Equity Incentive Plans

9 Months Ended

Oct. 02, 2011

Equity Incentive Plans [Abstract]

EQUITY INCENTIVE PLANS

4. EQUITY INCENTIVE PLANS

The Company had awards outstanding under four equity compensation plans at October 2, 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 October 2, 2011, under the 2006 Plan, the Company had 1,707,484 shares of common stock available for issuance pursuant to future awards that may be granted under the plan of which up to 943,804 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 thirty-nine weeks ended October 2, 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.

Fiscal Year	Shares			Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Term		Aggregate Intrinsic 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		(297	)		8.22
Options forfeited/canceled/expired		(43	)		19.71
Options outstanding at October 2, 2011		1,615			19.47		6.97	$	3,561
Options exercisable at October 2, 2011		901			16.80		5.53	$	3,429

The fair value of each option awarded on March 1, 2011 and April 15, 2011 was $9.72 and $10.06, respectively. For the thirty-nine weeks ended October 2, 2011 and October 3, 2010, the amount of stock-based compensation expense related to stock options was $2.2 million and $1.0 million, respectively. As of October 2, 2011, the Company had $4.6 million of unrecognized compensation costs related to non-vested stock option awards that are expected to be recognized over a weighted average period of 3.0 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:

	Shares			Wtd. Avg. Grant  Date Fair Value
	(in thousands)
Restricted stock outstanding at January 2, 2011		161		$	21.12
Granted		376			24.57
Vested		(84	)		22.85
Forfeited/canceled		—
Restricted stock outstanding at October 2, 2011		453		$	23.66

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 thirty-nine weeks ended October 2, 2011, 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. Also during the thirty-nine weeks ended October 2, 2011, the Company issued awards for 171,010 shares of restricted stock to certain other employees and directors. Of these restricted stock awards, 49,010 of these shares vest in equal increments annually over three years while the remaining 122,000 vest in equal increments annually over four years. The aggregate fair value of all 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 thirty-nine weeks ended October 2, 2011 and October 3, 2010, the Company recognized $2.6 million and $2.5 million, respectively, of compensation expense related to its outstanding shares of restricted stock. As of October 2, 2011, the Company had $8.4 million of unrecognized compensation expense related to restricted stock awards that is expected to be recognized over a weighted average period of 2.6 years.

Employee Stock Purchase Plan

On July 9, 2011, the Company adopted The GEO Group Inc. 2011 Employee Stock Purchase Plan (the “Plan”). The Plan was approved by the Company’s Compensation Committee and its Board of Directors on May 4, 2011. The purpose of the Plan, which is qualified under Section 423 of the Internal Revenue Service Code of 1986, as amended, is to encourage stock ownership through payroll deductions by the employees of GEO and designated subsidiaries of GEO in order to increase their identification with the Company’s goals and secure a proprietary interest in the Company’s success. These deductions will be used to purchase shares of the Company’s Common Stock at a 5% discount from the then current market price. The Plan is subject to approval by the Company’s shareholders on or before June 29, 2012 and, as such, no shares will be issued until such time as the Plan is approved by our shareholders. If the Plan is approved by the Company’s shareholders, the Company will offer up to 500,000 shares of its common stock for sale to eligible employees.