|12 Months Ended|
Dec. 31, 2011
9. STOCK-BASED COMPENSATION
We have one active share-based award plan, the 2008 Omnibus Incentive Plan which was approved by our shareholders in 2008, that provides our directors, officers and certain employees with stock options and nonvested stock. The plan is described below. We expect to issue common shares held by treasury stock upon the exercise of stock options or once nonvested shares vest. Total stock-based compensation expense in our Consolidated Statements of Income during the twelve months ended December 31, 2011, 2010 and 2009, was as follows:
The total income tax benefit recognized for stock-based compensation expense was $8.7 million, $7.8 million and $6.9 million for the twelve months ended December 31, 2011, 2010 and 2009, respectively.
Benefits of tax deductions in excess of recognized compensation cost are reported as a financing cash flow, rather than as an operating cash flow. This requirement reduced operating cash flows and increased financing cash flows by $1.2 million, $3.5 million and $1.3 million during the twelve months ended December 31, 2011, 2010 and 2009, respectively.
Stock Options. The 2008 Omnibus Incentive Plan provides that qualified and nonqualified stock options may be granted to officers and other employees. In conjunction with our acquisition of TALX, we assumed options outstanding under the legacy TALX stock option plan, which was approved by TALX shareholders. In addition, stock options remain outstanding under three shareholder-approved plans and three non-shareholder-approved plans from which no new grants may be made. The 2008 Omnibus Incentive Plan requires that stock options be granted at exercise prices not less than market value on the date of grant. Generally, stock options are subject to graded vesting for periods of up to three years based on service, with 33% vesting for each year of completed service, and expire ten years from the grant date.
We use the binomial model to calculate the fair value of stock options granted on or after January 1, 2006. The binomial model incorporates assumptions regarding anticipated employee exercise behavior, expected stock price volatility, dividend yield and risk-free interest rate. Anticipated employee exercise behavior and expected post-vesting cancellations over the contractual term used in the binomial model were primarily based on historical exercise patterns. These historical exercise patterns indicated there was not significantly different exercise behavior between employee groups. For our expected stock price volatility assumption, we weighted historical volatility and implied volatility. We used daily observations for historical volatility, while our implied volatility assumption was based on actively traded options related to our common stock. The expected term is derived from the binomial model, based on assumptions incorporated into the binomial model as described above.
The fair value for stock options granted during the twelve months ended December 31, 2011, 2010 and 2009, was estimated at the date of grant, using the binomial model with the following weighted-average assumptions:
The following table summarizes changes in outstanding stock options during the twelve months ended December 31, 2011, as well as stock options that are vested and expected to vest and stock options exercisable at December 31, 2011:
The aggregate intrinsic value amounts in the table above represent the difference between the closing price of Equifax’s common stock on December 31, 2011 and the exercise price, multiplied by the number of in-the-money stock options as of the same date. This represents the value that would have been received by the stock option holders if they had all exercised their stock options on December 31, 2011. In future periods, this amount will change depending on fluctuations in Equifax’s stock price. The total intrinsic value of stock options exercised during the twelve months ended December 31, 2011, 2010 and 2009, was $9.9 million, $14.7 million and $5.1 million, respectively. At December 31, 2011, our total unrecognized compensation cost related to stock options was $7.7 million with a weighted-average recognition period of 1.5 years.
The following table summarizes changes in outstanding options and the related weighted-average exercise price per share for the twelve months ended December 31, 2010 and 2009:
Nonvested Stock. Our 2008 Omnibus Incentive Plan also provides for awards of nonvested shares of our common stock that can be granted to executive officers, employees and directors. Nonvested stock awards are generally subject to cliff vesting over a period between one to three years based on service.
The fair value of nonvested stock is based on the fair market value of our common stock on the date of grant. However, since our nonvested stock does not pay dividends during the vesting period, the fair value on the date of grant is reduced by the present value of the expected dividends over the requisite service period (discounted using the appropriate risk-free interest rate).
The following table summarizes changes in our nonvested stock during the twelve months ended December 31, 2011, 2010 and 2009 and the related weighted-average grant date fair value:
The total fair value of nonvested stock that vested during the twelve months ended December 31, 2011, 2010 and 2009, was $12.1 million, $10.3 million and $6.5 million, respectively, based on the weighted-average fair value on the vesting date, and $11.7 million, $12.1 million and $7.9 million, respectively, based on the weighted-average fair value on the date of grant. At December 31, 2011, our total unrecognized compensation cost related to nonvested stock was $17.1 million with a weighted-average recognition period of 1.9 years.
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.
Reference 1: http://www.xbrl.org/2003/role/presentationRef