Annual report pursuant to Section 13 and 15(d)

Stock Incentive Plan

v2.4.0.6
Stock Incentive Plan
 12 Months Ended
Dec. 31, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Incentive Plan
STOCK INCENTIVE PLAN
In 2000, the Company’s Board of Directors approved the Company’s 2000 Stock Incentive Plan (the “2000 Plan”) and between 2000 and 2010 authorized the Company to reserve a total of 28,500,000 shares of its then authorized common stock, par value $0.0001 per share (”Common Stock”) for issuance under the 2000 Plan. The 2000 Plan provided for the issuance of restricted stock grants, incentive stock options and nonqualified stock options. The Company will grant no further stock options or restricted awards under the 2000 Plan.
The Company’s 2010 Stock Incentive Plan (the “2010 Plan”), which became effective upon the closing of the Company’s initial public offering, was adopted by the Company’s Board of Directors in May 2010 and approved by its stockholders in June 2010. The 2010 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards and other stock-based awards. Upon its effectiveness, 10,000,000 shares of the Company’s Class A common stock were reserved for issuance under the 2010 Plan. As of December 31, 2012, the Company had granted options to purchase 964,144 shares of Class A common stock under the 2010 Plan. The 2012 options were granted at a weighted average exercise price of $11.78 per share.
Stock Option Grants 
The Company has granted stock options to certain employees and directors, including its principal and controlling stockholder, under the 2000 Plan. The Company will grant no further stock options or restricted stock awards under the 2000 Plan. The Company has also granted stock options to certain employees and directors under the 2010 Plan. At December 31, 2012, 9,049,574 shares were available for grant under the 2010 Plan. The following table summarizes the collective activity under the 2000 Plan and the 2010 Plan:
 
 
Number of Options
 
Weighted-Average Exercise Price
Outstanding at December 31, 2009
 
9,450,200

 
$
2.680

Granted
 
856,000

 
13.045

Exercised
 
(1,801,906
)
 
1.484

Forfeited
 
(230,294
)
 
2.074

Outstanding at December 31, 2010
 
8,274,000

 
4.177

Granted (1)
 
257,500

 
12.520

Exercised
 
(2,790,188
)
 
2.305

Forfeited
 
(316,700
)
 
10.787

Outstanding at December 31, 2011
 
5,424,612

 
5.151

Granted (1)
 
706,644

 
11.782

Exercised
 
(1,306,145
)
 
2.651

Forfeited
 
(46,968
)
 
7.249

Outstanding at December 31, 2012
 
4,778,143

 
$
6.794

Options exercisable at December 31, 2012
 
3,309,722

 
$
4.986

Expected to vest at December 31, 2012
 
1,432,041

 
$
10.951

Options exercisable at December 31, 2011
 
3,896,512

 
$
3.773

 
(1) Grants are related to the 2010 Plan.
The weighted-average remaining contractual life of options expected to vest at December 31, 2012 was 8.32 years. The total intrinsic value of options exercised during the years ended December 31, 2012, 2011 and 2010 was $12,829,917, $31,757,430, and $19,947,860, respectively.
The following table summarizes information about stock options outstanding at December 31, 2012: 
 
 
 
