Annual report pursuant to Section 13 and 15(d)

Shareholder's Equity, Stock Options and Net Income per Share (Notes)

v2.4.0.6
Shareholder's Equity, Stock Options and Net Income per Share (Notes)
 12 Months Ended
Dec. 31, 2011
Shareholders’ Equity, Stock Options and Net Income per Share [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
Shareholders' Equity, Stock Options and Net Income per Share
 
Preferred Stock

There are 5,000,000 shares of preferred stock with a par value of $0.01 authorized, but no shares have been issued to date.    

Cash Dividends

During each quarter of 2011, 2010 and 2009, the Company’s Board of Directors declared a cash dividend of $0.07 per share of Common Stock. On February 7, 2012, the Company’s Board of Directors declared a $0.07 per share dividend that will be paid in the first quarter of 2012. The Company expects to continue to pay regular quarterly cash dividends, though each subsequent quarterly dividend is subject to review and approval by the Board of Directors.

Repurchase of Common Stock
In July 2007, our Board of Directors approved a stock repurchase program (“Repurchase Plan”) for up to 2,000,000 shares of our common stock. During the year ended December 31, 2011, we repurchased 973,768 shares of common stock under the Repurchase Plan for $26,101, or $26.80 per share. As of December 31, 2011, 815,059 shares remain that may be repurchased under the Repurchase Plan.

Share-Based Compensation

The Company had previously reserved for issuance 4,500,000 common shares under the 1999 Stock Option and Incentive Plan (the “1999 Plan”). Options issued under the 1999 Plan have seven to ten-year terms and vested over a one to five year period.

In May 2008, with the approval of shareholders, the Company amended and restated the 1999 Stock Option and Incentive Plan (the “1999 Amended Plan”) to reserve for issuance an additional 3,000,000 common shares, increasing the total number of reserved common shares under the 1999 Amended Plan to 7,500,000.

Employee Activity - Options

The following table summarizes the Company’s employee stock option activity and related information for the years ended December 31, 2011, 2010 and 2009:

 
2011
 
2010
 
2009
 
 
 
Weighted-
 
 
 
Weighted-
 
 
 
Weighted-
 
 
 
Average
 
 
 
Average
 
 
 
Average
 
Options
 
Exercise
 
Options
 
Exercise
 
Options
 
Exercise
 
(000)
 
Price
 
(000)
 
Price
 
(000)
 
Price
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at beginning of year
3,702

 
$
26

 
3,086

 
$
26

 
2,446

 
$
28

Granted
117

 
29

 
664

 
22

 
675

 
23

Exercised
(451
)
 
23

 
(35
)
 
21

 
(1
)
 
18

Forfeited
(5
)
 
24

 
(13
)
 
26

 
(34
)
 
28

Outstanding at end of year
3,363

 
$
26

 
3,702

 
$
26

 
3,086

 
$
26

Exercisable at end of year
2,585

 
$
27

 
2,475

 
$
27

 
1,906

 
$
27

Shares available for grant
1,433

 
 
 
1,713

 
 
 
2,363

 
 
Weighted-average fair value of options granted during the year
$
10.68

 
 
 
$
8.24

 
 
 
$
7.96

 
 
Aggregate intrinsic value for options exercised
$
3,771

 
 
 
$
268

 
 
 
$
3

 
 
Average aggregate intrinsic value for options outstanding
$
14,169

 
 
 
 
 
 
 
 
 
 
Average aggregate intrinsic value for exercisable options
$
8,717

 
 
 
 
 
 
 
 
 
 


The following table summarizes information about stock options outstanding as of December 31, 2011:








Outstanding



Exercisable






Weighted

Weighted



Weighted
Range of

Number

Average

Average

Number

Average
Exercise

Outstanding

Remaining

Exercise

Exercisable

Exercise
Price

(000)

Contractual Life

Price

(000)

Price
$
13.25

-
18.82


263


1.4


$
15.08


263


$
15.08

20.21

-
29.44


2,297


4.0


25.78


1,519


26.95

30.35

-
35.53


803


2.4


31.37


803


31.37

$
13.25

-
35.53


3,363


3.4


$
26.28


2,585


$
27.12



Share-based compensation expense for options granted in 2011, 2010 and 2009 was recognized in salaries, wages and employee benefits.  Share-based compensation expense for options granted was $3,981, $5,689 and $5,832 during 2011, 2010 and 2009, respectively.  The total tax benefit related to the share-based expense for these options was $1,042, $1,707 and $1,691 for 2011, 2010 and 2009, respectively. Total compensation cost, net of estimated forfeitures, related to the options not yet recognized in earnings was $2,810 at December 31, 2011. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures.

