Stock-Based Compensation

Stock Incentive Compensation Plans

We have two stock incentive plans. The 2007 Stock Incentive Plan (the “2007 Plan”), as amended effective March 20, 2007, and the 2013 Stock Incentive Plan (the “2013 Plan”), collectively referred to as (the “Stock Incentive Plans”), permits awards of stock options, restricted stock units, performance stock units and other stock-based awards to our officers, key employees and non-employee directors on terms determined by the Compensation Committee of the Board of Directors (the “Committee”). The aggregate number of our shares available for issuance under the 2007 Plan and 2013 Plan are 1,200,000 and 1,040,000, respectively. Under the 2007 Plan, no more than an aggregate of 400,000 shares are available for issue of stock-based awards other than stock options and stock appreciation rights. As of December 31, 2015, shares available for future grant under the 2007 Plan and 2013 Plan are 56,726 and 626,727, respectively. Prior the adoption of the 2007 Plan, we granted stock-based awards to purchase shares of our common stock to officers, key employees and non-employee directors under certain predecessor plans. No further awards can be granted under these predecessor plans.

Stock Options

In the years ended December 31, 2015, 2014, and 2013, we granted stock options to our officers, key employees and non-employee directors of 73,000, 71,000, and 190,500, respectively, with weighted-average grant date fair values of approximately $10.63, $12.62, and $10.95, respectively. Stock options have been granted with an exercise price equal to the fair market value of our stock on the date of grant and expire not more than ten years from the date of grant. The stock options vest over a period of four years after the date of grant. The option price and number of shares are subject to adjustment under certain dilutive circumstances. If an employee terminates employment, the non-vested portion of the stock options will not vest and all rights to the non-vested portion will terminate completely.

Stock option activity for the year ended December 31, 2015 were as follows:



	Number of Stock Options		Weighted- Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2015	611,977		$	19.02
Granted	73,000		25.51
Exercised	(167,523	)	18.42
Expired	(13,875	)	18.58
Forfeited	(20,088	)	22.29
Outstanding at December 31, 2015	483,491		$	20.08	4.1	$	689
Exerciseable at December 31, 2015	251,891		$	18.80	3.4	$	417

Changes in nonvested stock options for the year ended December 31, 2015 were as follows:



	Number of Stock Options		Weighted- Average Grant Date Fair Value
Nonvested at January 1, 2015	323,565		$	9.42
Granted	73,000		10.63
Vested	(144,877	)	8.78
Forfeited	(20,088	)	10.40
Nonvested at December 31, 2015	231,600		$	10.03

The aggregate intrinsic value of stock options represents the amount by which the market price of our common stock exceeds the exercise price of the stock option. The aggregate intrinsic value of stock options exercised for the years ended December 31, 2015, 2014 and 2013 was approximately $2.3 million, $1.0 million, and $2.6 million, respectively. Cash received from stock option exercised for the years ended December 31, 2015, 2014 and 2013 was approximately $3.1 million, $2.3 million, and $8.8 million, respectively, with related tax benefits of $0.9 million, $0.4 million, and $1.0 million, respectively. The total stock options vested and expected to vest in the future are 483,491 shares with a weighted-average exercise price of approximately $20.08 and an aggregate intrinsic value of approximately $0.7 million. These stock options have a weighted-average remaining contractual term of approximately 4.1 years.

The share-based compensation cost expensed for stock options for the years ended December 31, 2015, 2014, and 2013 (before tax benefits) was approximately $1.2 million, $1.5 million, and $1.2 million, respectively, and is included in selling, general and administrative expenses on the consolidated income statements. At December 31, 2015, total unrecognized compensation cost (before tax benefits) related to stock options of approximately $1.7 million is expected to be recognized over a weighted-average period of approximately 2.2 years. The weighted-average grant date fair value of stock options granted during the years ended December 31, 2015, 2014, and 2013 was approximately $10.63, $12.62, and $10.95. The total fair value of stock options vested during the years ended December 31, 2015, 2014, and 2013 was approximately $1.3 million, $1.3 million, and $1.1 million, respectively.

