STOCK-BASED COMPENSATION

Stock Option Plans

The Company has a 2002 Stock Option Plan, a 2005 Stock Option Plan, a 2008 Stock Option Plan, and a 2011 Stock Option Plan for the benefit of certain directors, officers, and key employees. Under these plans, 4,100,000 shares of authorized common stock have been reserved for issuance pursuant to grants approved by the Compensation and Stock Option Committee of the Board of Directors. Stock options granted under these plans have a maximum duration of 10 years, may be subject to certain vesting requirements, which are generally five years for officers, directors, and key employees, and are priced at the market value of the Company's common stock on the date of grant of the option. At December 31, 2013, there were 303,527 shares available for grant under the plans.

Stock based compensation is recognized as provided under FASB ASC Topic 718-10 and FASB ASC Topic 505-50. FASB ASC Topic 718-10 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the requisite service period (generally the vesting period) in the consolidated financial statements based on their fair values. The impact of forfeitures that may occur prior to vesting is also estimated and considered in the amount recognized. Stock option compensation is recognized as an expense over the unvested portion of all stock option awards granted based on the fair values estimated at grant date in accordance with the provisions of FASB ASC Topic 718-10. The Company has applied the Black-Scholes valuation model in determining the fair value of the stock option awards. Compensation expense is recognized only for those options expected to vest, with forfeitures estimated based on historical experience and future expectations.

The weighted-average fair value at the grant date for options issued during the three and nine months ended December 31, 2013 was $44.41. The weighted-average fair value at the grant date for options issued during the three and nine months ended December 31, 2012 was $36.04. This fair value was estimated at grant date using the weighted-average assumptions listed below.



	Three months ended		Nine months ended
	December 31,		December 31,
	2013	2012	2013	2012
Dividend yield	—%	—%	—%	—%
Expected Volatility	54.62%	56.15%	54.62%	56.15%
Average risk-free interest rate	1.52%	0.80%	1.52%	0.80%
Expected life	5.5 years	5.6 years	5.5 years	5.6 years

The expected stock price volatility is based on the historical volatility of the Company's stock for a period approximating the expected life. The expected life represents the period of time that options are expected to be outstanding after the grant date. The risk-free rate reflects the interest rate at grant date on zero-coupon U.S. governmental bonds having a remaining life similar to the expected option term.

Option activity for the nine months ended December 31, 2013 was as follows:



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding, beginning of period	1,249,585		$	54.90
Granted during period	196,860		89.03
Exercised during period	(172,755	)	38.82
Forfeited during period	(60,220	)	66.73
Expired during period	(740	)	32.62
Options outstanding, end of period	1,212,730		$	62.16	7.80	$	31,076,373
Options exercisable, end of period	329,000		$	44.12	5.75	$	14,280,979

The aggregate intrinsic value reflected in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price on December 31, 2013 and the exercise price, multiplied by the number of in-the-money options) that would have been received by option holders had all option holders exercised their options as of December 31, 2013. This amount will change as the stock’s market price changes. The total intrinsic value of options exercised during the periods ended December 31, 2013 and 2012 was as follows:



	December 31, 2013		December 31, 2012
Three months ended	$	6,821,396	$	5,377,474
Nine months ended	$	8,972,609	$	10,327,163

As of December 31, 2013, total unrecognized stock-based compensation expense related to non-vested stock options amounted to approximately $23.4 million, which is expected to be recognized over a weighted-average period of approximately 3.9 years.

Restricted Stock

On November 5, 2013 the Company granted 1,940 shares of restricted stock (which are equity classified), with a grant date fair value of $89.21 per share, respectively, to certain officers. On December 12, 2013 the Company granted 2,650 shares of restricted stock (which are equity classified), with a grant date fair value of $86.52 per share to a certain officer. The 4,590 shares will vest on April 30, 2015 based on the Company's achievement of the following performance goals as of March 31, 2015:



EPS Target		Restricted Shares Eligible for Vesting (Percentage of Award)
$10.29		100%
$9.76		67%
$9.26		33%
Below $9.26		0%

On November 5, 2013 the Company granted 13,060 shares of restricted stock (which are equity classified), with a grant date fair value of $89.21 per share, respectively, to certain officers. On December 12, 2013 the Company granted 17,600 shares of restricted stock (which are equity classified), with a grant date fair value of $86.52 per share to a certain officer. The 30,660 shares will vest as follows, if the Company achieves the following performance goals during any successive trailing four quarters during the measurement period beginning on September 30, 2013 and ending March 31, 2017:



Trailing 4 quarter EPS Target		Restricted Shares Eligible for Vesting (Percentage of Award)
$13.00		25%
$14.50		25%
$16.00		25%
$18.00		25%

On February 5, 2013, the Company granted 85,000 shares of restricted stock (which are equity classified), with a grant date fair value of $77.31 per share, respectively, to certain officers. The remaining unforfeited 50,000 shares will vest as follows, if the Company achieves the following performance goals during any successive trailing four quarters during the measurement period beginning on October 1, 2012 and ending March 31, 2017:



