Share Based Compensation

12 Months Ended

Dec. 31, 2011

Share Based Compensation [Abstract]

Share Based Compensation

Note 6—Share Based Compensation

The Company accounts for share-based compensation in accordance with ASC Topic 718. Share-based compensation expense is reflected as a component of the Company’s general and administrative expense. A detail of share-based compensation for the years ended December 31, 2011, 2010 and 2009 is as follows (in thousands):

		September 30,		September 30,		September 30,
	Years Ended
	December 31,
	2011		2010		2009
Stock options:
Incentive Stock Options	$	493	$	793	$	835
Non-Qualified Stock Options		703		2,081		2,024
Restricted stock		3,637		4,263		3,469
Share-based compensation	$	4,833	$	7,137	$	6,328

During the years ended December 31, 2011, 2010 and 2009, the Company recorded income tax benefits of approximately $1.6 million, $2.4 million and $2 million, respectively, related to share-based compensation expense recognized during those periods. Share-based compensation expense for the year ended December 31, 2010 included a charge of approximately $0.5 million related to the voluntary early cancellation of certain stock options and accelerated recognition of associated compensation expense. Any excess tax benefits from the vesting of restricted stock and the exercise of stock options will not be recognized in paid-in capital until the Company is in a current tax paying position. Presently, all of the Company’s income taxes are deferred and the Company has net operating losses available to carryover to future periods. Accordingly, no excess tax benefits have been recognized for any periods presented.

At December 31, 2011, the Company had $10.3 million of unrecognized compensation cost related to granted restricted stock and stock options. This amount will be recognized as an expense over a weighted average period of approximately two years.

Stock Options

Stock options generally vest equally over a three-year period, must be exercised within 10 years of the grant date and may be granted only to employees, directors and consultants. The exercise price of each option may not be less than 100% of the fair market value of a share of Common Stock on the date of grant. Upon a change in control of the Company, all outstanding options become immediately exercisable.

The Company computes the fair value of its stock options using the Black-Scholes option-pricing model assuming a stock option forfeiture rate and expected term based on historical activity and expected volatility computed using historical stock price fluctuations on a weekly basis for a period of time equal to the expected term of the option. The Company recognizes compensation expense using the accelerated expense attribution method over the vesting period. Periodically, the Company adjusts compensation expense based on the difference between actual and estimated forfeitures.

The following table outlines the assumptions used in computing the fair value of stock options granted during 2011, 2010 and 2009:

		September 30,		September 30,		September 30,
	Years Ended December 31,
	2011		2010		2009
Dividend yield		0%		0%		0%
Expected volatility		78.5% - 79.7%		78.2% - 80.3%		75.5% - 78.4%
Risk-free rate		1.1% - 2.2%		1.5% - 3.0%		2.3% - 2.5%
Expected term		6 years		6 years		6 years
Forfeiture rate		5.0%		5.0%		5.0%
Stock options granted (1)		395,280		69,500		638,486
Wgtd. avg. grant date fair value per share	$	5.09	$	4.21	$	4.77
Fair value of grants (1)	$	2,011,000	$	293,000	$	3,045,000

(1) Prior to applying estimated forfeiture rate

The following table details stock option activity during the year ended December 31, 2011:

		September 30,			September 30,		September 30,		September 30,
	Number of Options			Wgtd. Avg. Exercise  Price		Wgtd. Avg. Remaining  Life		Aggregate Intrinsic  Value (000’s)
Outstanding at beginning of year		1,625,551		$	5.09
Granted		395,280			7.49
Expired/cancelled/forfeited		(39,756	)		8.77
Exercised		(58,667	)		3.45
Outstanding at end of year		1,922,408			5.56		5.69 years	$	2,699
Options exercisable at end of year		1,283,674		$	4.73		4.09 years	$	2,653
Options expected to vest		606,797			7.23		8.89 years	$	44

The intrinsic value of options exercised was immaterial for all periods presented.

The following table summarizes information regarding stock options outstanding at December 31, 2011:

		September 30,		September 30,		September 30,		September 30,		September 30,
Range of	Options		Wgtd. Avg.		Wgtd. Avg.		Options		Wgtd. Avg.
Exercise	Outstanding		Remaining		Exercise		Exercisable		Exercise
Price	12/31/11		Contractual Life		Price		12/31/11		Price
$0.0—$3.17		508,167		2.0 years	$	2.95		508,167	$	2.95
$3.17—$5.91		339,065		3.3 years	$	4.24		312,398	$	4.14
$5.91—$7.08		681,896		7.4 years	$	6.99		453,109	$	7.01
$7.08—$9.99		393,280		9.5 years	$	7.59		10,000	$	9.99
		1,922,408		5.7 years	$	5.56		1,283,674	$	4.73

Restricted Stock

The Company computes the fair value of its service based restricted stock using the closing price of the Company’s stock at the date of grant, and compensation expense is recognized assuming a 5% estimated forfeiture rate. Restricted stock granted to employees prior to 2011 generally vests over a five-year period with one-fourth vesting on each of the first, second, third and fifth anniversaries of the date of the grant. No portion of the restricted stock vests on the fourth anniversary of the date of the grant. Restricted stock granted to directors generally vests evenly over a three year period. Beginning January 1, 2011, restricted stock granted to employees generally vests evenly over a three year period. Upon a change in control of the Company, all outstanding shares of restricted stock will become immediately vested. Compensation expense related to restricted stock is recognized over the vesting period using the accelerated expense attribution method. Periodically, the Company adjusts compensation expense based on the difference between actual and estimated forfeitures.

The following table details restricted stock activity during 2011:

		September 30,			September 30,
	Number of Shares			Wgtd. Avg. Fair Value  per Share
Outstanding at beginning of year		1,638,809		$	6.57
Granted		1,134,917			7.54
Expired/cancelled/forfeited		(88,416	)		5.04
Lapse of restrictions		(696,708	)		8.01
Outstanding at December 31, 2011		1,988,602		$	6.69

At December 31, 2011, the weighted average remaining life of restricted stock outstanding was three years and the intrinsic value of restricted stock outstanding, using the closing stock price on December 31, 2011, was $13.1 million.