Equity Incentive Plans

6 Months Ended

Jul. 03, 2011

Equity Incentive Plans [Abstract]

EQUITY INCENTIVE PLANS

4. EQUITY INCENTIVE PLANS

The Company had awards outstanding under four equity compensation plans at July 3, 2011: The Wackenhut Corrections Corporation 1994 Stock Option Plan (the “1994 Plan”); the 1995 Non-Employee Director Stock Option Plan (the “1995 Plan”); the Wackenhut Corrections Corporation 1999 Stock Option Plan (the “1999 Plan”); and The GEO Group, Inc. 2006 Stock Incentive Plan (the “2006 Plan” and, together with the 1994 Plan, the 1995 Plan and the 1999 Plan, the “Company Plans”).

On August 12, 2010, the Company’s Board of Directors adopted and its shareholders approved an amendment to the 2006 Plan to increase the number of shares of common stock subject to awards under the 2006 Plan by 2,000,000 shares from 2,400,000 to 4,400,000 shares of common stock. On February 16, 2011, the Company’s Board of Directors approved Amendment No. 1 to the 2006 Plan to provide that of the 2,000,000 additional shares of Common Stock that were authorized to be issued pursuant to awards granted under the 2006 Plan, up to 1,083,000 of such shares may be issued in connection with awards, other than stock options and stock appreciation rights, that are settled in common stock. The 2006 Plan, as amended, specifies that up to 2,166,000 of such total shares pursuant to awards granted under the plan may constitute awards other than stock options and stock appreciation rights, including shares of restricted stock. As of July 3, 2011, under the 2006 Plan, the Company had 1,696,704 shares of common stock available for issuance pursuant to future awards that may be granted under the plan of which up to 946,804 shares were available for the issuance of awards other than stock options. See “Restricted Stock” below for further discussion.

Stock Options

The Company uses a Black-Scholes option valuation model to estimate the fair value of each option awarded. During the twenty-six weeks ended July 3, 2011, the Company’s Board of Directors approved the issuance of 529,350 stock option awards to employees of the Company and 25,000 stock option awards to the Company’s directors. These awards vested 20% on the date of grant and will vest in 20% increments annually through 2015. A summary of the activity of stock option awards issued and outstanding under Company Plans is presented below.

	July 3, 2011
				Wtd. Avg.		Wtd. Avg.		Aggregate
				Exercise		Remaining		Intrinsic
Fiscal Year	Shares			Price		Contractual Term		Value
	(in thousands)							(in thousands)
Options outstanding at January 2, 2011		1,401		$	15.01		5.84	$	13,517
Options granted		554			24.71
Options exercised		(253	)		8.74
Options forfeited/canceled/expired		(29	)		18.53
Options outstanding at July 3, 2011		1,673			19.11		7.05	$	7,893
Options exercisable at July 3, 2011		955			16.31		5.54	$	6,917

The fair value of each option awarded on March 1, 2011 and April 15, 2011was $9.72 and $10.06, respectively. For the twenty-six weeks ended July 3, 2011 and July 4, 2010, the amount of stock-based compensation expense related to stock options was $1.8 million and $0.7 million, respectively. As of July 3, 2011, the Company had $4.9 million of unrecognized compensation costs related to non-vested stock option awards that are expected to be recognized over a weighted average period of 3.2 years.

Restricted Stock

Shares of restricted stock become unrestricted shares of common stock upon vesting on a one-for-one basis. The cost of these awards is determined using the fair value of the Company’s common stock on the date of the grant and compensation expense is recognized over the vesting period. A summary of the activity of restricted stock outstanding is as follows:

				Wtd. Avg.
				Grant Date
	Shares			Fair Value
	(in thousands)
Restricted stock outstanding at January 2, 2011		161		$	21.12
Granted		373			24.60
Vested		(48	)		25.75
Forfeited/canceled		—
Restricted stock outstanding at July 3, 2011		486		$	23.34

The shares of restricted stock granted under the 2006 Plan prior to our fiscal year beginning January 3, 2011 vest in equal 25% increments on each of the four anniversary dates immediately following the date of grant. During the twenty-six weeks ended July 3, 2011, the Company issued awards for 168,010 shares of restricted stock to its senior employees and directors. Of these restricted stock awards, 49,010 of these shares vest in equal increments annually over three years while the remaining 119,000 vest in equal increments annually over four years. In addition, the Company issued 205,000 performance based shares to the Company’s Chief Executive Officer and Senior Vice Presidents which will vest in equal increments annually over a 3-year period. These performance based shares will be forfeited if the Company does not achieve certain targeted revenue in its fiscal year ended January 1, 2012. The aggregate fair value of these awards, based on the closing price of the Company’s common stock on the respective grant dates, was $9.2 million. During the twenty-six weeks ended July 3, 2011 and July 4, 2010, the Company recognized $1.8 million and $1.7 million, respectively, of compensation expense related to its outstanding shares of restricted stock. As of July 3, 2011, the Company had $9.2 million of unrecognized compensation expense related to restricted stock awards that is expected to be recognized over a weighted average period of 2.8 years.