Quarterly report pursuant to Section 13 or 15(d)

Share-Based Payments

v2.4.0.6
Share-Based Payments
 3 Months Ended
Mar. 31, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-Based Payments
Share-Based Payments

The Company’s general practice has been to make a single annual grant of share-based compensation to key employees and to make other employee grants only in connection with new employment or promotions.  Forms of share-based compensation granted to employees by the Company include stock options, non-vested shares of common stock (“non-vested share”), and performance shares.  The Company also typically makes a single annual grant of non-vested shares to non-employee directors in conjunction with the annual election of non-employee directors to the Board of Directors.  Share-based compensation is based on the grant date fair value of the instrument and is recognized, net of estimated forfeitures, ratably over the requisite service period, or vesting period. The Company estimates forfeitures based upon historical experience.  All share-based compensation expense is recognized in salaries, wages and employee benefits.

Employee Activity - Stock Options
 
Stock option grants to employees typically expire seven years from the grant date and vest ratably over a three-year period.  The Company used the Black-Scholes option-pricing model to estimate the grant-date fair value of options granted.  The weighted-average fair value of options granted and assumptions used to calculate their fair value during the three months ended March 31, 2012 and 2011 were as follows:


Three months ended

March 31,
2012

March 31,
2011
Expected dividend yield
0.9
%

1.0
%
Expected stock price volatility
46.6
%

44.9
%
Weighted average risk-free interest rate
0.8
%

2.4
%
Expected life of options (years)
4.2


4.6

Weighted average grant date fair value
$
13


$
11



The following tables summarize the Company’s employee stock option activity and related information for the three months ended March 31, 2012 and 2011:
 
Three months ended March 31, 2012







Weighted-



Weighted-

Aggregate

Average



Average

Intrinsic

Remaining

Options

Exercise

Value

Contractual

(000)

Price

(000)

Term
Outstanding at December 31, 2011
3,363


$
26





Granted
93


37





Exercised
(308
)

27





Outstanding at March 31, 2012
3,148


$
27


$
25,704


3.2

Exercisable at March 31, 2012
2,755


$
26


$
22,678


2.9



Three months ended

March 31,
2012

March 31,
2011
Shared-based compensation for options
$
822


$
1,115

Tax benefit for option compensation
$
217


$
307

Unrecognized compensation cost for options, net of estimated forfeitures
$
3,265


$
5,678



 Employee Activity - Non-vested Shares

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. The following tables summarize the Company’s employee non-vested share activity and related information for the three months ended March 31, 2012 and 2011:


Three months ended March 31, 2012



Weighted-

Aggregate

Non-vested

Average

Grant Date

Shares

Grant Date

Fair Value

(000)

Fair Value

(000)
Outstanding and non-vested at December 31, 2011
108


$
29



Granted
103


37



Vested
(36
)

29



Outstanding and non-vested at March 31, 2012
175


$
33


$
5,813



Three months ended

March 31,
2012

March 31,
2011
Shared-based compensation for non-vested shares
$
445


$
137

Tax benefit for non-vested share compensation
$
174


$
55

Unrecognized compensation cost for non-vested shares, net of estimated forfeitures
$
5,319


$
2,939



Employee Activity - Performance Shares

In 2011 and 2012, 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.  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 doubled if the Company share price performs better than 90% of the peer group.  The fair value of the performance shares was estimated using a Monte Carlo simulation. The weighted average assumptions used in the Monte Carlo calculation were as follows:


Three months ended

March 31,
2012

March 31,
2011
Expected stock price volatility
40.8
%

47.7
%
Weighted average risk-free interest rate
0.4
%

1.4
%

The following tables summarize the Company’s employee performance share activity, assuming median share awards, and related information for the three months ended March 31, 2012 and 2011:
Three months ended March 31, 2012



Weighted-

Aggregate

Performance

Average

Grant Date

Shares

Grant Date

Fair Value

(000)

Fair Value

(000)
Outstanding and non-vested at December 31, 2011
38


$
30



Granted
24


45



Vested
—


—



Outstanding and non-vested at March 31, 2012
62


$
36


$
2,205



Three months ended

March 31,
2012

March 31,
2011
Shared-based compensation for performance shares
$
147


$
53

Tax benefit for performance share compensation
$
57


$
21

Unrecognized compensation cost for performance shares, net of estimated forfeitures
$
1,724


$
1,164



Non-employee Director Activity - Non-vested Shares

Grants of non-vested shares to non-employee directors vest ratably over the elected term to the Board of Directors, or one year.  The following tables summarize the Company’s non-employee non-vested share activity and related information for the three months ended March 31, 2012 and 2011:

Three months ended March 31, 2012



Weighted-

Aggregate

Non-vested

Average

Grant Date

Shares

Grant Date

Fair Value

(000)

Fair Value

(000)
Outstanding and non-vested at December 31, 2011
24


$
33



Granted
—


—



Vested
(2
)

31



Outstanding and non-vested at March 31, 2012
22


$
33


$
720



Three months ended

March 31,
2012

March 31,
2011
Shared-based compensation for non-vested shares
$
192


$
138

Tax benefit for non-vested share compensation
$
75


$
55

Unrecognized compensation cost for non-vested shares, net of estimated forfeitures
$
78


$
120



Non-employee Director Activity - Stock 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.  At March 31, 2012, 40,625 options were outstanding and will expire between May 2013 and May 2015.  At March 31, 2012, the weighted average exercise price per share and remaining contractual term for the outstanding options of non-employee directors were $21 and 2.2 years, respectively.