6.Stock-Based Compensation

Total stock-based compensation expense charged as a selling, general and administrative expense in our unaudited consolidated statements of comprehensive income related to our stock compensation plans was $2.9 million and $2.6 million for the three months ended September 30, 2014 and September 30, 2013, respectively, and $9.1 million and $8.7 million for the nine months ended September 30, 2014 and September 30, 2013, respectively.

Stock Options

Presented below is a summary of our stock option activity for the nine months ended September 30, 2014 (in thousands, except for weighted average exercise price and weighted average remaining contractual terms):


	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms	Aggregate Intrinsic Value
Outstanding at December 31, 2013	4,273		$	17.53	4.86	$	27,099
Granted	193		20.17
Exercised	(297	)	9.31
Forfeited	(254	)	23.40
Expired	(167	)	22.27
Outstanding at September 30, 2014	3,748		17.78		4.31	15,613
Expected to vest at September 30, 2014	1,796		22.72		5.86	402
Exercisable at September 30, 2014	1,910		$	13.02	2.82	$	15,198

For awards subject to service-based vesting conditions, we recognize stock-based compensation expense, net of estimated forfeitures, equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term. For awards subject to both performance and service-based vesting conditions, we recognize stock-based compensation expense using the straight-line recognition method when it is probable that the performance condition will be achieved. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The fair value of each option grant with service-based vesting conditions was estimated using the Black-Scholes pricing models. The performance share awards granted in 2013 are market condition awards as attainment is based on the performance of our common stock for the relevant performance period. These awards were valued on the date of grant using a Monte Carlo simulation model (a binomial lattice-based valuation model).

Expected volatilities are calculated based on the historical volatility of our common stock. Management monitors stock option exercises and employee termination patterns to estimate forfeiture rates within the valuation model. Separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected holding period of options represents the period of time that options granted are expected to be outstanding. The expected terms of options granted are based on our historical experience for similar types of stock option awards. The risk-free interest rate is based on U.S. Treasury Notes.

The weighted average grant date fair value per share of the stock options granted during the nine months ended September 30, 2014 and 2013 was $7.24 and $7.27, respectively. We estimated the fair value of each stock option grant on the date of grant using a Black-Scholes option-pricing model and the weighted average assumptions set forth in the following table:

	Nine months ended September 30,
	2014	2013
Expected dividend yield	—	—
Risk-free interest rate	1.56%	0.67%
Expected volatility	38.11%	40.05%
Expected life	4.81 years	4.47 years

During the three months ended September 30, 2014 and 2013, we issued 36,016 shares and 0.2 million shares, respectively, of our common stock upon the exercise of outstanding stock options and received proceeds of $0.1 million and $1.1 million, respectively.

For the three months ended September 30, 2014 and 2013, stock-based compensation expense for stock options was $1.7 million and approximately $1.3 million, respectively.

We recognized excess income tax benefit of approximately $17,000 and $0.9 million from the exercise of stock options in our unaudited consolidated statements of comprehensive income for the three months ended September 30, 2014 and 2013, respectively.

The total intrinsic value of options exercised (the difference in the market price of our common stock on the exercise date and the price paid by the optionee to exercise the option) during the three months ended September 30, 2014 and 2013 was approximately $0.6 million and $3.1 million, respectively.

During the nine months ended September 30, 2014 and 2013, we issued 0.3 million shares and 0.9 million shares, respectively, of our common stock upon the exercise of outstanding stock options and received proceeds of $3.3 million and $7.4 million, respectively.

For the nine months ended September 30, 2014 and 2013, stock-basedtti compensation expense for stock options was $5.3 million and $4.9 million, respectively.

We recognized excess income tax benefit of $0.9 million and $5.2 million from the exercise of stock options in our unaudited consolidated statements of comprehensive income for the nine months ended September 30, 2014 and 2013, respectively.

The total intrinsic value of options exercised during the nine months ended September 30, 2014 and 2013 was $3.9 million and $17.0 million, respectively.

As of September 30, 2014, there was $9.9 million of total unrecognized compensation cost, adjusted for estimated forfeitures, related to stock options outstanding, which is expected to be recognized over a weighted average period of 1.2 years.

Restricted Stock Units

Our non-employee members of the Board and certain employees have received restricted stock units under our 2006 Stock Plan, as amended (the “2006 Stock Plan”). The fair value of restricted stock units is estimated based on the closing sale price of our common stock on the NASDAQ Global Select Market on the date of issuance. The total number of restricted stock units expected to vest is adjusted by estimated forfeiture rates. Shares withheld to pay taxes upon the vesting of restricted stock units are retired.

For the three months ended September 30, 2014, we granted 14,518 restricted stock units with an aggregate fair market value of $0.3 million.

For each of the three months ended September 30, 2014 and 2013, stock-based compensation expense for restricted stock units was $1.2 million.

For the nine months ended September 30, 2014, we granted 261,282 restricted stock units with an aggregate fair market value of $5.3 million.

For the nine months ended September 30, 2014 and 2013, stock-based compensation expense for restricted stock units was $3.7 million and $3.3 million, respectively.

At September 30, 2014, 601,068 restricted stock units remained unvested and there was $10.0 million of unamortized compensation cost related to these restricted stock units, which is expected to be recognized over the remaining weighted average vesting period of 1.5 years.

A summary of the status of our restricted stock units and of changes in restricted stock units outstanding under the 2006 Stock Plan for the nine months ended September 30, 2014 is as follows (in thousands, except for weighted average grant date fair value per unit):

	Number of Units		Weighted Average Grant Date Fair Value per Unit		Aggregate Intrinsic Value
Outstanding balance at December 31, 2013	636		$	25.50	$	14,429
Granted	261		20.21
Vesting of restricted stock units, net of shares withheld for taxes	(45	)	25.60
Shares withheld for taxes	(25	)	25.60
Forfeitures	(131	)	25.04
Outstanding balance at September 30, 2014	696		$	23.56	$	13,112

Restricted Stock Awards

In February 2009, certain executive officers received a grant of restricted stock awards under the 2006 Stock Plan, which vested in full in February 2014. The vesting of these restricted stock awards was subject to the executive officers’ continued employment with us and the recipients of these awards were not required to provide us with any consideration other than rendering service. The stock-based compensation expense for restricted stock awards is determined based on the closing market price of our common stock on the grant date of the awards applied to the total number of awards that are anticipated to fully vest. Shares withheld to pay taxes are retired upon the vesting of the restricted stock awards.

For the three months ended September 30, 2014, we did not issue restricted stock awards. For the three months ended September 30, 2013, stock-based compensation expense for restricted stock awards was $0.1 million.

For the nine months ended September 30, 2014 and 2013, stock-based compensation expense for restricted stock awards was $0.1 million and $0.5 million, respectively.

A summary of the status of our restricted stock awards at September 30, 2014 and of changes in restricted stock awards outstanding under the 2006 Stock Plan for the nine months ended September 30, 2014 is as follows (in thousands, except for weighted average grant date fair value per share):

	Shares		Weighted Average Grant Date Fair Value per Share		Aggregate Intrinsic Value
Outstanding balance at December 31, 2013	82		$	10.42	$	1,851
Granted	—		—
Vesting of restricted stock awards	(54	)	10.42
Shares withheld for payment of taxes upon vesting of restricted stock awards	(28	)	10.42
Forfeitures	—		—
Outstanding balance at September 30, 2014	—		$	—	$	—

The total fair value of restricted stock awards vested during the nine months ended September 30, 2014 was $0.9 million.