Stock-Based Compensation

The Company measures stock-based compensation expense at the grant date, based on the estimated fair value of the award, and the expense is recognized over the requisite employee service period or performance period (generally the vesting period) for awards expected to vest (considering estimated forfeitures).

The Company has an amended and restated long-term incentive plan (the "Plan") that was adopted in conjunction with its initial public offering in 2004. In February 2008, the Board of Directors approved an amendment to the Plan, subject to stockholder approval, that increased the maximum number of shares of common stock available for awards under the Plan from 2,000,000 to 2,175,000 and extended the Plan's termination date. Company stockholders approved this Plan amendment on April 22, 2008, and the Plan now terminates twenty years from the date of such approval, or April 22, 2028. On March 13, 2013, the Board approved an amendment to the Plan, subject to stockholder approval, that increased the number of shares of common stock available for awards under the Plan from 2,175,000 to 2,975,000. Company stockholders approved this Plan amendment on April 24, 2013. Forfeited and expired options under the Plan become generally available for reissuance. At December 31, 2015, 370,420 shares remained available for award under the Plan.

Stock Options and Grants

The Company uses the Black-Scholes option pricing model to estimate the fair value of each option grant as of the date of grant. The volatilities are based on the 90 day historical volatility of Company common stock as the grant date. The risk free interest rate is based on zero-coupon U.S. government issues with a remaining term equal to the expected life of the option.

There were no options granted during the years ended December 31, 2015, 2014 and 2013. The Company recognized no stock-based compensation expense related to stock options for the years ended December 31, 2015, 2014 and 2013 as all options previously granted are fully vested.

On April 21, 2015, the Company authorized vested stock grants to certain directors totaling 32,357 shares. The total value of the grant was $0.7 million, which was fully expensed at the grant date, and is included in General and administrative expenses within the Consolidated Statements of Income. On April 22, 2014, the Company authorized vested stock grants to certain directors totaling 19,336 shares. The total value of the grant was $0.5 million, which was fully expensed at the grant date, and is included in General and administrative expenses within the Consolidated Statements of Income. On April 24, 2013, the Company authorized vested stock grants to certain directors totaling 21,949 shares. The total value of the grant, based on the fair value of the stock on the grant date, was $0.5 million, which was fully expensed at the grant date and is included in General and administrative expenses within the Consolidated Statements of Income.

The Company recognized $0.7 million, $0.5 million, and $0.5 million of stock based compensation expense for the years ended December 31, 2015, 2014 and 2013, respectively, which are included in General and administrative expense within the Consolidated Statements of Income. As of December 31, 2015, there was no unrecognized compensation costs related to unvested options.

A summary of the status of the stock option plans as of December 31, 2015, and changes during the years ended December 31, 2015, 2014 and 2013, are presented below:



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2012	7,101		$	5.75
Granted	—		n/a
Exercised	—		n/a
Expired	—		n/a
Outstanding at December 31, 2013	7,101		$	5.75
Granted	—		n/a
Exercised	—		n/a
Expired	—		n/a
Outstanding at December 31, 2014	7,101		$	5.75
Granted	—		n/a
Exercised	(7,101	)	5.75
Expired	—		n/a
Vested and Exercisable at December 31, 2015	—		$	—	—	$	—

The total intrinsic value of options exercised during the year ended December 31, 2013 was $0.1 million. There were no nonvested options as of December 31, 2015, 2014 and 2013.

Restricted Stock Units

During the year ended December 31, 2015, the Company authorized certain one-time grants of 3,963 restricted stock units to certain executives that vest three years from date of issuance. The restricted stock unit agreement is designed to reward performance over a three-year period.

During the year ended December 31, 2014, the Company authorized certain one-time grants of 31,099 restricted stock units to certain executives that vest five years from date of issuance. The restricted stock unit agreements are designed to reward performance over a five-year period.

During the year ended December 31, 2013, the Company authorized a one-time grant of 68,044 restricted stock units to executives that joined the Company in connection with the Central Merger. These restricted stock units vest on December 3, 2018. The restricted stock unit agreements are designed to reward performance over a five-year period. Additionally, the Company authorized a one-time grant of 4,247 restricted stock units to an executive which vest in June 2016.

The fair value of restricted stock units is determined using the market value of Company common stock on the date of the grant, and compensation expense is recognized over the vesting period. The Company estimates forfeitures at the time of the grant and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting forfeitures and records stock-based compensation expense only for those awards that are expected to vest.