Outstanding Options
 
Exercisable Options
Related Plan
Exercise Price
 
Number Outstanding
 
Weighted-Average Remaining Term
 
Weighted-Average Exercise Price
 
Number Exercisable
 
Weighted-Average Exercise Price
2000 Plan
$
1.750

 
84,511

 
0.53
 
$
1.750

 
84,511

 
$
1.750

2000 Plan
1.875

 
112,500

 
0.73
 
1.875

 
112,500

 
1.875

2000 Plan
2.750

 
453,231

 
1.51
 
2.750

 
453,231

 
2.750

2000 Plan
3.000

 
41,600

 
2.07
 
3.000

 
41,600

 
3.000

2000 Plan
3.250

 
603,904

 
3.19
 
3.250

 
603,904

 
3.250

2000 Plan
3.410

 
569,862

 
4.02
 
3.410

 
569,862

 
3.410

2000 Plan
4.220

 
383,109

 
4.65
 
4.220

 
379,859

 
4.220

2000 Plan
6.055

 
976,000

 
6.49
 
6.055

 
654,300

 
6.055

2010 Plan
10.750

 
76,995

 
9.41
 
10.750

 
5,399

 
10.750

2010 Plan
10.950

 
140,000

 
8.71
 
10.950

 
36,000

 
10.950

2010 Plan
11.630

 
155,093

 
9.46
 
11.630

 
5,015

 
11.630

2010 Plan
11.980

 
499,650

 
9.32
 
11.980

 
4,000

 
11.980

2000 Plan
13.045

 
593,000

 
7.32
 
13.045

 
337,500

 
13.045

2010 Plan
14.810
 
60,000

 
8.40
 
14.810

 
12,000

 
14.810

2010 Plan
16.290
 
28,688

 
8.07
 
16.290

 
10,041

 
16.290

 
 
 
4,778,143

 
 
 
 

 
3,309,722

 
 


 
During the year ended December 31, 2012, a total of 1,306,145 shares were issued upon the exercise of options under the 2000 Plan at an average price of $2.651 per share. Cash received from option exercises under all stock-based payment arrangements, net, for the years ended December 31, 2012, 2011 and 2010 was $3,462,679, $6,407,804, and, $2,674,764, respectively.
Under the 2000 Plan and the 2010 Plan, all options expire if not exercised within ten years after the grant date. Historically, options generally provided for vesting over five years, with 20% vesting on the first anniversary of the grant date and 5% vesting every three months thereafter. During 2011, the Company began awarding options generally providing for vesting over five years, with 20% vesting on each of the first five anniversaries of the grant date. If the employee ceases to be employed by the Company for any reason before vested options have been exercised, the employee has 90 days to exercise options that have vested as of the date of such employee’s termination or they are forfeited. 
The Company uses the Black-Scholes option pricing model to determine the weighted-average fair value of options granted. The Company will recognize the compensation cost of stock-based awards on a straight-line basis over the vesting period of the award. 
The determination of the fair value of stock-based payment awards utilizing the Black-Scholes model is affected by the stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. The following table sets forth the significant assumptions used in the model during 2012, 2011 and 2010:
 
 
Years Ended December 31,
 
2012
 
2011
 
2010
Future dividends
$ -
 
$ -
 
$ -
Risk-free interest rate
0.82-1.25%
 
1.35-2.58%
 
2.59-3.11%
Expected volatility
32%
 
32%-33%
 
57%-59%
Expected life
6.5 years
 
6.0-6.5 years
 
6.5 years

 
The Company will continue to use judgment in evaluating the expected term, volatility and forfeiture rate related to the stock-based compensation on a prospective basis, and incorporating these factors into the Black-Scholes pricing model. Higher volatility and longer expected lives result in an increase to stock-based compensation expense determined at the date of grant. In addition, any changes in the estimated forfeiture rate can have a significant effect on reported stock-based compensation expense, as the cumulative effect of adjusting the rate for all expense amortization is recognized in the period that the forfeiture estimate is changed. If a revised forfeiture rate is higher than the previously estimated forfeiture rate, an adjustment is made that will result in a decrease to the stock-based compensation expense recognized in the accompanying consolidated financial statements. If a revised forfeiture rate is lower than the previously estimated rate, an adjustment is made that will result in an increase to the stock-based compensation expense recognized in the accompanying consolidated financial statements. These expenses will affect the direct expenses, salaries and benefits and project development costs expenses. 
The weighted-average fair value of stock options granted during the years ended December 31, 2012, 2011 and 2010, under the Black-Scholes option pricing model was $4.03, $5.59, and $7.57, respectively, per share. For the years ended December 31, 2012, 2011 and 2010, the Company recorded stock-based compensation expense of approximately $3,351,142, $2,865,706, and $2,498,660, respectively, in connection with stock-based payment awards. The compensation expense is allocated between direct expenses, salaries and benefits and project development costs in the accompanying consolidated statements of income based on the salaries and work assignments of the employees holding the options. As of December 31, 2012, there was approximately $6,718,399 of unrecognized compensation expense related to non-vested stock option awards that is expected to be recognized over a weighted-average period of 3.17 years.