7. Common Stock and Share-Based Compensation

Stock Options — The following table summarizes stock option activity during the first quarter of 2012:


	Options			Weighted Average Exercise Price		Weighted Average Contractual Life (Years)		Aggregate Intrinsic Value
Options outstanding at January 1, 2012		19,628,200		$	19.27
Granted		2,207,809			12.07
Forfeited and canceled(1)		(2,367,742	)		13.15
Exercised		(35,161	)		10.48

Options outstanding at March 31, 2012		19,433,106			19.17		5.03	$	3,452,967

Options exercisable at March 31, 2012		15,856,092			20.83		4.08		1,270,047

(1)	Pursuant to the terms of our stock option plans, options that are forfeited or canceled may be available for future grants.

We recognize share-based compensation expense for stock options ratably over the vesting period. The fair value of each option award is estimated on the date of grant using a Black-Scholes valuation model. The following weighted average assumptions were used to estimate the fair value of grants issued during these periods:


	Three Months Ended March 31
	2012		2011
Expected volatility		44%		41%
Expected dividend yield		— %		— %
Expected option term		5 years		5 years
Risk-free rate of return		0.88% to 0.89%		2.19% to 2.30%

Restricted Stock Units — The following table summarizes restricted stock unit ("RSU") activity during the first quarter of 2012:


	Employees			Directors			Total
Stock units outstanding at January 1, 2012		2,196,450			102,381			2,298,831
Stock units issued		944,778			45,702			990,480
Shares issued upon vesting of stock units		(673,503	)		(31,720	)		(705,223	)
Stock units canceled or forfeited(1)		(488,335	)		—			(488,335	)

Stock units outstanding at March 31, 2012		1,979,390			116,363			2,095,753

Weighted average grant date fair value	$	12.77		$	11.22		$	12.70

(1)	Pursuant to the terms of our stock unit plans, employees have the option of forfeiting stock units to cover their minimum statutory tax withholding when shares are issued. Stock units that are canceled or forfeited become available for future grants.

Cash Performance Units — We grant awards of cash performance units ("CPUs") as part of our long-term incentive compensation program under the terms of our 2007 Stock Incentive Plan (the "2007 Plan"). The CPU awards are cash-settled awards and are designed to link compensation of certain executive officers and other key employees to our performance over a three-year period. The performance metric, as defined in the award, is the performance of our stock price relative to that of a peer group of companies. The range of payout under the award is between 0% and 200% and is payable in cash at the end of each respective performance period. The fair value of the awards is remeasured at each reporting period. Compensation expense is recognized over the vesting period with a corresponding liability, which is recorded in other long-term liabilities in our unaudited Condensed Consolidated Balance Sheets. The following table summarizes CPU activity during the first quarter of 2012:


	Units
Outstanding at January 1, 2012		11,855,084
Granted		1,750,000
Converted/paid		—
Forfeited		(1,155,250	)

Outstanding at March 31, 2012		12,449,834

Phantom Shares — We grant phantom shares as part of our long-term incentive compensation program, which are similar to RSUs in that they are based on the price of our stock and vest ratably over a three-year period, but are cash settled based upon the value of our stock at each vesting period. The fair value of the awards is remeasured at each reporting period. Compensation expense is recognized over the vesting period with a corresponding liability, which is recorded in accounts payable and accrued expenses in our unaudited Condensed Consolidated Balance Sheets. The following table summarizes the phantom share activity during the first quarter of 2012:


	Shares			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2012		1,081,668		$	10.36
Granted		893,409			12.07
Converted/paid		(320,084	)		10.35
Forfeited		(120,394	)		10.46

Outstanding at March 31, 2012		1,534,599			11.35

Share-Based Compensation Expense — The following table summarizes the share-based compensation expense recognized during the three months ended March 31, 2012 and 2011:


	Three Months Ended March 31
	2012			2011
	(In thousands)
Stock Options (1)	$	(943	)	$	3,362
Stock Units		2,573			5,030
Cash Performance Units		469			209
Phantom Shares		1,313			504

Total	$	3,412		$	9,105

(1)

The net credit to stock option expense for the three months ended March 31, 2012 is the result of a $3.9 million one-time cumulative reduction to share-based compensation expense for stock options based on our review of historical forfeiture activity in comparison to the estimated forfeiture rate originally applied to those awards.