Share-Based Compensation Arrangements

9 Months Ended

Sep. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation Arrangements

Share-Based Compensation Arrangements

Prior to March 7, 2011, under our Long-Term Incentive Cash Award Plan, two types of incentives were awarded, both of which were based upon the value of our Class A shares: stock appreciation rights (“SARs”) and phantom shares. SARs and phantom shares were generally granted to key employees in the first quarter of each year and vested one-third each year over a three year period. SARs were granted with an exercise price equal to the closing price of our common stock on the date of the grant, as reported by the NASDAQ Stock Market and have a seven year term. Fair value of outstanding phantom shares is based upon the closing stock price of our Class A common stock on the last day of the reporting period. At September 30, 2012 and December 31, 2011, the closing stock price on our Class A common stock was $5.18 and $4.70 respectively.

Effective March 7, 2011, we granted performance phantom shares to make our annual equity incentives reflect our performance during the year. For the nine months ended September 30, 2011, we did not record any expense, based on our then estimate of our 2011 performance.

Effective March 2, 2012, we granted performance phantom shares to make our annual equity incentives reflect our performance during the year. The actual phantom share award amounts for 2012 will be determined based on specified performance targets with respect to performance in 2012 and 25% of the potential awards will be determined at the discretion of our Board of Directors. We record these performance phantom shares as an expense and corresponding liability only when we estimate that it is more likely than not that we will achieve the threshold level of performance necessary for any phantom shares to be awarded. As of September 30, 2012, we estimate that it is more likely than not that we will achieve the threshold level of performance with respect to some of the performance phantom share awards made in 2012. As a result, we recorded $1.6 million of compensation expense in the first nine months ended September 30, 2012. In addition, if we believed that it was more likely than not that we would achieve the threshold level of performance with respect to the remainder of the performance phantom share awards made in March 2012, an additional $0.3 million would have been recorded as expense in the nine months ended September 30, 2012.

For the nine months ended September 30, 2012, 24,864 phantom shares vested. Of these vested shares, 18,803 were paid in the first half of 2012 at a price of $5.08 and 6,061 were paid in the third quarter of 2012 at a price of $4.28 per share, reducing our liability by $0.1 million.

We measure the fair value of each SAR based on the closing stock price of Class A common stock on the last day of the period, using a Black-Scholes valuation model. The fair value of each SAR was estimated as of September 30, 2012 and 2011 using the following assumptions:

	September 30, 2012		September 30, 2011
Risk-free interest rate	0.25-0.49%		0.53-1.04%
Dividend yield	0.0	%	0.0	%
Expected life (years)	2.4-4.3 years		3.4-5.3 years
Volatility	65.55	%	82.87	%

Since both the SARs and the phantom shares are settled in cash rather than by issuing equity instruments, we record them as expense with a corresponding liability on our balance sheet.

The expense is based on the fair value of the awards on the last day of the reporting period and represents an amortization of that fair value over the three-year vesting period of the awards. Total compensation expense (income) related to the SARs and phantom shares that have been issued and earned was $0.0 million and $(0.4) million for the three months ended September 30, 2012 and 2011, respectively, and $0.1 million and $(1.2) million for the nine months ended September 30, 2012 and 2011, respectively. The fair value for the unvested SARs has not yet been recorded as expense and is therefore considered an unrecognized liability. The total unrecognized compensation liability as calculated at September 30, 2012 and December 31, 2011 was less than $0.1 million and $0.1 million, respectively.

In addition to the awards to our executives, we grant deferred stock units ("DSUs") to our non-employee directors under our Outside Directors' Deferred Stock Unit Plan. These awards are fully vested when made. We measure the fair value of outstanding DSUs based upon the closing stock price of our Class A common stock on the last day of the reporting period. We will pay out the DSUs to a director after the earlier of a Company Change in Control, as defined in the plan, or the date when he or she ceases to be a non-employee director for any reason. Since the DSUs are settled in cash rather than by issuing equity instruments, we record them as expense with a corresponding liability on our balance sheet. We recorded a liability of $0.7 million and $0.1 million as of September 30, 2012 and December 31, 2011, respectively.