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 December 31, 2015, there were a total of 298,553 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.

The weighted-average fair value at the grant date for options issued during the three months ended December 31, 2015 was $10.28, and the weighted-average fair value at the grant date for options issued during the three months ended December 31, 2014 was $34.38. The weighted-average fair value at the grant date for options issued during the nine months ended December 31, 2015 and 2014 was $10.82 and $34.53, respectively. Fair value was estimated at grant date using the weighted-average assumptions listed below:



	Three months ended December 31,		Nine months ended December 31,
	2015	2014	2015	2014
Dividend Yield	—%	—%	—%	—%
Expected Volatility	41.51%	44.53%	41.41%	44.67%
Average risk-free rate	1.37%	1.77%	1.38%	1.77%
Expected Life	5.0 years	6.1 years	5.0 years	6.1 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, 2015 was as follows:



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding, beginning of period	1,083,767		$	69.15
Granted during period	112,400		28.45
Exercised during period	(64,103	)	43.24
Forfeited during period	(119,677	)	72.92
Expired during period	(9,958	)	61.43
Options outstanding, end of period	1,002,429		$	65.87	7.04	$	1,803,974
Options exercisable, end of period	488,081		$	64.96	5.80	$	702,630

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, 2015 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, 2015. This amount will change as the stock’s market price changes. The total intrinsic value of options exercised during the periods ended December 31, 2015 and 2014 was as follows:



	December 31, 2015		December 31, 2014
Three months ended	$	153,726	$	2,534,147
Nine months ended	$	2,107,301	$	2,973,627

As of December 31, 2015, total unrecognized stock-based compensation expense related to non-vested stock options amounted to approximately $10.9 million, which is expected to be recognized over a weighted-average period of approximately 2.8 years.

Restricted Stock

During fiscal 2016, the company granted 67,550 shares of restricted stock (which are equity classified), to certain executive officers, with a grant date weighted average fair value of $27.84. One-third of these awards will vest on each anniversary of the grant date over the next three years.

During fiscal 2014 and 2013 the Company granted 8,590 and 70,800 Group A performance based restricted stock awards to certain officers. Group A awards vested 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 December 31, 2015, 195,760 remain unforfeited and outstanding. 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%

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 compensation expense of $0.3 million and $2.0 million for the three months ended December 31, 2015 and 2014, respectively, and recognized a net reduction of compensation expense of $6.0 million and compensation expense of $6.0 million for the nine months ended December 31, 2015 and 2014, respectively, which is included as a component of general and administrative expenses in the Company’s Consolidated Statements of Operations.

As of December 31, 2015, there was approximately $1.6 million of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over the next 2.8 years based on current estimates. In addition there was approximately $11.6 million of unrecognized compensation cost related to unvested restricted stock awards, which are not expected to vest based on current estimates. If these estimates change, the $11.6 million will be expensed, accordingly, in future periods.

A summary of the status of the Company’s restricted stock as of December 31, 2015, and changes during the nine months ended December 31, 2015, are presented below:



	Shares		Weighted Average Fair Value at Grant Date
Outstanding at March 31, 2015	433,750		$	76.84
Granted during the period	67,550		27.84
Vested during the period	(91,140	)	76.02
Forfeited during the period	(149,250	)	74.10
Outstanding at December 31, 2015	260,910		$	66.01

Total share-based compensation included as a component of net income during the three and nine month periods ended December 31, 2015 and 2014 was as follows:



	Three months ended December 31,			Nine months ended December 31,
	2015		2014	2015		2014
Share-based compensation related to equity classified awards:
Share-based compensation related to stock options	$	1,719,236	2,645,017	3,226,766		6,538,234
Share-based compensation related to restricted stock, net of adjustments and exclusive of cancellations	346,865		2,018,775	(6,049,127	)	5,969,533
Total share-based compensation related to equity classified awards	$	2,066,101	4,663,792	(2,822,361	)	12,507,767

The Company no longer believes that achieving the earnings per share target of $14.50 or greater per share is probable during the measurement period which ends on March 31, 2017, therefore the Company released approximately $6.0 million of compensation expense during the nine months ended December 31, 2015. The Company also released approximately $3.7 million of compensation expense for the nine months ended December 31, 2015 related to the resignation and retirement of certain executives.