A summary of the status of the restricted stock units as of December 31, 2015, and changes during the year ended December 31, 2015, 2014 and 2013, are presented below:



	Shares		Weighted Average Grant-Date Fair Value
Nonvested at December 31, 2012	723,425		$	19.78
Issued	72,291		20.40
Vested	(90,965	)	21.84
Forfeited	—		n/a
Nonvested at December 31, 2013	704,751		$	20.00
Issued	31,099		22.20
Vested	(145,421	)	22.41
Forfeited	(34,729	)	23.88
Nonvested at December 31, 2014	555,700		$	19.57
Issued	12,589		23.65
Vested	(150,073	)	20.77
Forfeited	(16,500	)	19.45
Nonvested at December 31, 2015	401,716		$	19.25

The Company recognized $1.6 million, $2.4 million and $3.8 million of stock based compensation expense related to the restricted stock units for the year ended December 31, 2015, 2014 and 2013, respectively, which is included in General and administrative expense. For the years ended December 31, 2015, 2014 and 2013, unrecognized stock-based compensation costs, net of estimated forfeitures, were $2.7 million, $4.4 million and $7.3 million, respectively. The costs related to restricted stock units that are expected to be recognized over a weighted average period of approximately 3.8 years, 4.0 years and 4.0 years for 2015, 2014 and 2013, respectively.

Performance Share Units

In September 2014, the Board of Directors authorized a performance-based incentive program under the Company's Long-Term Incentive Plan ("Performance-Based Incentive Program"), whereby the Company will issue performance share units to certain executive management individuals that represent shares potentially issuable in the future. The objective of the performance-based incentive program is to link compensation to business performance, encourage ownership of Company stock, retain executive talent, and reward executive performance. The Performance-Based Incentive Program provides participating executives with the opportunity to earn vested common stock if certain performance targets for pre-tax free cash flow are achieved over the cumulative three year period and recipients satisfy service-based vesting requirements. The stock-based compensation expense associated with unvested performance-based incentives are recognized on a straight-line basis over the shorter of the vesting period or minimum service period and dependent upon the probable outcome of the number of shares that will ultimately be issued based on the achievement of pre-tax free cash flow over the cumulative three year period.

During 2014, certain participating executives became vested in the Performance-Based Incentive Program shares based on retirement eligibility and as a result $0.2 million of stock-based compensation related to 9,687 shares were recognized in General and administrative expenses within the Consolidated Statement of Income, and which continue to be subject to achieving cumulative pre-tax free cash flow over the three-year period of 2014 through 2016.

In April 2015, the Board of Directors authorized another performance-based incentive program under the Company's Long-Term Incentive Plan ("2015 Performance-Based Incentive Program"). The 2015 Performance-Based Incentive Program is similar to the 2014 Performance-Based Incentive Program, with the exception of the number of shares ultimately to be issued is based on the achievement of pre-tax free cash flow over the cumulative three-year period of 2015 through 2017.

During 2015, certain participating executives became vested in Performance-Based Incentive Program shares based on retirement eligibility and as a result $0.1 million of stock-based compensation related to 6,915 shares were recognized in General and administrative expenses, and which continue to be subject to achieving cumulative pre-tax free cash flow over the respective three-year periods.

A summary of the status of the performance share units as of December 31, 2015, and changes during the year ended December 31, 2015 and 2014 are presented below:



	Shares		Weighted Average Grant-Date Fair Value
Nonvested at December 31, 2013	—		n/a
Issued	89,117		18.96
Vested	(9,687	)	18.96
Forfeited	—		n/a
Nonvested at December 31, 2014	79,430		18.96
Issued	125,392		21.64
Vested	(6,915	)	19.91
Forfeited	(24,056	)	20.60
Nonvested at December 31, 2015	173,851		$	20.63

The Company recognized $1.3 million and $0.3 million of stock-based compensation expense for the years ended December 31, 2015 and 2014, respectively, and is included in General and administrative expenses within the Consolidated Statement of Income. During the year ended December 31, 2015, 24,056 performance-based shares were forfeited under the Long-Term Incentive Program and became available for reissuance. During the year ended December 31, 2014, no performance-based shares were forfeited. Future compensation expense for currently outstanding awards under the Performance-Based Incentive Program could reach a maximum of $5.4 million. Stock-based compensation for the Performance-Based Incentive Program is expected to be recognized over a weighted average period of 1.6 years. There was no such program in place during 2013.