Equity Incentive Plans

3 Months Ended

Mar. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity Incentive Plans

EQUITY INCENTIVE PLANS

As of March 31, 2013, under the 2006 Stock Incentive Plan ("2006 Plan"), the Company had 1,292,787 shares of common stock available for issuance pursuant to future awards that may be granted under the plan of which up to 656,804 shares were available for the issuance of awards other than stock options.

Stock Options

The Company uses a Black-Scholes option valuation model to estimate the fair value of each option awarded. A summary of the activity of stock option awards issued and outstanding under Company plans is as follows for the three months ended March 31, 2013:

	Shares		Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Term (years)	Aggregate Intrinsic Value
	(in thousands)					(in thousands)
Options outstanding at December 31, 2012	1,198		$	18.92	6.85	$	11,090
Options granted	—		—
Options exercised	(181	)	16.81
Options forfeited/canceled/expired	(3	)	20.67
Options outstanding at March 31, 2013	1,014		$	19.30	6.95	$	18,567
Options vested and expected to vest at March 31, 2013	977		$	19.22	6.90	$	17,975
Options exercisable at March 31, 2013	637		$	18.27	6.32	$	12,322

The Company did not grant any stock options during the three months ended March 31, 2013. For the three months ended March 31, 2013 and April 1, 2012, the amount of stock-based compensation expense related to stock options was $0.4 million and $0.5 million, respectively. As of March 31, 2013, the Company had $2.2 million of unrecognized compensation costs related to non-vested stock option awards that are expected to be recognized over a weighted average period of 2.0 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 closing price of the Company’s common stock on the date of the grant and compensation expense is recognized over the vesting period. Generally, the restricted stock awards vest in equal increments over either a three or four year period. The Company has issued share-based awards with non-performance and performance-based vesting criteria. For share-based awards that are performance-based, achievement of the milestones must be “probable” before share-based compensation expense is recorded. At each reporting date, the Company reviews the likelihood that these awards will vest and if the vesting is deemed probable, compensation expense is recorded at that time. If ultimately performance goals are not met, for any awards where vesting was previously deemed probable, previously recognized compensation cost will be reversed.

A summary of the activity of restricted stock outstanding is as follows for the three months ended March 31, 2013:

	Shares		Wtd. Avg. Grant  Date Fair Value
	(in thousands)
Restricted stock outstanding at December 31, 2012	670		$	18.14
Granted	—		—
Vested	(130	)	21.33
Forfeited/canceled	—		—
Restricted stock outstanding at March 31, 2013	540		$	17.37

The Company did not grant any restricted stock awards during the three months ended March 31, 2013.

The vesting of performance-based restricted stock grants are subject to the achievement by GEO of two annual performance metrics as follows: (i) up to 75% of the shares of restricted stock in each award can vest annually or cumulatively if GEO meets certain earnings per share performance targets during years 2012, 2013 and 2014; and (ii) up to 25% of the shares of restricted stock in each award can vest annually if GEO meets certain return on capital performance targets in 2012, 2013 and 2014. The Company achieved the annual metrics in 2012.

For the three months ended March 31, 2013 and April 1, 2012, the Company recognized $1.3 million and $1.0 million, respectively, of compensation expense related to its restricted stock awards. As of March 31, 2013, the Company had $7.1 million of unrecognized compensation costs related to non-vested restricted stock awards, including non-vested restricted stock awards with performance-based vesting, that are expected to be recognized over a weighted average period of 2.1 years.

Employee Stock Purchase Plan

The Company adopted The GEO Group Inc. 2011 Employee Stock Purchase Plan (the “Plan”). 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 are used to purchase shares of the Company’s Common Stock at a 5% discount from the then current market price. The Company has made available up to 500,000 shares of its common stock, which were registered with the Securities and Exchange Commission on May 4, 2012, for sale to eligible employees.

The Plan is considered to be non-compensatory. As such, there is no compensation expense required to be recognized. Share purchases under the Plan are made on the last day of each month. During the three months ended March 31, 2013, 2,004 shares were issued out of the Company's treasury stock in connection with the Plan.