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, a total of 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 June 30, 2014, there were a total of 374,893 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 grant date fair values. The impact of forfeitures that may occur prior to vesting is also estimated and considered in the amount recognized. The Company has applied the Black-Scholes valuation model in determining the grant date 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.

There were no option grants during the quarters ended June 30, 2014 or June 30, 2013.

Option activity for the three months ended June 30, 2014 was as follows:



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding, beginning of period	1,096,000		$	63.81
Granted during period	—		—
Exercised during period	(3,470	)	22.30
Forfeited during period	(13,100	)	66.50
Expired during period	(500	)	67.41
Options outstanding, end of period	1,078,930		$	63.91	7.37	$	15,759,061
Options exercisable, end of period	233,020		$	44.47	4.76	$	7,337,260

The aggregate intrinsic value reflected in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price on June 30, 2014 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 June 30, 2014. This amount will change as the stock’s market price changes. The total intrinsic value of options exercised during the periods ended June 30, 2014 and 2013 was as follows:



	June 30, 2014		June 30, 2013
Three months ended	$	197,660	$	1,043,402

As of June 30, 2014, total unrecognized stock-based compensation expense related to non-vested stock options amounted to approximately $18.5 million, which is expected to be recognized over a weighted-average period of approximately 3.4 years.

Restricted Stock

During Fiscal 2014 and 2013 the Company granted 8,590 and 70,800 Group A performance based restricted stock awards to certain officers. As of June 30, 2014, 60,390 remain unforfeited. Group A awards 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%

During Fiscal 2014 and 2013 the Company granted 56,660 and 443,700 Group B performance based restricted stock awards to certain officers. As of June 30, 2014, 373,360 remain unforfeited. Group B awards will vest as follows, if the Company achieves the following performance goals during any successive trailing four quarters during the measurement period ending on 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 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 of the restricted stock 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 5,223 shares vested 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%

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 $1.8 million and $2.2 million of compensation expense for the three months ended June 30, 2014 and June 30, 2013, respectively, which is included as a component of general and administrative expenses in the Company’s Consolidated Statements of Operations.

As of June 30, 2014, there was approximately $16.2 million of unrecognized compensation cost related to unvested restricted stock awards granted, which is expected to be recognized over the next 2.4 years. In addition there was approximately $6.7 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 $6.7 million could be expensed in future periods.

A summary of the status of the Company’s restricted stock as of June 30, 2014, and changes during the three months ended June 30, 2014, are presented below:



	Shares		Weighted Average Fair Value at Grant Date
Outstanding at March 31, 2014	461,959		$	76.49
Granted during the period	—		—
Vested during the period	(5,223	)	67.70
Forfeited during the period	(15,594	)	73.84
Outstanding at June 30, 2014	441,142		$	76.69

Total share-based compensation included as a component of net income during the three months ended June 30, 2014 and 2013 was as follows:



	Three months ended June 30,
	2014		2013
Share-based compensation related to equity classified awards:
Share-based compensation related to stock options	$	1,892,821	2,495,913
Share-based compensation related to restricted stock units	1,802,816		2,188,987
Total share-based compensation related to equity classified awards	$	3,695,637	4,684,900