Stock-Based Incentive Plans

6 Months Ended

Jun. 30, 2011

Stock-Based Incentive Plans

Stock-Based Incentive Plans

9.             Stock-Based Incentive Plans

The Company currently has one stock-based incentive plan, which incorporates and supersedes its two previous plans (see Note 1 “Basis of Presentation — Accounting for Stock-Based Compensation”). Participants are granted stock-based awards only if the applicable Company-wide or profit-center operating goals, or both, established by the Compensation and Leadership Development Committee of the Board of Directors at the beginning of the year, are met.

The fair value of each stock option award was estimated on the date of grant using the Black-Scholes option pricing model. Expected volatility is based on historical volatilities of the Company’s common stock measured monthly over a term that is equivalent to the expected life of the award. The expected term of awards granted is estimated based on the Company’s prior exercise experience and future expectations of the exercise and termination behavior of the grantees. The risk-free rate is based on the yield of United States Treasury zero-coupon bonds with maturities comparable to the expected life in effect at the time of grant. The dividend yield is based on the expected dividend yield on the grant date.

Black-Scholes option pricing model assumptions for options granted in 2011 and 2010 are as follows:

Number		Risk-								Weighted
of Options		Free								Average
Granted	Grant	Interest		Dividend		Expected				Fair
(in thousands)	Date	Rate		Yield		Life	Volatility		Exercise Price	Value
1994 Plan
1,362	02/03/11	2.62	%	1.75	%	6.2 years	39.0	%	$29.66 to $32.63	$	10.33
148	02/02/10	2.93	%	1.62	%	6.5 years	36.0	%	$24.75	$	8.46
1995 Plan
30	02/15/11	2.92	%	1.76	%	6.6 years	38.0	%	$29.58	$	10.49

No options were granted under the 1995 Plan in 2010.

The following table summarizes the Company’s stock option activity for the six months ended June 30, 2011:

					Weighted-
			Weighted-		Average	Aggregate
			Average		Remaining	Intrinsic
	Shares		Exercise		Contractual	Value *
Non-Qualified Stock Options	(in thousands)		Price		Life (in years)	(in thousands)
Outstanding at January 1, 2011	1,124		$	34.19
Granted	1,392		29.66
Exercised	(7	)	23.74
Forfeited	(16	)	35.69
Outstanding at June 30, 2011	2,493		$	31.68	4.6	$	1,873
Outstanding and expected to vest at June 30, 2011	2,436		$	31.74	4.6	$	1,817
Exercisable at June 30, 2011	1,083		$	35.04	2.2	$	773

*The intrinsic value represents the amount, if any, by which the fair market value of the underlying common stock exceeds the exercise price of the option, using the closing price per share of $29.87 as reported by the New York Stock Exchange on June 30, 2011.

The total intrinsic value of options exercised during the six months ended June 30, 2011 and 2010, was $40 thousand and $0.3 million, respectively.

A summary of the status of unvested options as of June 30, 2011, and changes during the six months ended June 30, 2011, are presented below:

			Weighted-
			Average
	Shares		Grant-Date
Unvested Options	(in thousands)		Fair Value
Unvested at January 1, 2011	180		$	7.85
Granted	1,392		10.33
Vested	(161	)	9.88
Forfeited	(1	)	6.55
Unvested at June 30, 2011	1,410		$	10.07

As of June 30, 2011, $9.9 million of total unrecognized compensation cost was related to unvested share-based compensation arrangements under the 1994 Plan. This cost is expected to be recognized over a weighted-average period of 3.5 years. Options granted under the 1995 Plan are fully vested and are expensed on the date of grant.