Stock-Based Compensation

Our shareholders approved the 2014 Omnibus Stock Plan (the “2014 Stock Plan”) at our annual meeting of shareholders on May 20, 2014. The 2014 Stock Plan replaced the expired 2004 Omnibus Stock Plan (the “2004 plan”) previously approved by the shareholders in 2004. The 2014 Stock Plan is administered by the Compensation Committee of the Board of Directors and will remain in effect for ten years. All directors of the Company and employees of the Company and its subsidiaries are eligible to participate in the 2014 Stock Plan. The 2014 Stock Plan (similar to the 2004 plan) continues the maintenance of the Employee Stock Purchase Plan, as well as provisions for the grant of stock options and other stock-based incentives. The 2014 Stock Plan provides for the grant of five percent of the number of the Company’s common shares outstanding as of the first day of each fiscal year plus the number of common shares that were available for grant of awards, but not granted, in prior years. In no event, however, may the number of common shares available for the grant of awards in any fiscal year exceed ten percent of the common shares outstanding as of the first day of that fiscal year. Common shares subject to an award that is forfeited, terminated, or canceled without having been exercised are generally added back to the number of shares available for grant under the 2014 Stock Plan.

Stock-based compensation expense under all share-based payment plans—our Employee Stock Purchase Plan, stock option plans, stock-settled stock appreciation rights, and performance-based restricted stock units—included in the results of operations follows:



	Year Ended December 31,
	2016		2015		2014
Compensation expense, all share-based payment plans	$	2,811	$	2,327	$	1,860
Income tax benefit	823		694		549


O.	Stock-Based Compensation (continued)

Stock-based compensation consisted of the following:

Employee Stock Purchase Plan--Under the Employee Stock Purchase Plan, all full-time employees with one year of service are eligible to purchase, through payroll deduction, common shares. Employee purchases under the Employee Stock Purchase Plan are at 85% of the fair market value of the common shares--a 15% discount. Purchases under the plan, at 85% of the fair market value of the common shares, have been as follows:



	Year Ended December 31,
	2016		2015		2014
Number of employees participating	1,952		1,750		1,684
Shares purchased during the year	148,631		125,779		115,029
Weighted-average per share purchase price paid	$	28.34	$	26.22	$	23.07
Cumulative shares purchased since 1982	9,025,665		8,877,034		8,751,255

Compensation costs are recognized as payroll deductions are made. The 15% discount of total shares purchased under the plan resulted in compensation cost recognized of $727 in 2016, $569 in 2015 and $463 in 2014.

Stock Option Plans--The stock options outstanding were awarded under a graded vesting schedule, measured at fair value, and have a term of ten years. Compensation costs for stock options are recognized over the requisite service period on the straight-line recognition method. Compensation cost recognized for stock options was $596 in 2016, $494 in 2015 and $398 in 2014.

Stock-Settled Stock Appreciation Rights--During the year ended December 31, 2016, the Compensation Committee of the Board of Directors awarded 150,100 Stock-Settled Stock Appreciation Rights (“SSARs”) to certain management employees and nonemployee directors, which vest ratably over five years. A stock-settled stock appreciation right is an award that allows the recipient to receive common stock equal to the appreciation in the fair market value of our common stock between the date the award was granted and the conversion date of the shares vested.

The following table summarizes the SSARs as of December 31, 2016:



Stock-Settled Stock Appreciation Rights	Number of Rights		Weighted- Average Award Date Value		Weighted- Average Remaining Contractual Life	Unrecognized Compensation Cost		Aggregate Intrinsic Value
Unvested, January 1, 2016	330,707		$	4.65
Granted	150,100		6.38
Forfeited	—		—
Vested	(108,976	)	4.11
Unvested, December 31, 2016	371,831		$	5.50	2.8 years	$	1,515	$	12,605
Employee SSARs	368,832		$	5.53	2.9 years	$	1,513	$	12,503
Nonemployee Director SSARs	2,999		$	2.03	0.4 years	$	2	$	102

Compensation costs for SSARs are determined using a fair-value method and amortized over the requisite service period. Compensation expense for SSARs totaled $591 in 2016, $489 in 2015 and $384 in 2014.


O.	Stock-Based Compensation (continued)

Performance-Based Restricted Stock Units--During the year ended December 31, 2016, the Compensation Committee of the Board of Directors awarded 35,015 Performance-Based Restricted Stock Units ("PRSUs") to certain management employees.

