14. Stock‑Based Compensation

Under the 2012 Equity Incentive Plan (the “2012 Plan”) grants of stock options, restricted stock and restricted stock units, and performance share units have been, and will be, determined and administered by the compensation committee of the Board of Directors. Total stock‑based compensation expense was $5.0 million, $5.6 million and $4.8 million for the years ended December 31, 2016, 2015 and 2014, respectively. Stock-based compensation expense is recognized using the straight‑line method over the vesting period and generally vests over a three‑year vesting period. Certain awards provide for accelerated vesting when the sum of an employee's age and years of service is at least 75. We recognize forfeitures as they occur. Total income tax benefit recognized for stock‑based compensation arrangements was $1.9 million, $2.1 million and $1.8 million for each of the years ended December 31, 2016, 2015 and 2014. Subsequent to our adoption of ASU 2016-09 in the second quarter of 2016, we elected to apply the presentation requirements for cash flows related to excess tax benefits prospectively. As such, we present, in the consolidated statements of cash flows, the benefits of tax deductions in excess of recognized compensation costs (“excess tax benefits”) as operating cash flows for the year ended 2016 and as financing cash flows for the years ended 2015 and 2014.

We generally issue treasury shares for stock options and restricted stock, unless treasury shares are not available. Upon the vesting of restricted shares, we have allowed the holder to elect to surrender an amount of shares to meet their statutory tax withholding requirements. These shares are accounted for as treasury stock based upon the value of the stock on the date of vesting.

Stock Options

The following table summarizes activity under our stock option plans (shares in thousands):


	Year Ended
	December 31,
	2016
		Weighted-
		Average
Stock Options	Shares	Exercise Price
Outstanding at beginning of year	724	$	14.69
Granted	102	$	30.36
Exercised	(112)	$	14.11
Forfeited	—	$	—
Expired	—	$	—
Outstanding at end of year	714	$	17.01
Options exercisable at end of year	473

The total intrinsic value of options exercised during the years ended December 31, 2016, 2015 and 2014 was $1.9 million, $3.9 million and $0.4 million, respectively. Stock options exercisable as of December 31, 2016 have a weighted‑average remaining contractual term of 5.3 years and an aggregate intrinsic value of $9.2 million. As of December 31, 2016, we have 0.7 million options that are vested or expected to vest; these options have a weighted average exercise price of $17.01 per share, have a weighted‑average remaining contractual term of 6.4 years and an aggregate intrinsic value of $11.6 million.

The following table summarizes information about stock options outstanding at December 31, 2016 (shares in thousands):


	Options Outstanding				Options Exercisable
		Weighted-
		Average
	Number	Remaining	Weighted-		Number	Weighted-
	Outstanding at	Contractual	Average		Exercisable at	Average
Range of Exercise Prices	12/31/2016	Life	Exercise Price		12/31/2016	Exercise Price
$11.00 - $15.00	361	4.63	$	12.64	361	$	12.64
$15.01 - $20.00	251	7.72	$	17.89	112	$	17.30
$20.01 - $30.36	102	9.23	$	30.36	—	$	—
$11.00 - $30.36	714	6.37	$	17.01	473	$	13.74

The fair value of each option award is estimated, based on several assumptions, on the date of grant using the Black‑Scholes option valuation model. The fair values and the assumptions used for the 2016, 2015 and 2014 grants are shown in the table below:


	Year Ended December 31,
	2016		2015		2014
Weighted-average fair value per share of options granted	$	9.94	$	6.33	$	6.24
Fair value assumptions:
Expected dividend yield		0.97%		1.51%		1.34%
Expected stock price volatility		37.9%		38.4%		45.2%
Risk-free interest rate		1.41%		1.50%		1.91%
Expected term		5.3 years		5.6 years		5.6 years

Stock options are accounted for as equity instruments. As of December 31, 2016, the unrecognized compensation cost related to stock options was $0.8 million, which is expected to be recognized over a weighted‑average period of 1.5 years. The total fair value of options vested during the year ended December 31, 2016 was $0.9 million.

The following table summarizes information about nonvested stock option awards as of December 31, 2016 and changes for the year ended December 31, 2016 (shares in thousands):


		Weighted-Average
		Grant Date
Stock Options	Shares	Fair Value
Nonvested at December 31, 2015	287	$	6.07
Granted	102	$	9.94
Vested	(148)	$	5.85
Forfeited	—		—
Nonvested at December 31, 2016	241	$	7.83

Restricted Stock and Restricted Stock Units

The following table summarizes activity under our restricted stock plans (shares in thousands):


	Year Ended
	December 31,
	2016
		Weighted
		Average Grant
Restricted Stock and Restricted Stock Units	Shares	Date Fair Value
Unvested at beginning of year	149	$	17.48
Granted	85	$	30.25
Vested	(108)	$	20.61
Forfeited	—	$	—
Unvested at end of year	126	$	23.41

Approximately $1.3 million of compensation expense related to restricted stock and restricted stock units will be recognized over a weighted‑average period of 1.6 years. The total fair value of shares vested during the year ended December 31, 2016 was $2.2 million. The weighted‑average fair value per share of restricted stock shares and units awarded during 2016, 2015 and 2014 was $30.25, $20.64 and $15.80, respectively. The aggregate intrinsic value of restricted stock vested during the years ended December 31, 2016, 2015 and 2014 was $3.6 million, $3.4 million and $2.9 million, respectively.

Performance Stock Units

Under the 2012 Plan, we granted dollar‑denominated performance vesting restricted stock units (“PSUs”), which cliff vest at the end of a three‑year performance period. The PSUs are subject to two performance measures; 50% of the PSUs are based on the annual performance of our stock price relative to a group of our peers (total shareholder return) and 50% of the PSUs are measured based on meeting or exceeding a pre‑determined annual earnings per share target as set by our board of directors (EPS). Depending on the Company’s performance in relation to the established performance measures, the awards may vest at zero to a maximum of 2.0 times the dollar‑denominated award granted at target. Upon achievement of the necessary performance metrics, the award will be determined in dollars and may be settled in cash or stock based on the market price of the Company’s common stock at the end of the performance period, at our discretion.

Compensation expense for dollar‑denominated performance units will ultimately be equal to the final dollar value awarded to the grantee upon vesting, settled either in cash or stock. However, throughout the performance period we must record an accrued expense based on an estimate of that future payout. For units determined by EPS performance, the awards are evaluated quarterly against established targets in order to estimate the liability throughout the vesting period. For units determined by total shareholder return performance, a Monte Carlo simulation model was used to estimate accruals throughout the vesting period. The model simulates our total shareholder return and compares it against our peer group over the three‑year performance period to produce a predicted distribution of relative share performance. This is applied to the reward criteria to give an expected value of the total shareholder return element. The calculated fair market value as of December 31, 2016 was $4.8 million. Of this amount, $1.8 million relates to the PSUs granted in 2014 whose performance period ended December 31, 2016. These awards will be settled within the upcoming year either in cash or stock. The expense related to performance stock units for the years ended December 31, 2016, 2015 and 2014 was $1.6 million, $2.6 million and $1.8 million, respectively. At the December 31, 2016 calculated fair market value, approximately $1.5 million of compensation expense related to performance stock units will be recognized over a weighted‑average period of 1.1 years.