Trailing 4 quarter EPS Target		Restricted Shares Eligible for Vesting (Percentage of Award)
$13.00		25%
$14.50		25%
$16.00		25%
$18.00		25%

On December 7, 2012 , the Company granted 69,600 shares of restricted stock (which are equity classified), with a grant date fair value of $74.08 per share, respectively, to certain officers and certain independent directors. On December 11, 2012 the Company granted 1,200 shares of restricted stock (which are equity classified), with a grant date fair value of $73.41 per share, respectively, to a certain officer. The remaining unforfeited 59,800 shares will vest on April 30, 2015 based on the Company’s achievement of the following performance goals as of March 31, 2015:



EPS Target		Restricted Shares Eligible for Vesting (Percentage of Award)
$10.29		100%
$9.76		67%
$9.26		33%
Below $9.26		0%

On December 7, 2012, the Company granted 350,900 shares of restricted stock (which are equity classified), with a grant date fair value of $74.08 per share, respectively, to certain officers and certain independent directors. On December 11, 2012, the Company granted 7,800 shares of restricted stock (which are equity classified), with a grant date fair value of $73.41 per share, respectively, to a certain officer. The remaining unforfeited 319,700 shares will vest as follows, if the Company achieves the following performance goals during any successive trailing four quarters during the measurement period beginning on October 1, 2012 and ending March 31, 2017:



Trailing 4 quarter EPS Target		Restricted Shares Eligible for Vesting (Percentage of Award)
$13.00		25%
$14.50		25%
$16.00		25%
$18.00		25%

On November 7, 2011, the Company granted 15,077 shares of restricted stock (which are equity classified), with a grant date fair value of $67.70 per share, to certain executive officers. One-third of the restricted stock vested immediately, one-third vested on November 7, 2012, and 3,249 shares vested on November 7, 2013, respectively. On that same date, the Company granted an additional 24,200 shares of restricted stock (which are equity classified), with a grant date fair value of $67.70 per share, to certain officers. One-third of the restricted stock vested on November 7, 2012, and one-third of the restricted stock vested on November 7, 2013 and one-third will vest on November 7, 2014, respectively. On that same date, the Company granted an additional 11,139 shares of restricted stock (which are equity classified), with a grant date fair value of $67.70 per share, to certain executive officers. The remaining unforfeited 7,275 shares will vest on April 30, 2014 based on the Company’s compounded annual EPS growth according to the following schedule:



Vesting Percentage		Compounded Annual EPS Growth
100%		15% or higher
67%		12% - 14.99%
33%		10% - 11.99%
0%		Below 10%

On November 8, 2010, the Company granted 29,080 shares of restricted stock (which are equity classified), with a grant date fair value of $43.04 per share, to certain officers. One-third of the restricted stock vested immediately, one-third vested on November 8, 2011 and the final third vested on November 8, 2012, respectively. On that same date, the Company granted an additional 15,871 shares of restricted stock (which are equity classified), with a grant date fair value of $43.04 per share, to certain executive officers. The 15,871 shares vested on April 30, 2013.

Compensation expense related to restricted stock is based on the number of shares expected to vest and the fair market value of the common stock on the grant date. The Company recognized approximately $0.3 and $1.0 million of compensation expense for the three months ended December 31, 2013 and December 31, 2012, respectively, and recognized approximately $4.4 million and $2.8 million, respectively, for the nine months ended December 31, 2013 and 2012 related to restricted stock. The Company reversed previously recorded share based compensation expense of $1.5 million for the three months ended December 31, 2013 and $2.2 million for the nine months ended December 31, 2013, which is included as a component of general and administrative expenses in the Company’s Consolidated Statements of Operations.

As of December 31, 2013, there was approximately $22.0 million of unrecognized compensation cost related to unvested restricted stock awards granted, which is expected to be recognized over the next 2.8 years. In addition there was approximately $5.3 million of unrecognized compensation cost related to unvested restricted stock awards granted, which are not expected to vest based on current estimates. If these estimates change the $5.3 million could be expensed in future periods.

A summary of the status of the Company’s restricted stock as of December 31, 2013, and changes during the nine months ended December 31, 2013, are presented below:



	Shares		Weighted Average Fair Value at Grant Date
Outstanding at March 31, 2013	562,456		$	73.32
Granted during the period	35,250		87.66
Vested during the period	(27,106	)	53.26
Forfeited during the period	(90,589	)	74.93
Outstanding at December 31, 2013	480,011		$	75.20

Total share-based compensation included as a component of net income during the three months and nine months ended December 31, 2013 and 2012 was as follows:



	Three months ended December 31,			Nine months ended December 31,
	2013		2012	2013		2012
Share-based compensation related to equity classified awards:
Share-based compensation related to stock options	$	2,884,602	2,370,084	$	8,024,370	4,863,099
Share-based compensation related to restricted stock units	257,758		1,012,904	4,364,474		2,848,405
Total share-based compensation related to equity classified awards	$	3,142,360	3,382,988	$	12,388,844	7,711,504