Similar awards were made in prior periods. The awards vest over specified periods. The following table summarizes PRSUs as of December 31, 2016:



Performance-Based Restricted Stock Units	Number of Stock Units		Weighted- Average Grant Date Value		Weighted- Average Remaining Contractual Life	Unrecognized Compensation Cost		Aggregate Intrinsic Value
Unvested, January 1, 2016	141,985		$	23.98
Granted	35,015		31.59
Forfeited	—		—
Vested	(24,521	)	19.63
Unvested, December 31, 2016	152,479		$	26.43	2.5 years	$	2,119	$	5,169
Employee PRSUs	133,084		$	26.09	2.7 years	$	1,843	$	4,512
Nonemployee Director PRSUs	19,395		$	28.70	1.7 years	$	276	$	657

Compensation cost for awards is determined using a fair-value method, amortized over the requisite service period. “Intrinsic value” is defined as the amount by which the fair market value of a common share of stock exceeds the exercise price of a performance-based restricted stock unit. Compensation expense on restricted stock awards totaled $897 in 2016, $775 in 2015 and $615 in 2014.

The fair value of each award was estimated on the date of grant using a binomial option-pricing model. The binomial model considers a range of assumptions related to volatility, risk-free interest rate and employee exercise behavior. Expected volatilities utilized in the binomial model are based on historical volatility of our share prices and other factors. Similarly, the dividend yield is based on historical experience and expected future changes. The binomial model also incorporates exercise and forfeiture assumptions based on an analysis of historical data. The expected life of the stock-based awards is derived from the output of the binomial model and represents the period of time that awards granted are expected to be outstanding.

The fair values of stock-based awards granted were estimated at the dates of grant with the following weighted-average assumptions:



	Year Ended December 31,
	2016		2015		2014
Volatility rate	10.6	%	10.9	%	11.2	%
Risk-free interest rate	1.8	%	2.1	%	2.6	%
Expected dividend yield	.7	%	.7	%	1.1	%
Expected life of awards (years)	9.5		9.3		9.4


O.	Stock-Based Compensation (continued)

General Stock Option Information--The following table summarizes activity under the stock option plans for the year ended December 31, 2016:



Stock Options	Number of Options Outstanding		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life	Unrecognized Compensation Cost		Aggregate Intrinsic Value
Outstanding, January 1, 2016	816,744		$	21.58
Granted	148,000		32.70
Exercised	(137,696	)	12.37
Forfeited	(27,400	)	28.80
Outstanding, December 31, 2016	799,648		$	24.97	6.8 years	$	1,886	$	7,141
Exercisable, December 31, 2016	375,448		$	20.84	5.3 years			$	4,903

“Intrinsic value” is defined as the amount by which the market price of a common share of stock exceeds the exercise price of an option. Information regarding the stock options outstanding at December 31, 2016 is summarized below:



Stock Options Exercise Price		Number Outstanding	Weighted-Average Remaining Contractual Life	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Exercise Price
Employee options:
$	16.00	88,853	2.8 years	$	16.00	88,853	$	16.00
16.60		95,095	3.8 years	16.60		95,095	16.60
23.20		181,650	6.5 years	23.20		102,250	23.20
26.40		173,050	7.5 years	26.40		62,950	26.40
30.10		133,500	8.5 years	30.10		26,300	30.10
32.70		127,500	9.5 years	32.70		—	32.70
		799,648	6.8 years	$	24.97	375,448	$	20.84

We issue common shares from treasury upon the exercise of stock options, stock-settled stock appreciation rights, performance-based restricted stock units or purchases under the Employee Stock Purchase Plan.

Tax Benefits of Stock-Based Compensation--Our total income tax benefit from share-based awards--as recognized in our consolidated statement of operations--for the last three years was: $823 in 2016, $694 in 2015, and $549 in 2014. Tax benefits for share-based awards are accrued as stock compensation expense and recognized in our consolidated statement of operations. Tax benefits on share-based awards are realized when: (a) stock-settled stock appreciation rights are exercised; (b) performance-based restricted stock units vest; and, (c) stock options are exercised.

When actual tax benefits realized exceed the tax benefits accrued for share-based awards, we realize an excess tax benefit. We had excess tax benefits of: $1,113 in 2016, $352 in 2015, and $354 in 2014.