Stock-based Compensation

6 Months Ended

Jun. 30, 2012

Stock-based Compensation

10. Stock-based Compensation

Compensation cost and the related tax benefits were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2012		2011		2012		2011
Stock-based compensation expense	$	2.2	$	2.6	$	6.3	$	6.0
Tax benefit		(0.8)		(0.9)		(2.2)		(2.1)
Stock-based compensation expense, net of taxes	$	1.4	$	1.7	$	4.1	$	3.9

Stock Options

Information on the Company’s stock option plan activity is summarized as follows:

	Six Months Ended June 30,
	2012				2011
(in whole shares and dollars)	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding, beginning of period		2,715,430	$	38.57		2,843,909	$	39.22
Granted		517,500		36.81		297,000		46.47
Exercised		(38,524)		30.49		(118,014)		33.13
Forfeited or cancelled		(51,250)		40.18		(18,250)		37.39
Expired		(158,850)		44.04		(256,250)		57.00
Outstanding, end of period		2,984,306		38.07		2,748,395		38.62

Restricted Stock Units

The following tables summarize activity information about employee restricted stock units:

	Six Months Ended June 30,
	2012				2011
(in whole shares and dollars)	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Time-based restricted stock units:
Outstanding, beginning of period		768,529	$	40.17		838,129	$	40.93
Granted		172,691		36.99		111,496		46.10
Vested		(121,522)		35.30		(187,123)		45.14
Forfeited		(26,705)		40.03		(21,944)		41.54
Outstanding, end of period		792,993		40.22		740,558		40.63
Performance and market-based restricted stock units:
Outstanding, beginning of period		69,500	$	45.37		101,680	$	39.62
Granted		94,000		36.75		42,500		46.47
Vested		-		-		(25,055)		45.21
Forfeited		(1,125)		41.16		-		-
Outstanding, end of period		162,375		40.34		119,125		40.89

Performance based restricted stock units are based upon the achievement of the performance metrics at 100%. These units have the potential to range from 0% to 133% of the shares disclosed, which varies based on grant year and individual participation level. Increases above the 100% target level are reflected as granted in the period in which the performance-based stock unit goals are achieved. Decreases below the 100% target level are reflected as forfeited.

In the first three months of 2012, the Company granted market-based awards to certain members of senior management, which are included in the table above as performance and market-based restricted stock activity. The attainment of these stock units are based on the relative total shareholder return (“TSR”) of the Company. This metric is based on a three-year average relative TSR as compared to a Property and Casualty Index of peer companies. The fair value of market based awards was estimated at the date of grant using a valuation model. These units have the potential to range from 0% to 150% of the shares disclosed.