16.

STOCK BASED COMPENSATION

Share Based Compensation:

The Company originally established a Stock Option and Incentive Plan in 1997 (the “1997 Plan”). On June 1, 2006, the Company adopted the Amended and Restated Stock Option and Incentive Plan (the “Stock Option Plan”), which amended and extended the 1997 Plan. Under the plan, a total of eight million shares of Common Stock were reserved for issuance. The dates on which options granted under the Stock Option Plan become first exercisable are determined by the Compensation Committee of the Board of Directors, but generally vest over a four-year period from the date of grant. The term of any option may not exceed ten years from the date of grant. No stock options were issued for the three months ended June 30, 2014 and 2013.

The Company accounts for share-based compensation based on the estimated fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Statement of Comprehensive Income. Share-based compensation expense recognized as above for the three months ended June 30, 2014 and 2013 was $1.59 million and $1.15 million, respectively, including a charge for restricted stock. Share-based compensation expense recognized as above for the six months ended June 30, 2014 and 2013 was $3.01 million and $2.17 million, respectively, including a charge for restricted stock.

The shares issued upon the exercise of the options are new share issues.

Restricted Stock:

On different dates during the years ended December 31, 2009, 2008, and 2007, the Company issued 12,224, 80,676 and 14,464 shares, respectively, of incentive restricted stock to its non-employee directors and certain employees. The shares were granted to employees for their future services as a retention tool at a zero exercise price, with the restrictions on transferability lapsing with regard to 25% of the shares issued on or after the first, second, third and fourth anniversary of the grant dates. Generally, the shares to non-employee directors are granted for their future services starting from the date of the annual meeting to the date of the following annual meeting.

On different dates during the year ended December 31, 2011 and 2010, the Company issued restricted stock awards of 91,364 and 209,358, respectively, to its non-employee directors and some employees as well as to some employees of its subsidiaries. The restricted stock awards were granted to employees for their future services as a retention tool at a zero exercise price, and vest in shares with regards to 25% of the awards issued on or after the first, second, third and fourth anniversary of the grant dates.

On different dates during the year ended December 31, 2013 and 2012, and for the six months ended June 30, 2014 the Company issued restricted stock awards of 93,528, 108,828 and 86,284 respectively, to its non-employee directors and some employees as well as to some employees of its subsidiaries. The restricted stock awards were granted to employees for their future services as a retention tool at a zero exercise price and vest in shares with regards to 25% of the awards issued on or after the first, second, third and fourth anniversary of the grant dates.

The impact on the Company’s results of operations of recording stock-based compensation (including impact of restricted stock) for the three and six months ended June 30, 2014 and 2013 was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	*(in thousands)*				*(in thousands)*
Cost of revenues	$	472	$	320	$	932	$	619
Selling, general and administrative expenses		1,115		835		2,081		1,548

	$	1,587	$	1,155	$	3,013	$	2,167

A summary of the activity for restricted stock awards granted under our stock-based compensation plans as of June 30, 2014 and changes during the period ended is presented below:


	Number Of Awards		Weighted Average Grant Date Fair Value
Unvested at January 1, 2014		250,646	$	57.27
Granted		86,284		82.82
Vested		49,893		38.43

Unvested at June 30, 2014		287,037	$	68.23

As of June 30, 2014, $15.9 million of total remaining unrecognized stock-based compensation cost related to restricted stock awards is expected to be recognized over the weighted-average remaining requisite service period of 2.8 years.