Quarterly report pursuant to Section 13 or 15(d)

Stock Based Compensation

Stock Based Compensation
3 Months Ended
Mar. 31, 2013
Stock Based Compensation [Abstract]  

Stock options are granted under the Company’s long-term incentive plan and have an exercise price that may not be less than the fair market value of the underlying shares on the date of grant. On March 5, 2013 the Company granted 1,116,400 stock options from existing stock plans. In general, stock options granted will become exercisable over a period determined by the Compensation Committee which in the past has been a five year life, with the options vesting over a two or three year period. A third of the stock options granted to employees in March 2013 and 2012 were vested immediately with the remainder vesting over a two year period. In addition, stock options will become exercisable upon a change in control, unless provided otherwise by the Compensation Committee. At March 31, 2013, there were 2,247,046 shares subject to options authorized, but not granted.

The Company recognized non-cash compensation expense of $1.4 million related to stock options in each of the three months ended March 31, 2013 and 2012. These amounts were recorded as general and administrative expense. Because the Company does not pay significant United States federal income taxes, no amounts were recorded for tax benefits related to excess stock based compensation deductions.

A summary of the stock option activity for the three months ended March 31, 2013 is provided below:


    Number of Shares
Underlying  Options
(in thousands)
    Weighted Average
Exercise Price Per
Contractual Term
Intrinsic Value
(in millions)

Outstanding at beginning of period

    4,065     $ 6.12       2.65          


    1,116     $ 7.75       4.93          


    (32   $ 4.24       0.53          


    —       $ 0.00       —             










Outstanding at end of period

    5,149     $ 6.48       2.97     $ 10.24  













Vested - end of period

    4,266     $ 6.15       2.63     $ 9.86  













Vested and expected to vest - end of period

    4,967     $ 6.48       2.97     $ 10.16  














The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option.

As of March 31, 2013, unrecognized compensation costs totaled $1.8 million. The expense is expected to be recognized over a weighted average period of 1.4 years.