STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2011

STOCK-BASED COMPENSATION

3. STOCK-BASED COMPENSATION

WESCO’s stock-based employee compensation plans are comprised of stock options, stock-settled stock appreciation rights and restricted stock units. Compensation cost for all stock-based awards is measured at fair value on the date of grant, and compensation cost is recognized, net of estimated forfeitures, over the service period for awards expected to vest. The fair value of stock options and stock-settled appreciation rights is determined using the Black-Scholes valuation model. The fair value of restricted stock units is determined by the grant-date closing price of WESCO’s common stock. The forfeiture assumption is based on WESCO’s historical employee behavior that is reviewed on an annual basis. No dividends are assumed.

During the three and nine month periods ended September 30, 2011 and 2010, WESCO granted the following stock-settled stock appreciation rights and restricted stock units at the following weighted average assumptions:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Stock-settled appreciation rights granted		15,156			684,949			399,330			708,949
Restricted stock units		—			153,318			53,852			153,318
Risk free interest rate		1.0	%		1.8	%		2.3	%		1.8	%
Expected life		5.0 years			5.0 years			5.0 years			5.0 years
Expected volatility		48	%		49	%		49	%		49	%

For the three and nine months ended September 30, 2011, the weighted average fair value per stock-settled appreciation right granted was $16.42 and $26.47, respectively. For the three and nine months ended September 30, 2010, the weighted average fair value per stock-settled appreciation right granted was $14.69 and $14.71, respectively. For the nine months ended September 30, 2011, the weighted average fair value per restricted stock unit granted was $60.05. For the three and nine months ended September 30, 2010, the weighted average fair value per restricted stock unit granted was $33.05.

WESCO recognized $2.9 million and $4.3 million of non-cash stock-based compensation expense, which is included in selling, general and administrative expenses, for the three months ended September 30, 2011 and 2010, respectively. WESCO recognized $12.4 million and $11.5 million of non-cash stock-based compensation expense, which is included in selling, general and administrative expenses, for the nine months ended September 30, 2011 and 2010, respectively. As of September 30, 2011, there was $19.7 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements for all awards previously made, of which approximately $3.0 million is expected to be recognized over the remainder of 2011, $10.0 million in 2012, $6.1 million in 2013 and $0.6 million in 2014.

During the nine months ended September 30, 2011 and 2010, the total intrinsic value of awards exercised was $12.0 million and $2.2 million, respectively, and the total amount of cash received from the exercise of options was $0.2 million and $0.7 million, respectively. The tax benefit associated with the exercise of awards for the nine months ended September 30, 2011 and 2010 totaled $3.5 million and $0.6 million, respectively, and was recorded to additional capital.

The following table sets forth a summary of stock options and stock-settled stock appreciation rights and related information for the nine months ended September 30, 2011:

	Awards			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value (In Thousands)
Outstanding at December 31, 2010		4,498,303		$	36.38
Granted		399,330			59.18
Exercised		(273,556	)		30.40
Forfeited		(82,697	)		46.14
Outstanding at September 30, 2011		4,541,380			38.56		6.2	$	76,400
Exercisable at September 30, 2011		3,442,870		$	37.86		5.3	$	60,543

The following table sets forth a summary of restricted stock units and related information for the nine months ended September 30, 2011:

	Awards			Weighted Average Fair Value
Unvested at December 31, 2010		392,493		$	28.36
Granted		53,852			60.05
Vested		(236,913	)		27.93
Forfeited		(5,543	)		31.48
Unvested at September 30, 2011		203,889		$	37.16