EXECUTIVE STOCK PLANS AND STOCK-BASED COMPENSATION

Executive Stock Plans

The Company’s shareholders have approved executive stock plans under which officers, directors, and employees of the Company may receive grants and awards of common stock, restricted stock, restricted stock units (“RSUs”), performance share awards (“PSAs”), stock appreciation rights (“SARs”), incentive stock options, and non-qualified stock options. Currently, grants are outstanding under the 1997 Executive Stock Plan, the 2002 Executive Stock Plan, and the 2007 Stock Incentive Plan. Together, these plans are referred to in this disclosure as the “Plans.” Up to 2 million shares of the Company’s common stock may be issued under each of the Plans; however, direct awards of common stock, restricted stock, or RSUs are limited to 500,000 shares under the 2002 Executive Stock Plan and 1,350,000 shares under the 2007 Stock Incentive Plan.

The Company’s practice is to award grants of stock-based compensation to officers at the first regularly-scheduled meeting of the Executive Compensation, Nominating, and Corporate Governance Committee of the Board of Directors (the “Compensation Committee”) in the fiscal year following the public release of the Company’s financial results for the prior year. Since fiscal year 2006, grants have been limited to restricted stock, RSUs, PSAs, and stock-settled SARs. In fiscal years 2014 and 2015, the Compensation Committee has awarded only grants of RSUs and PSAs. Outside directors automatically receive restricted stock units following each annual meeting of shareholders.

Non-qualified stock options and SARs granted under the Plans have an exercise price equal to the market price of a share of common stock on the date of grant. No stock options are currently outstanding under the Plans. SARs granted under the Plans vest in equal one-third tranches one, two, and three years after the grant date and expire 10 years after the grant date, except that SARs granted after fiscal year 2007 expire on the earlier of 3 years after the grantee’s retirement date or 10 years after the grant date. RSUs awarded under the Plans vest 5 years from the grant date and are then paid out in shares of common stock. Under the terms of the RSU awards, grantees receive dividend equivalents in the form of additional RSUs that vest and are paid out on the same date as the original RSU grant. The PSAs vest 3 years from the grant date, are paid out in shares of common stock at the vesting date, and do not carry rights to dividends or dividend equivalents prior to vesting. Shares ultimately paid out under PSA grants are dependent on the achievement of predetermined performance measures established by the Compensation Committee and can range from zero to 150% of the stated award. RSUs awarded to outside directors vest 3 years after the grant date, and restricted stock vests upon the individual’s retirement from service as a director.

Stock Options and SARs

The following tables summarize the Company’s stock option and SAR activity and related information for fiscal years 2013 through 2015:



	Shares		Weighted-Average Exercise Price		Weighted-Average Contractual Term (in years)	Aggregate Intrinsic Value
Fiscal Year Ended March 31, 2013:
Outstanding at beginning of year	855,850		$	46.01
Exercised	(407,758	)	41.21
Cancelled/expired	(29,615	)	54.83
Outstanding at end of year	418,477		50.07

Fiscal Year Ended March 31, 2014:
Exercised	(161,137	)	42.48
Outstanding at end of year	257,340		54.83

Fiscal Year Ended March 31, 2015:
Exercised	(63,539	)	38.50
Cancelled/expired	(24,200	)	62.66
Outstanding at end of year	169,601		$	59.82	2.07	$	144



	Fiscal Year Ended March 31,
	2015		2014		2013
Total intrinsic value of stock options and SARs exercised	$	1,091	$	2,816	$	4,249
Total fair value of SARs vested	$	375	$	769	$	1,460

All of the grants outstanding at the end of fiscal year 2015 in the above tables represent SARs, all of which were exercisable at the end of the year. Intrinsic value and aggregate intrinsic value in the tables above are based on the difference between the market price of the underlying shares at the exercise date or balance sheet date, as applicable, and the exercise prices of the stock options and SARs. The closing market prices used to determine the aggregate intrinsic value at the end of each fiscal year were as follows: $47.16 at March 31, 2015, $55.89 at March 31, 2014, and $56.04 at March 31, 2013.

RSUs, Restricted Stock, and PSAs

The following table summarizes the Company’s RSU, restricted stock, and PSA activity for fiscal years 2013 through 2015:



	RSUs				Restricted Stock				PSAs
	Shares		Weighted-Average Grant Date Fair Value		Shares		Weighted-Average Grant Date Fair Value		Shares		Weighted-Average Grant Date Fair Value
Fiscal Year Ended March 31, 2013:
Unvested at beginning of year	291,279		$	43.72	67,400		$	41.91	142,466		$	31.45
Granted	87,780		44.06		—		—		92,425		35.25
Vested	(86,925	)	52.42		(7,550	)	43.74		(94,725	)	29.67
Forfeited	—		—		—		—		(5,149	)	36.15
Unvested at end of year	292,134		41.23		59,850		41.68		135,017		35.12

Fiscal Year Ended March 31, 2014:
Granted	70,092		57.79		—		—		52,400		53.56
Vested	(69,046	)	44.89		(11,750	)	39.02		(32,464	)	33.95
Forfeited	—		—		—		—		(5,566	)	37.45
Unvested at end of year	293,180		44.33		48,100		42.33		149,387		41.76

Fiscal Year Ended March 31, 2015:
Granted	94,539		51.86		—		—		57,580		46.41
Vested	(123,322	)	42.02		—		—		(50,092	)	31.95
Forfeited	—		—		—		—		(3,400	)	53.56
Unvested at end of year	264,397		$	48.10	48,100		$	42.33	153,475		$	45.58

Shares granted and vested in the above table include dividend equivalents on RSUs and any shares awarded above the base grant under the performance provisions of PSAs. Shares forfeited or canceled include any reductions from the base PSA grant under those same performance provisions. The fair values of RSUs, restricted stock, and PSAs are based on the market price of the common stock on the grant date.

Stock-Based Compensation Expense

Fair value expense for stock-based compensation is recognized ratably over the period from grant date to the earlier of (1) the vesting date of the award, or (2) the date the grantee is eligible to retire without forfeiting the award. For employees who are already eligible to retire at the date an award is granted, the total fair value of the award is recognized as expense at the date of grant. For the fiscal years ended March 31, 2015, 2014, and 2013, total stock-based compensation expense and the related income tax benefit recognized were as follows:



	Fiscal Year Ended March 31,
	2015		2014		2013
Total stock-based compensation expense	$	6,230	$	6,278	$	6,171
Income tax benefit recorded on stock-based compensation expense	$	2,181	$	2,197	$	2,160

At March 31, 2015, the Company had $5.3 million of unrecognized compensation expense related to stock-based awards, which will be recognized over a weighted-average period of approximately 1.3 years. Cash proceeds from the exercise of stock options were $3.9 million for the fiscal year ended March 31, 2013, and were not material for the fiscal years ended March 31, 2014 or 2015.