Notes to CoNsolidated FiNaNCial statemeNts Note 10 – Impairment and Restructuring Charges (continued) NOTE 11 – sTOCK COMPENsATION PlANs The following is a rollforward of the consolidated restructuring accrual for the years ended December 31: The restructuring accrual at December 31, 2011 and 2010 was included in other current liabilities on the Consolidated Balance Sheets.  The accrual at December 31, 2011 included $2.8 million of severance and related benefits, which are expected to be paid by June  2012. The remainder of the restructuring accrual at December 31, 2011 primarily represented environmental exit costs, which are  principally related to Sao Paulo, Brazil. As of December 31, 2011, the Company has $14.8 million reserved for environmental matters, of  which $10.5 million relates to Sao Paulo, Brazil. The Company adjusts environmental remediation accruals based on the best available  estimate of costs to be incurred, the timing and extent of remedial actions required by governmental authorities and the amount of the  Company’s liability in proportion to other responsible parties. The Company’s estimated total liability for this site ranges from a minimum  of $10.5 million to a maximum of $16.1 million. It is possible that the estimate may change in the near term. Under the Company’s long-term incentive plan, shares of the Company’s common stock have been made available to grant, at the  discretion of the Compensation Committee of the Board of Directors, to officers and key employees in the form of stock option awards.  Stock option awards typically have a ten-year term and generally vest in 25% increments annually beginning on the first anniversary  of the date of grant. In addition to stock option awards, the Company has granted restricted shares under the long-term incentive  plan. Restricted shares typically vest in 25% increments annually beginning on the first year anniversary of the date of grant and are  expensed over the vesting period. During 2011, 2010 and 2009, the Company recognized stock-based compensation expense of $9.4 million ($5.9 million after tax or $0.06  per diluted share), $8.8 million ($5.6 million after tax or $0.06 per diluted share) and $7.0 million ($4.5 million after tax or $0.05 per diluted  share), respectively, for stock option awards. The fair value of stock option awards granted during 2011, 2010 and 2009 was estimated at the date of grant using a Black-Scholes  option-pricing method with the following assumptions: Historical information was the primary basis for the selection of the expected dividend yield, expected volatility and the expected lives  of the options. The dividend yield was calculated based upon the last dividend prior to the grant compared to the trailing 12 months’  daily stock prices. The risk-free interest rate was based upon yields of U.S. zero coupon issues with a term equal to the expected life of  the option being valued. Forfeitures were estimated at 4%. 2011 2010 Beginning balance, January 1 $ 22.1 $ 34.0 Expense  13.9   17.0  Payments  (14.2)  (28.9) Ending balance, December 31 $ 21.8 $ 22.1 2011 2010 2009 Weighted average fair value per option $ 19.93 $ 9.04 $ 4.44 Risk-free interest rate  2.76% 2.65% 2.04% Dividend yield  2.00% 1.81% 2.65% Expected stock volatility  0.481 0.470 0.430 Expected life – years  6 6 6 62 THE TIMKEN COMPANY