Note 10. Share-Based Compensation

On June 30, 2014, the Company had one share-based compensation plan, the Amended and Restated City National Corporation 2008 Omnibus Plan (the “Plan”), which was originally approved by the Company’s shareholders on April 23, 2008. No new awards have been or will be granted under predecessor plans since the adoption of the Plan. The Plan permits the grant of stock options, restricted stock, restricted stock units, cash-settled restricted stock units, performance shares, performance share units, performance units and stock appreciation rights, or any combination thereof, to the Company’s eligible employees and non-employee directors. No grants of performance shares, performance share units or stock appreciation rights had been made as of June 30, 2014. At June 30, 2014, there were approximately 2.8 million shares available for future grants. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for further discussion of the Company’s share-based compensation plan.

The compensation cost recognized for all share-based awards was $5.2 million and $10.6 million for the three and six months ended June 30, 2014, respectively, compared with $5.4 million and $10.5 million for the three and six months ended June 30, 2013, respectively. The total income tax benefit recognized in the consolidated statements of income for share-based compensation arrangements was $2.2 million and $4.5 million for the three and six months ended June 30, 2014, respectively, compared with $2.3 million and $4.4 million for the three and six months ended June 30, 2013, respectively. The Company received $16.4 million and $17.8 million in cash for the exercise of stock options during the six months ended June 30, 2014 and 2013, respectively. The actual tax benefit realized for the tax deductions from stock option exercises was $2.2 million and $3.5 million for the six months ended June 30, 2014 and 2013, respectively.

To estimate the fair value of stock option awards, the Company uses the Black-Scholes methodology, which incorporates the assumptions summarized in the table below:

	For the three months ended June 30,			For the six months ended June 30,
	2014		2013	2014		2013
Weighted-average volatility	27.15	%	—	27.35	%	28.12	%
Dividend yield	1.78	%	—	1.79	%	2.15	%
Expected term (in years)	5.46		—	6.06		6.15
Risk-free interest rate	1.92	%	—	1.99	%	1.24	%

Using the Black-Scholes methodology, the weighted-average grant-date fair values of options granted during the six months ended June 30, 2014 and 2013 were $17.93 and $12.57, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2014 and 2013 was $5.2 million and $8.5 million, respectively.

A summary of option activity and related information for the six months ended June 30, 2014 is presented below:

			Weighted				Weighted
			Average		Aggregate		Average
	Number of		Exercise		Intrinsic		Remaining
	Shares		Price		Value		Contractual
Options	(in thousands)		(per share)		(in thousands) (1)		Term
Outstanding at January 1, 2014	4,075		$	55.50
Granted	452		73.64
Exercised	(289	)	56.61
Forfeited or expired	(30	)	58.36
Outstanding at June 30, 2014	4,208		$	57.35	$	77,718	5.74
Exercisable at June 30, 2014	2,870		$	56.05	$	56,782	4.43

(1) Includes in-the-money options only.

A summary of changes in unvested options and related information for the six months ended June 30, 2014 is presented below:

			Weighted Average
	Number of		Grant Date
	Shares		Fair Value
Unvested Options	(in thousands)		(per share)
Unvested at January 1, 2014	1,425		$	13.64
Granted	452		17.93
Vested	(519	)	14.57
Forfeited	(19	)	12.78
Unvested at June 30, 2014	1,339		$	14.75

The number of options vested during the six months ended June 30, 2014 and 2013 was 518,620 and 646,736, respectively. The total fair value of options vested during the six months ended June 30, 2014 and 2013 was $7.6 million and $7.8 million, respectively. As of June 30, 2014, there was $15.2 million of unrecognized compensation cost related to unvested stock options granted under the Company’s plans. That cost is expected to be recognized over a weighted-average period of 2.7 years.

A summary of changes in restricted stock and related information for the six months ended June 30, 2014 is presented below:

			Weighted Average
	Number of		Grant Date
	Shares		Fair Value
Restricted Stock (1)	(in thousands)		(per share)
Unvested at January 1, 2014	608		$	53.03
Granted	119		73.63
Vested	(169	)	44.00
Forfeited	(6	)	54.12
Unvested at June 30, 2014	552		$	60.22

(1) Includes restricted stock units.

Restricted stock is valued at the closing price of the Company’s stock on the date of award. The weighted-average grant-date fair value of restricted stock granted during the six months ended June 30, 2014 and 2013 was $73.63 and $55.73, respectively. The number of restricted shares vested during the six months ended June 30, 2014 and 2013 was 169,028 and 186,109, respectively. The total fair value of restricted stock vested during the six months ended June 30, 2014 and 2013 was $7.4 million and $8.5 million, respectively. As of June 30, 2014, the unrecognized compensation cost related to restricted stock granted under the Company’s plans was $19.2 million. That cost is expected to be recognized over a weighted-average period of 3.0 years.

Cash-settled restricted stock units are initially valued at the closing price of the Company’s stock on the date of award. They are subsequently remeasured to the closing price of the Company’s stock at each reporting date until settlement. A summary of changes in cash-settled restricted stock units for the six months ended June 30, 2014 is presented below:

	Number of
	Shares
Cash-Settled Restricted Stock Units	(in thousands)
Unvested at January 1, 2014	190
Granted	15
Vested	(23	)
Forfeited	(3	)
Unvested at June 30, 2014	179