Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v2.4.0.6
Stock-Based Compensation
 9 Months Ended
Sep. 30, 2012
Share-based Compensation [Abstract]  
Stock-Based Compensation
STOCK-BASED COMPENSATION
The Company’s Stock Incentive Plan (the “Plan”) allows for grants of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units and other stock-based awards. The majority of all stock option and restricted stock unit grants outstanding under the Plan were granted in the first quarter of each fiscal year.
Stock-based compensation expense consisted of the following (in thousands):
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2012
 
2011
 
2012
 
2011
Stock options
 
$
607

 
$
906

 
$
2,384

 
$
2,633

Restricted stock units
 
797

 
1,145

 
3,323

 
3,222

Total
 
$
1,404

 
$
2,051

 
$
5,707

 
$
5,855


Stock Options
The Company estimates the fair value of stock options using the Black-Scholes model. Key inputs and assumptions used to estimate the fair value of stock options include the exercise price of the award, the expected option term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate applicable to the option’s expected term, and the Company’s estimated annual dividend yield.
The following table presents the weighted average assumptions for stock options granted in the period:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2012
 
2011
 
2012
 
2011(1)
Expected term
4.51 years
 
4.49 years
 
4.78 years
 
5.12 years
Expected stock price volatility
31.95%
 
31.21%
 
32.20%
 
30.76%
Risk-free interest rate
0.47%
 
0.95%
 
0.88%
 
1.84%
Expected dividend yield
1.63%
 
1.53%
 
1.80%
 
1.31%
Weighted average grant date fair value
$12.37
 
$13.39
 
$11.57
 
$16.09

 
(1) 
For the nine months ended September 30, 2011, the Company granted two stock option grants totaling 53,720 shares that vest 100% on the fifth anniversary of the grant date. Because the Company did not have sufficient historical exercise data to provide a reasonable basis for estimating the expected term for these grants, the Company utilized the simplified method in developing an estimate of the expected term of these options.
During the nine months ended September 30, 2012 and 2011, the Company granted a total of 358,169 and 340,973 stock options, respectively. At September 30, 2012, unrecognized costs related to outstanding stock options totaled approximately $6,234,000, before any related tax benefit. The unrecognized costs related to stock options are amortized over the related vesting period using the straight-line attribution method. Unrecognized costs related to stock options at September 30, 2012 are expected to be recognized over a weighted average period of 2.41 years.
Restricted Stock Units
The Company estimates the fair value of service-based and performance-based restricted stock units using the Black-Scholes model. Key inputs and assumptions used to estimate the fair value of restricted stock units include the vesting period, dividend yield and closing price of the Company’s common stock on the date of grant.
 
The following table presents the weighted average assumptions for restricted stock units granted in the period:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2012
 
2011
 
2012
 
2011
Vesting period
4.00 years
 
4.00 years
 
3.86 years
 
3.96 years
Expected dividend yield
1.63%
 
1.84%
 
1.77%
 
1.33%
Estimated average grant date fair value per restricted stock unit
$50.46
 
$44.82
 
$46.57
 
$58.37

During the nine months ended September 30, 2012 and 2011, the Company granted 183,816 and 145,768 restricted stock units, respectively. At September 30, 2012, unrecognized costs related to outstanding restricted stock units totaled approximately $11,033,000, before any related tax benefit. The unrecognized costs related to restricted stock units are being amortized over the related vesting period using the straight-line attribution method. These unrecognized costs at September 30, 2012 are expected to be recognized over a weighted average period of 2.51 years.