Quarterly report pursuant to Section 13 or 15(d)

Share-Based Compensation

v2.3.0.15
Share-Based Compensation
 9 Months Ended
Sep. 30, 2011
Share-Based Compensation [Abstract]  
Share-Based Compensation
8. Share-Based Compensation
The Company has share-based compensation plans, which are more fully described in Note 9, Share-based Compensation, to the Consolidated Financial Statements in the 2010 10-K. During the nine months ended September 30, 2011, the Company granted stock awards subject to continued service, consisting of stock units and SARs, with vesting terms fully described in the 2010 10-K. There were no stock options granted during the three and nine months ended September 30, 2011 and 2010.
In August 2011, the Company granted 0.9 million SARS subject to service, market and performance conditions to its Chairman and Chief Executive Officer. These awards will vest on December 31, 2014, subject to his continued employment through that date, the Company’s stock price appreciating and exceeding a targeted price, and the Company’s achievement of certain volume point performance targets. The fair value of these SARS was determined on the date of the grant using the Monte Carlo lattice model.
For the three months ended September 30, 2011 and 2010, share-based compensation expense amounted to $6.1 million each period. For the nine months ended September 30, 2011 and 2010, share-based compensation expense amounted to $17.2 million and $16.9 million, respectively. As of September 30, 2011, the total unrecognized compensation cost related to all non-vested stock awards was $47.3 million and the related weighted-average period over which it is expected to be recognized is approximately 2.0 years.
All share and per share data have been adjusted for the two-for-one stock split discussed in Note 2, Significant Accounting Policies.
The following tables summarize the activity under all share-based compensation plans for the nine months ended September 30, 2011:
                                 
                    Weighted        
            Weighted     Average        
            Average     Remaining     Aggregate  
            Exercise     Contractual     Intrinsic  
Stock Options & SARs   Awards     Price     Term     Value  
    (In thousands)                 (In millions)  
Outstanding at December 31, 2010
    12,780     $ 14.38     5.7 years     $ 253.1  
Granted(1)
    2,081     $ 54.82                  
Exercised
    (2,826 )   $ 12.54                  
Forfeited
    (132 )   $ 19.83                  
 
                             
Outstanding at September 30, 2011
    11,903     $ 21.83     5.6 years     $ 382.1  
 
                           
Exercisable at September 30, 2011
    5,094     $ 12.98     4.1 years     $ 206.9  
 
                           
     
(1)  
Includes 0.9 million SARs which are subject to service, market and performance conditions.
The weighted-average grant date fair value of SARs granted during the three months ended September 30, 2011 and 2010 was $17.40 and $11.02, respectively. The weighted-average grant date fair value of SARs granted during the nine months ended September 30, 2011 and 2010 was $19.63 and $9.31, respectively. The total intrinsic value of stock options and SARs exercised during the three months ended September 30, 2011 and 2010, was $36.8 million and $25.8 million, respectively. The total intrinsic value of stock options and SARs exercised during the nine months ended September 30, 2011 and 2010, was $100.9 million and $39.3 million, respectively.
                 
            Weighted  
            Average  
            Grant Date  
Incentive Plan and Independent Directors Stock Units   Shares     Fair Value  
    (In thousands)        
Outstanding and nonvested December 31, 2010
    1,160.5     $ 13.76  
Granted
    24.3     $ 42.55  
Vested
    (453.5 )   $ 17.77  
Forfeited
    (10.8 )   $ 12.18  
 
             
Outstanding and nonvested at September 30, 2011
    720.5     $ 12.23  
 
             
The total vesting date fair value of stock units which vested during the three months ended September 30, 2011 and 2010, was $0.5 million and $0.4 million, respectively. The total vesting date fair value of stock units which vested during the nine months ended September 30, 2011 and 2010, was $8.1 million and $7.3 million, respectively.
The Company recognizes excess tax benefits associated with share-based compensation to shareholders’ equity only when realized. When assessing whether excess tax benefits relating to share-based compensation have been realized, the Company follows the with-and-without approach which was adopted in the second quarter of 2011. Under this approach, excess tax benefits related to share-based compensation are not deemed to be realized until after the utilization of all other tax benefits available to the Company, which are also subject to applicable limitations. As of September 30, 2011, and December 31, 2010, the Company had $12.6 million and $8.7 million, respectively, of unrealized excess tax benefits. See Note 2, Significant Accounting Policies, for further discussion of the Company’s change in accounting principle from the tax-law-ordering method to the with-and-without approach.