Share-Based Employee Compensation

9 Months Ended

Sep. 30, 2011

Share-Based Employee Compensation

NOTE 2.  Share-Based Employee Compensation

The amount of compensation cost for share-based awards to be recognized during a period is based on the portion of the awards that are ultimately expected to vest. The Company estimates option forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company analyzes historical data to estimate pre-vesting forfeitures and records share compensation expense for those awards expected to vest.

Total share-based compensation expenses are as follows (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2011		2010		2011		2010
Option plan	$	2,326	$	1,424	$	7,047	$	3,993
Other share-based awards		3,572		16,305		43,899		33,755
Total share-based compensation before tax		5,898		17,729		50,946		37,748
Tax benefit		2,243		6,883		19,338		14,742
Total share-based compensation expense included in net income	$	3,655	$	10,846	$	31,608	$	23,006

In addition to the above share-based compensation expense, Polaris sponsors a qualified non-leveraged employee stock ownership plan (“ESOP”). Shares allocated to eligible participants’ accounts vest at various percentage rates based on years of service and require no cash payments from the recipient.

At September 30, 2011 there was $23,995,000 of total unrecognized share-based compensation expense related to unvested share-based awards. Unrecognized share-based compensation expense is expected to be recognized over a weighted-average period of 1.8 years. Included in unrecognized share-based compensation is $16,721,000 related to stock options and $7,274,000 related to restricted stock.