Employee Activity – Non-vested shares
 
During the first quarter of 2011, the Company granted 107,505 non-vested shares to key employees with a weighted-average fair value of $28.61. Non-vested share grants to employees vest ratably over a three-year period.  The non-vested shares' fair values were estimated using closing market prices on the day of grant. Share-based compensation expense was $895 during 2011 for non-vested shares granted to employees. The total tax benefit related to this share-based expense was $347 for the year ended December 31, 2011.  As of December 31, 2011, total compensation cost, net of estimated forfeitures, related to the non-vested shares not yet recognized in earnings was $2,094.
    
During the year ended December 31, 2006, the Company granted 129,350 non-vested shares to key employees with a weighted-average fair value of $36.09 per share.  Share-based compensation expense of $258 for non-vested shares granted to employees during 2006 was recognized in salaries, wages and employee benefits during the year ended December 31, 2009. The total tax benefit related to this share-based expense was $109 for the year ended December 31, 2009. During the year ended December 31, 2009, 37,632 previously non-vested shares with a total grant date fair value of $1,358 vested to employees.  

Employee Activity – Performance shares

During the first quarter of 2011, the Company granted performance shares to key employees. Under the terms of the performance share agreements, on the third anniversary of the grant date, the Company will issue to the employees a calculated number of common stock shares based on the three year performance of the Company's common stock share price as compared to the share price performance of a selected peer group. The median number of shares eligible for issuance to employees under these agreements is 37,530. No shares may be issued if the Company share price performance outperforms 30% or less of the peer group, but the number of shares issued may be increased to 75,060 shares if the Company share price performs better than 90% of the peer group. The fair value of the performance shares was estimated to be $30.17 per share using a Monte Carlo simulation with a risk free rate of return of 1.4% and a three year volatility of 47.7%. Share-based compensation expense for the performance shares was $335 during the year ended December 31, 2011. The total tax benefit related to this share-based expense was $130 for the year ended December 31, 2011.  As of December 31, 2011, total compensation cost, net of estimated forfeitures, related to the performance shares not yet recognized in earnings was $798.

Employee Activity – ESPP

Under the ESPP at December 31, 2011, the Company is authorized to issue up to a remaining 429,969 shares of Common Stock to employees of the Company. For the years ended December 31, 2011, 2010 and 2009, participants under the plan purchased 9,122, 8,142 and 12,092 shares, respectively, at an average price of $27.20, $23.89 and $19.63 per share, respectively. The weighted-average fair value of each purchase right under the ESPP granted for the years ended December 31, 2011, 2010 and 2009, which is equal to the discount from the market value of the Common Stock at the end of each six month purchase period, was $5.79, $3.93 and $3.90 per share, respectively. Share-based compensation expense of $53, $32 and $47 was recognized in salaries, wages and employee benefits, during the years ended December 31, 2011, 2010 and 2009, respectively.

Non-employee Directors – Non-vested shares
 
On May 23, 2006, the Company’s shareholders approved the Company’s 2006 Non-Employee Director Stock Plan (the “2006 Plan”).  The Company’s shareholders then approved the Company’s Amended and Restated Non-Employee Director Stock Plan (the “Amended Plan”) on May 22, 2007.  The Amended Plan was then further amended and restated on December 17, 2008.  The Amended Plan is designed to better enable the Company to attract and retain well-qualified persons for service as directors of the Company.  Under the Amended Plan, on the first business day after each Annual Meeting of Shareholders, each non-employee director will automatically be granted an award (the “Annual Grant”), in such form and size as the Board determines from year to year.  Unless otherwise determined by the Board, Annual Grants will become vested and nonforfeitable one year after the date of grant so long as the non-employee director’s service with the Company does not earlier terminate.  Each director may elect to defer receipt of the shares under a non-vested share award until the director terminates service on the Board of Directors.  If a director elects to defer receipt, the Company will issue deferred stock units to the director, which do not represent actual ownership in shares and the director will not have voting rights or other incidents of ownership until the shares are issued.  However, the Company will credit the director with dividend equivalent payments in the form of additional deferred stock units for each cash dividend payment made by the Company.
  
