7.	Stock-Based Compensation

The Company’s incentive compensation plans allow the Company to grant awards to key employees in the form of stock options, stock awards, restricted stock units (“RSUs”), stock appreciation rights, performance stock units (“PSUs”), dividend equivalents and other awards. Compensation related to these awards is determined based on the fair value on the date of grant and is amortized to expense over the vesting period. For restricted stock units and performance stock units, the Company recognizes compensation expense based on the earlier of the vesting date or the date when the employee becomes eligible to retire. If awards can be settled in cash, these awards are recorded as liabilities and marked to market.

The following table discloses the amount of stock based compensation expense for the three- month and six-month periods ended June 30, 2013 and 2014:


	Three months ended June 30				Six months ended June 30
	2013		2014		2013		2014
Stock options	$	1,002	$	1,075	$	1,973	$	2,089
Restricted stock units		280		153		559		309
Performance stock units		1,361		948		1,929		1,214

Total stock based compensation	$	2,643	$	2,176	$	4,461	$	3,612

Stock Options

In February 2012, executives participating in the 2012–2014 Long-Term Incentive Plan were granted 589,934 stock options which will vest one- third each year through February 2015. In February 2013, executives participating in the 2013-2015 Long-Term Incentive Plan were granted 330,639 stock options which will vest one- third each year through February 2016. In February 2014, executives participating in the 2014-2016 Long-Term Incentive Plan were granted 380,064 stock options which will vest one- third each year through February 2017. The fair value of these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:


	2013			2014
Risk-free interest rate		1.17	%		2.00	%
Dividend yield		1.7	%		1.8	%
Expected volatility of the Company’s common stock		0.646			0.640
Expected life in years		6.0			6.0

The weighted average fair value of options granted in 2013 and 2014 was $12.97 and $12.26, respectively.

The following table provides details of the stock option activity for the six months ended June 30, 2014:


	Number of Shares
Outstanding at January 1, 2014		1,710,244
Granted		380,064
Exercised		(121,419	)
Expired		(53,000	)
Cancelled		(13,414	)

Outstanding at June 30, 2014		1,902,475
Exercisable		1,119,451

Restricted Stock Units (RSUs)

The following table provides details of the nonvested RSU activity for the six months ended June 30, 2014:


	Number of Restricted Units
Nonvested at January 1, 2014		60,686
Vested		(29,028	)
Accrued dividend equivalents		394

Nonvested at June 30, 2014		32,052

Performance Stock Units (PSUs)

Executives participating in the Company’s Long-Term Incentive Plan for the plan year 2012–2014, earn PSUs and cash. Any units and cash earned during 2012, 2013 and 2014 will vest at December 31, 2014.

Executives participating in the Company’s Long-Term Incentive Plan for the plan year 2013–2015, earn PSUs and cash. Any units and cash earned during 2013 and 2014 will vest at December 31, 2015.

Executives participating in the Company’s Long-Term Incentive Plan for the plan year 2014– 2016, earn PSUs and cash. Any units and cash earned during 2014 will vest at December 31, 2016.

The following table provides details of the nonvested PSUs under the Company’s Long-Term Incentive Plans:


Performance stock units outstanding at January 1, 2014	156,772
Cancelled	(2,104	)
Accrued dividend equivalents	1,316

Performance stock units outstanding at June 30, 2014	155,984

The Company’s RSUs and PSUs are not participating securities. These units will be converted into shares of Company common stock in accordance with the distribution date indicated in the agreements. RSUs earn dividend equivalents from the time of the award until distribution is made in common shares. PSUs earn dividend equivalents from the time the units have been earned based upon Company performance metrics, until distribution is made in common shares. Dividend equivalents are only earned subject to vesting of the underlying RSUs or PSUs, accordingly, such units do not represent participating securities.