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Note 14. Stock-Based Compensation
The Ryland Group, Inc. 2011 Equity and Incentive Plan (the “Plan”) permits the granting of stock options, restricted stock awards, stock units, cash incentive awards or any combination of the foregoing to employees. At March 31, 2012 and December 31, 2011, stock options or other awards or units available for grant under the Plan or its predecessor plans totaled 2,559,240 and 3,346,508, respectively.
The Ryland Group, Inc. 2011 Non-Employee Director Stock Plan (the “Director Plan”) provides for a stock award of 3,000 shares to each non-employee director on May 1 of each year. New non-employee directors will receive a pro rata stock award 30 days after their date of appointment or election based on the remaining portion of the plan year in which they are appointed or elected. Stock awards are fully vested and nonforfeitable on their applicable award dates. There were 176,000 stock awards available for future grant in accordance with the Director Plan at March 31, 2012 and December 31, 2011. Previously, The Ryland Group, Inc. 2004 Non-Employee Director Equity Plan and its predecessor plans provided for automatic grants of nonstatutory stock options to directors. These stock options are fully vested and have a maximum term of ten years.
All outstanding stock options, stock awards and restricted stock awards have been granted in accordance with the terms of the applicable Plan, Director Plan and their respective predecessor plans, all of which were approved by the Company’s stockholders. Certain option and share awards provide for accelerated vesting if there is a change in control (as defined in the plans).
The Company recorded stock-based compensation expense of $3.5 million and $2.2 million for the three months ended March 31, 2012 and 2011, respectively. Stock-based compensation expenses have been allocated to the Company’s business units and included in “Corporate,” “Financial services” and “Selling, general and administrative” expenses within the Consolidated Statements of Earnings.
A summary of stock option activity in accordance with the Company’s equity incentive plans as of March 31, 2012 and 2011, and changes for the three-month periods then ended, follows:
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|
|
|
|
|
|
WEIGHTED- |
|
|
|
|
|
|
|
WEIGHTED- |
|
AVERAGE |
|
AGGREGATE |
|
|
|
|
|
AVERAGE |
|
REMAINING |
|
INTRINSIC |
|
|
|
|
|
EXERCISE |
|
CONTRACTUAL |
|
VALUE |
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|
|
SHARES |
|
PRICE |
|
LIFE (in years) |
|
(in thousands) |
|
Options outstanding at January 1, 2011 |
|
3,722,656 |
|
$ |
33.29 |
|
2.8 |
|
|
|
Granted |
|
781,000 |
|
16.52 |
|
|
|
|
|
Exercised |
|
(36,398) |
|
11.50 |
|
|
|
|
|
Forfeited |
|
(16,292) |
|
24.72 |
|
|
|
|
|
Options outstanding at March 31, 2011 |
|
4,450,966 |
|
$ |
30.55 |
|
3.0 |
|
$ |
661 |
|
Available for future grant |
|
558,200 |
|
|
|
|
|
|
|
Total shares reserved at March 31, 2011 |
|
5,009,166 |
|
|
|
|
|
|
|
Options exercisable at March 31, 2011 |
|
2,908,186 |
|
$ |
36.29 |
|
2.3 |
|
$ |
440 |
|
Options outstanding at January 1, 2012 |
|
3,948,874 |
|
$ |
28.91 |
|
2.4 |
|
|
|
Granted |
|
726,000 |
|
18.22 |
|
|
|
|
|
Exercised |
|
(18,667) |
|
14.39 |
|
|
|
|
|
Forfeited |
|
(185,197) |
|
21.93 |
|
|
|
|
|
Options outstanding at March 31, 2012 |
|
4,471,010 |
|
$ |
27.52 |
|
3.0 |
|
$ |
4,763 |
|
Available for future grant |
|
2,559,240 |
|
|
|
|
|
|
|
Total shares reserved at March 31, 2012 |
|
7,030,250 |
|
|
|
|
|
|
|
Options exercisable at March 31, 2012 |
|
3,000,374 |
|
$ |
31.97 |
|
1.9 |
|
$ |
2,584 |
Stock-based compensation expense related to employee stock options totaled $1.1 million and $1.0 million for the three-month periods ended March 31, 2012 and 2011, respectively.
During the quarters ended March 31, 2012 and 2011, the total intrinsic values of stock options exercised were $102,000 and $256,000, respectively. The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option.
Compensation expense associated with restricted stock unit awards to senior executives totaled $2.3 million and $1.1 million for the three-month periods ended March 31, 2012 and 2011, respectively.
The following is a summary of activity related to restricted stock unit awards:
|
|
|
2012 |
|
2011 |
|
|
Restricted stock units at January 1 |
|
657,825 |
|
727,317 |
|
|
Shares awarded |
|
400,568 |
|
305,000 |
|
|
Shares vested |
|
(294,856 |
) |
(181,666 |
) |
|
Shares forfeited |
|
(6,667 |
) |
(60,000 |
) |
|
Restricted stock units at March 31 |
|
756,870 |
|
790,651 |
|
At March 31, 2012, the outstanding restricted stock units are expected to vest as follows: 2012—55,493; 2013—344,189; 2014—235,188; and 2015—122,000.
The Company has granted stock awards to its non-employee directors pursuant to the terms of the Director Plan. The Company recorded stock-based compensation expense related to Director Plan stock awards in the amounts of $81,000 and $108,000 for the three-month periods ended March 31, 2012 and 2011, respectively.
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