During 2011, 2010 and 2009, under the Amended Plan, 23,809, 19,131 and 30,870, respectively, of non-vested shares or deferred stock units were issued to the Company’s non-employee directors.  The weighted-average grant date fair values for the 2011, 2010 and 2009 grants to non-employee directors were $32.58, $29.27 and $18.14, respectively.  The share-based compensation for these awards are recognized, net of estimated forfeitures, ratably over the requisite service period, or vesting period, of one year.  

    


Under the 2006 Plan, during 2006, 13,500 non-vested shares and deferred stock units were issued to the Company’s non-employee directors with a weighted-average fair value of $36.27.  In April 2007, 375 non-vested shares with fair values of $30.88 per share were issued to a new non-employee director.  The share-based compensation for these awards was recognized, net of estimated forfeitures, ratably over the requisite service period, or vesting period, of three years.  
    
During the year ended December 31, 2009, 20,017 of previously non-vested shares and deferred stock units with a total fair value of $700 vested to non-employee directors.  During the year ended December 31, 2010, 30,995 of previously non-vested shares and deferred stock units with a total fair value of $892 vested to non-employee directors.  During the year ended December 31, 2011, 19,131 of previously non-vested shares and deferred stock units with a total fair value of $615 vested to non-employee directors. At December 31, 2011, 23,809 non-vested shares granted to non-employee directors had yet to vest.    

During the years ended December 31, 2011, 2010 and 2009, share-based compensation expense for non-vested shares granted to non-employee directors under the above plans was $707, $563 and $617, respectively, and was recognized in salaries, wages and employee benefits. The total tax benefits related to this share-based expense was $274, $226 and $261 for the years ended December 31, 2011, 2010 and 2009, respectively.  Total compensation cost, net of estimated forfeitures, related to these non-vested shares granted to non-employee directors not yet recognized in earnings was $271 at December 31, 2011. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures.

Non-employee Directors - Options
 
In addition to the above activity, each May from 1995 to 2005, options were granted to the non-employee directors of the Company.  The options have terms of ten years and are fully exercisable.  The following table summarizes the Company’s non-employee stock option activity and related information for the years ended December 31, 2011, 2010 and 2009:
 
2011
 
2010
 
2009
 
 
 
Weighted-
 
 
 
Weighted-
 
 
 
Weighted-
 
 
 
Average
 
 
 
Average
 
 
 
Average
 
Options
 
Exercise
 
Options
 
Exercise
 
Options
 
Exercise
 
(000)
 
Price
 
(000)
 
Price
 
(000)
 
Price
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at beginning of year
63

 
$
22

 
74

 
$
22

 
74

 
$
22

Granted
—

 
—

 
—

 
—

 
—

 
—

Exercised
(22
)
 
23

 
(11
)
 
24

 
—

 
—

Forfeited
—

 
—

 
—

 
—

 
—

 
—

Outstanding and exercisable at end of year
41

 
$
21

 
63

 
$
22

 
74

 
$
22

Aggregate intrinsic value for options exercised
$
202

 
 
 
$
37

 
 
 
$
—

 
 
Average aggregate intrinsic value for options outstanding and exercisable
$
385

 
 
 
 
 
 
 
 
 
 


At December 31, 2011, weighted average remaining contractual term for these options was 2.5 years.   

Net Income per Share

The following table sets forth the computation of net income per basic and diluted share:
 
2011

2010

2009
Numerator:





Numerator for basic and diluted net income per share
$
47,199


$
32,036


$
9,802







Denominator:





Denominator for basic net income per share - weighted-average shares (in thousands)
29,052


28,984


28,928

Effect of dilutive stock options and non-vested shares (in thousands)
383


127


65

Denominator for diluted net income per share - adjusted weighted-average shares (in thousands)
29,435


29,111


28,993

Basic net income per share
$
1.62


$
1.11


$
0.34

Diluted net income per share
$
1.60


$
1.10


$
0.34



The number of options and non-vested shares that could potentially dilute net income per basic share in the future, but that were not included in the computation of net income per diluted share because to do so would have been anti-dilutive for the periods presented, were approximately 649,000, 3,174,000 and 2,610,000 in 2011, 2010 and 2009, respectively.