Share-Based Employee Compensation

9 Months Ended

Sep. 30, 2012

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 share-based award 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 were as follows (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2012		2011		2012		2011
Option plan	$	4,286	$	2,326	$	12,643	$	7,047
Other share-based awards		17,053		3,572		44,349		43,899
Total share-based compensation before tax		21,339		5,898		56,992		50,946
Tax benefit		7,965		2,243		21,318		19,338
Total share-based compensation expense included in net income	$	13,374	$	3,655	$	35,674	$	31,608

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, 2012 there was $51,850,000 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 $29,037,000 related to stock options and $22,813,000 related to restricted stock.