARs cancelled / forfeited

     (19     41.65         
  

 

 

   

 

 

    

 

 

    

 

 

 

Options and SOSARs outstanding at December 31, 2011

     503      $ 31.56         1.81       $ 6,380   
  

 

 

   

 

 

    

 

 

    

 

 

 

Vested and expected to vest at December 31, 2011

     501      $ 31.58         1.80       $ 6,352   
  

 

 

   

 

 

    

 

 

    

 

 

 

Options exercisable at December 31, 2011

     363      $ 34.57         1.41       $ 3,597   
  

 

 

   

 

 

    

 

 

    

 

 

 

 

     2011      2010      2009  

Total intrinsic value of options exercised during the year ended December 31 (000's)

   $  3,817       $  2,724       $  2,127   

Total fair value of shares vested during the year ended December 31 (000's)

   $ 816       $ 3,084       $ 4,145   

Weighted average fair value of options granted during the year ended December 31

              $ 13.75       $ 3.80   

As of December 31, 2011, there was $0.1 million of total unrecognized compensation cost related to stock options and SOSARs granted under the LT Plan. That cost is expected to be recognized over the next 0.17 years.

Restricted Stock Awards

The LT Plan permits awards of restricted stock. These shares carry voting and dividend rights; however, sale of the shares is restricted prior to vesting. Restricted shares have a three year vesting period. Total restricted stock expense is equal to the market value of the Company's common shares on the date of the award and is recognized over the service period. In 2011, there were 46,862 shares issued to members of management and directors.

summary of the status of the Company's nonvested restricted shares as of December 31, 2011, and changes during the period then ended, is presented below:

 

Nonvested Shares    Shares (000)'s     Weighted-Average
Grant-Date  Fair
Value
 

Nonvested at January 1, 2011

     64      $ 26.52   

Granted

     47        47.80   

Vested

     (17     45.49   

Forfeited

     (1     40.81   
  

 

 

   

 

 

 

Nonvested at December 31, 2011

     93      $ 33.54   
  

 

 

   

 

 

 

 

     2011      2010      2009  

Total fair value of shares vested during the year ended December 31 (000's)

   $  1,367       $ 566       $ 109   

Weighted average fair value of restricted shares granted during the year ended December 31

   $ 47.80       $ 32.75       $ 11.02   

As of December 31, 2011, there was $1.3 million of total unrecognized compensation cost related to nonvested restricted shares granted under the LT Plan. That cost is expected to be recognized over the next 2.0 years.

Performance Share Units ("PSUs")

The LT Plan also allows for the award of PSUs. Each PSU gives the participant the right to receive common shares dependent on the achievement of specified performance results over a three calendar year performance period. At the end of the performance period, the number of shares of stock issued will be determined by adjusting the award upward or downward from a target award. Fair value of PSUs issued is based on the market value of the Company's common shares on the date of the award. The related compensation expense is recognized over the performance period when achievement of the award is probable and is adjusted for changes in the number of shares expected to be issued if changes in performance are expected. In 2011 there were 77,025 PSUs issued to members of management. Currently, the Company is accounting for the awards granted in 2009, 2010 and 2011 at 40%, 100%, and 100%, respectively, of the maximum amount available for issuance.

PSUs Activity

A summary of the status of the Company's PSUs as of December 31, 2011, and changes during the period then ended, is presented below:

 

Nonvested Shares    Shares (000)'s     Weighted-Average
Grant- Date
Fair Value
 

Nonvested at January 1, 2011

     124      $ 26.90   

Granted

     77        47.80   

Vested

     —          —     

Forfeited

     (36     44.97   
  

 

 

   

 

 

 

Nonvested at December 31, 2011

     165      $ 32.73   
  

 

 

   

 

 

 

 

     2011      2010      2009  

Weighted average fair value of PSUs granted during the year ended December 31

   $  47.80       $  32.69       $  10.81   
  

 

 

    

 

 

    

 

 

 

As of December 31, 2011, there was $2.9 million of total unrecognized compensation cost related to nonvested PSUs granted under the LT Plan. That cost is expected to be recognized over the next 2.0 years.

Employee Share Purchase Plan (the "ESP Plan")

The Company's 2004 ESP Plan allows employees to purchase common shares through payroll withholdings. The Company has approximately 266,000 common shares remaining available for issuance to and purchase by employees under this plan. The ESP Plan also contains an option component. The purchase price per share under the ESP Plan is the lower of the market price at the beginning or end of the year. The Company records a liability for withholdings not yet applied towards the purchase of common stock.

 

The fair value of the option component of the ESP Plan is estimated at the date of grant under the Black-Scholes option pricing model with the following assumptions for the appropriate year. Expected volatility was estimated based on the historical volatility of the Company's common shares over the past year. The average expected life was based on the contractual term of the plan. The risk-free rate is based on the U.S. Treasury issues with a one year term. Forfeitures are estimated at the date of grant based on historical experience.

 

     2011     2010     2009  

Employee Share Purchase Plan

      

Risk free interest rate

     0.27     0.47     0.37

Dividend yield

     1.21     1.10     2.06

Volatility factor of the expected market price of the Company's common shares

     .340        .544        .673   

Expected life for the options (in years)

     1.00        1.00        1.00