Stock-Based Compensation

3 Months Ended

Mar. 31, 2015

The Company has historically issued stock-based compensation in the form of nonvested restricted stock, stock options and stock appreciation rights (SARs). During the first three months of 2015, stock-based compensation was issued in the form of nonvested restricted stock and SARs. The stock-based compensation expense that has been charged against income was $2.7 million and $2.3 million in the three month periods ended March 31, 2015 and 2014, respectively.

Nonvested stock awards generally vest in 4 to 7 years and contain restrictions as to transferability, sale, pledging, or assigning, among others, prior to the end of the vesting period. Dividend and voting rights are conferred upon grant. A summary of the status of the Company’s nonvested share awards as of March 31, 2015, and changes during the three month period then ended, is presented below.



	Shares		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2015	1,259,689		$34.41
Granted	187,043		41.39
Vested	(124,747	)	29.26
Forfeited	(3,486	)	33.41
Nonvested at March 31, 2015	1,318,499		$35.89

SARs and stock options are granted with exercise prices equal to the market price of the Company’s stock at the date of grant. SARs vest ratably over 4 years of continuous service and have 10-year contractual terms. All SARs must be settled in stock under provisions of the plan. Stock options, which have not been granted since 2005, vested ratably over 3 years of continuous service and also have 10-year contractual terms. In determining compensation cost, the Black-Scholes option-pricing model is used to estimate the fair value of SARs and options on date of grant. The current year per share average fair value and the model assumptions are shown in the table below.



Weighted per share average fair value at grant date		$7.58
Assumptions:
Dividend yield	2.2		%
Volatility	21.3		%
Risk-free interest rate	1.8		%
Expected term	7.2 years

A summary of SAR activity during the first three months of 2015 is presented below.



(Dollars in thousands, except per share data)	Rights		Weighted Average Exercise Price	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2015	1,780,578		$33.96
Granted	231,745		41.38
Forfeited	(1,492	)	39.11
Expired	(173	)	36.77
Exercised	(27,575	)	33.30
Outstanding at March 31, 2015	1,983,083		$34.83	4.3 years	$	14,860

A summary of option activity during the first three months of 2015 is presented below.



(Dollars in thousands, except per share data)	Shares		Weighted Average Exercise Price	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2015	68,675		$29.27
Granted	—		—
Forfeited	—		—
Expired	—		—
Exercised	(67,056	)	29.22
Outstanding at March 31, 2015	1,619		$31.27	0.5 years	$	18

- Definition

Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate.

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