10.

Treasury Stock and Share Based Awards

Treasury Stock – Treasury stock represents shares of common stock repurchased or withheld by the Company and not yet retired. The Company has applied the cost method in recording its treasury shares. Below is a summary of the Company’s treasury stock activity for the six months ended June 30, 2014:


	Number of Treasury Shares		Cost
Balance at January 1, 2014		3,694,935	$	51,946
Restricted stock withholdings ⁽¹⁾		333,507		9,776
Restricted stock forfeitures		12,186		—

Balance at June 30, 2014		4,040,628	$	61,722

⁽¹⁾	The Company withheld shares as a result of such election by certain employees to satisfy their tax liabilities upon vesting in restricted stock and restricted stock units. The Company determined the number of shares to be withheld based upon market values ranging from $27.19 to $30.23 per share.

As of June 30, 2014, the Company had no plans to retire any shares of treasury stock.

Stock Options – During the six months ended June 30, 2014, 14,584 stock options were exercised at a weighted average exercise price of $7.63 and a total intrinsic value of $296. The Company recognized a tax benefit of approximately $124 related to the stock option exercises. As of June 30, 2014, there were no stock options outstanding.

Restricted Stock – During the six months ended June 30, 2014, the Company granted 261,213 shares of restricted stock to directors and employees of the Company. The fair value of the restricted stock granted was determined based on the market value of the Company’s common stock on the date of grant, which ranged from $28.54 to $30.30 per share. The Company assumed forfeiture rates ranging from 0% to 5% for the restricted stock awards. Restricted stock granted to directors vests over a one-year period. Certain of the restricted stock granted to employees vests over three years based on continued service and the remaining restricted stock granted to employees vests over four years based on continued service. The recipients of restricted stock are entitled to receive dividends and to vote their respective shares, however, the sale and transfer of the restricted shares is prohibited during the restriction period.

Below is a summary of restricted stock activity for the six months ended June 30, 2014:


	Shares of Restricted Stock			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2014		1,260,913		$	21.85
Granted		261,213		$	28.72
Vested		(619,307	)	$	20.50
Forfeited		(12,186	)	$	19.61

Outstanding at June 30, 2014		890,633		$	24.83

Unvested restricted stock at June 30, 2014		890,633		$	24.83

The Company receives an income tax deduction upon vesting of the restricted stock awards. The total fair value of shares that vested during the six months ended June 30, 2014 was $18,571. The Company recognized a tax benefit of approximately $7,109 during the six months ended June 30, 2014 related to these vested shares.

The Company recorded compensation expense of $4,986 and $5,123 related to restricted stock awards during the six months ended June 30, 2014 and 2013, respectively. As of June 30, 2014, the remaining unrecognized compensation expense related to restricted stock awards was $16,616 and the weighted average period over which this remaining compensation expense will be recognized is approximately two years.

Restricted Stock Units – During the six months ended June 30, 2014, the Company granted restricted stock units representing 197,515 hypothetical shares of common stock to employees. The restricted stock units vest based on a combination of financial performance factors and continued service. The financial performance factors are based on an implied equity value concept that determines an internal rate of return (“IRR”) during the two fiscal year period ending December 31, 2015 based on a formula utilizing a multiple of Adjusted EBITDA subject to certain specified adjustments as defined in the restricted stock unit award agreement. The financial performance factors for the restricted stock units have a threshold, target and maximum level of payment opportunity. If the IRR for the two year period is at least 8.5%, which is the threshold, one-third of the restricted stock units vest. If the IRR for the two year period is at least 10.5%, which is the target, two-thirds of the restricted stock units vest. If the IRR for the two year period is at least 12.5%, which is the maximum, 100% of the restricted stock units vest. Grantees are eligible to receive a ratable portion of the common stock issuable if the IRR is within the targets previously noted. All payouts of restricted stock units that vest will be subject to an additional two year service requirement and will be paid in the form of common stock if the participant continues to provide services through March 2018, which is the fourth anniversary of the grant date. Restricted stock unit award participants are eligible to receive dividend equivalent payments if and at the time the restricted stock unit awards vest.

Below is a table summarizing the potential number of shares that could vest under restricted stock unit awards granted during the six months ended June 30, 2014 at each of the three target levels of financial performance (excluding forfeiture assumptions):


	Number of Shares Vesting		Value at Grant
at IRR of at least 8.5%		65,832	$	1,879
at IRR of at least 10.5%		131,683	$	3,758
at IRR of at least 12.5%		197,515	$	5,637

Due to the fact that the IRR for the two year performance period could not be determined at the time of grant, the Company estimated that the most likely outcome is the achievement of the mid-point IRR level. The fair value of the restricted stock unit awards was determined based on the market value of the Company’s common stock on the date of grant, which was $28.54 per share. The Company assumed forfeiture rates ranging from 0% to 5% for the restricted stock unit awards. If during the service period, additional information becomes available to lead the Company to believe a different IRR level will be achieved for the two-year performance period, the Company will reassess the number of units that will vest for the grant and adjust its compensation expense accordingly on a prospective basis over the remaining service period.

The Company recorded compensation expense of $1,603 and $1,665 related to restricted stock unit awards during the six months ended June 30, 2014 and 2013, respectively.

During the six months ended June 30, 2014, 392,238 restricted stock unit awards vested. Upon vesting, each restricted stock unit was converted into one share of the Company’s common stock. In addition, the Company paid approximately $1,341 in dividends on the vested restricted stock units, which represented dividends that had accumulated on the awards since they were granted in 2010. The fair value of the restricted stock unit awards that vested during the six months ended June 30, 2014 was approximately $11,312. The Company recognized a tax benefit of approximately $4,751 during the six months ended June 30, 2014 related to these vested awards.

As of June 30, 2014, the remaining unrecognized compensation expense related to the outstanding restricted stock unit awards was $6,080. The weighted average period over which this remaining compensation expense will be recognized is approximately two years. As of June 30, 2014, the Company had restricted stock units outstanding that represented a total of 577,097 hypothetical shares of common stock, assuming the maximum IRR level is achieved for each of the grants.