Stock-based Compensation

3 Months Ended

Mar. 31, 2013

Stock-based Compensation

10. Stock-based Compensation

Compensation cost and the related tax benefits were as follows:

	Three Months Ended
	March 31,
(in millions)	2013			2012
Stock-based compensation expense	$	3.6		$	4.1
Tax benefit		(1.3	)		(1.4	)
Stock-based compensation expense, net of taxes	$	2.3		$	2.7

Stock Options

Information on the Company’s stock option plans is summarized below.

	Three Months Ended March 31,
	2013					2012
(in whole shares and dollars)	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding, beginning of period		2,892,882		$	38.28		2,715,430		$	38.57
Granted		535,300			42.49		517,500			36.81
Exercised		(213,645	)		30.26		(33,224	)		32.24
Expired		—			—		(158,850	)		44.04
Outstanding, end of period		3,214,537			39.52		3,040,856			38.06

Restricted Stock Units

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

	Three Months Ended March 31,
	2013					2012
(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		750,837		$	40.15		768,529		$	40.17
Granted		124,850			42.49		168,750			36.93
Vested		(245,185	)		39.42		(117,522	)		35.27
Forfeited		(1,625	)		39.32		(10,309	)		39.67
Outstanding, end of period		628,877			40.90		809,448			40.21
Performance-based and market-based restricted stock units:
Outstanding, beginning of period		132,775		$	39.97		69,500		$	45.37
Granted		79,850			41.67		99,500			36.61
Outstanding, end of period		212,625			40.61		169,000			40.21

Performance based restricted stock units are based upon the achievement of the performance metric at 100%. These units have the potential to range from 0% to 200% of the shares disclosed, which varies based on grant year and individual award. Increases above the 100% target level are reflected as granted in the period in which performance-based stock unit goals are achieved. Decreases below the 100% target level are reflected as forfeited.

In the first three months of 2013 and 2012, the Company granted market-based awards totaling 76,175 and 90,250, respectively, to certain members of senior management, which are included in the table above as performance and market-based restricted stock activity. The vesting of these stock units is based on the relative total shareholder return (“TSR”) of the Company. This metric is generally 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.