The assumptions used to compute the fair value of stock option grants under the Stock Incentive Plans for years ended December 31, 2015, 2014, and 2013 were as follows:



	Years Ended December 31,
	2015		2014		2013
Risk-free interest rate	1.13	%	1.67	%	1.44	%
Expected volatility	53.72	%	55.27	%	53.89	%
Expected dividends	—		—		—
Expected term (in months)	47		66		66

We apply fair value accounting for stock-based compensation based on the grant date fair value estimated using a Black-Scholes-Merton (“Black-Scholes”) valuation model. We recognize compensation expense, net of an estimated forfeiture rate, on a straight-line basis over the requisite service period of the award. We have one award population with an option vesting term of four years. We estimate the forfeiture rate based on our historic experience, attempting to determine any discernible activity patterns. The expected life computation is based on historic exercise patterns and post-vesting termination behavior. The risk-free interest rate for periods within the contractual life of the award is based on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility is derived from historical volatility of our common stock. We suspended payments of dividends after the first quarter of 2011.

Restricted Stock Units

We granted restricted stock units (“RSUs”) to certain officers, key employees and non-employee directors of approximately 108,500, 86,300, and 65,550 RSUs during the years ended December 31, 2015, 2014, and 2013, respectively, with weighted-average grant date fair values (equal to the fair market value of our stock on the date of grant) of approximately $25.15, $24.74, and $18.75 per share, respectively. RSUs represent a right to receive a share of stock at future vesting dates with no cash payment required from the holder. The RSUs have a three year vesting term of approximately 33%, 33% and 34% on the first, second and third anniversaries of the date of grant. If an employee terminates employment, their non-vested portion of the RSUs will not vest and all rights to the non-vested portion will terminate.

Restricted stock unit activity for the year ended December 31, 2015 was as follows:



	Number of Restricted Stock Units		Weighted- Average Grant Date Fair Value
Outstanding at January 1, 2015	122,943		$	21.67
Granted	108,500		25.15
Vested	(66,217	)	20.81
Forfeited	(10,035	)	25.32
Outstanding at December 31, 2015	155,191		$	24.24

The share-based compensation cost expensed for RSUs for the years ended December 31, 2015, 2014, and 2013 (before tax benefits) was approximately $1.8 million, $1.3 million, and $0.9 million respectively, and is included in selling, general and administrative expenses on the consolidated income statements. At December 31, 2015, total unrecognized compensation cost (before tax benefits) related to RSUs of approximately $2.3 million is expected to be recognized over a weighted average period of approximately 1.8 years. The total fair value of RSUs vested for the years ended December 31, 2015, 2014, and 2013 was approximately $1.8 million, $1.3 million, and $1.1 million, respectively. The tax benefit realized from vested RSUs for the years ended December 31, 2015, 2014, and 2013 was approximately $0.7 million, $0.5 million, and $0.4 million, respectively.

Performance Stock Units

We granted performance stock awards (“PSUs”) to certain key employees of approximately 64,000, 67,500, and 85,500 PSUs during the years ended December 31, 2015, 2014, and 2013, respectively, with weighted-average grant date fair values of approximately $25.51, $24.90, and $16.15 per share, respectively. PSU awards are subject to the attainment of performance goals established by the Committee, the periods during which performance is to be measured, and all other limitations and conditions applicable to the awarded shares. Performance goals are based on a pre-established objective formula or standard that specifies the manner of determining the number of performance stock awards that will be granted if performance goals are attained. If an employee terminates employment, their non-vested portion of the PSUs will not vest and all rights to the non-vested portion will terminate.

Performance stock activity for the year ended December 31, 2015 is as follows:



	Number of Performance Stock Units		Weighted- Average Grant Date Fair Value
Outstanding at January 1, 2015	168,158		$	18.94
Granted	64,000		25.51
Vested	(35,504	)	13.04
Forfeited	(63,157	)	20.65
Outstanding at December 31, 2015	133,497		$	22.86

The share-based compensation cost expensed for PSUs for the years ended December 31, 2015, 2014, and 2013 (before tax benefits) was approximately $0.5 million, $1.0 million and $0.3 million, respectively, and is included in selling, general and administrative expenses on the consolidated income statements. At December 31, 2015, total unrecognized compensation cost (before tax benefits) related to PSUs of approximately $1.4 million is expected to be recognized over a weighted-average period of approximately 1.3 years. The total fair value of PSUs vested during the years ended December 31, 2015, 2014, and 2013, was approximately $0.9 million, zero, and zero, respectively. The tax benefit realized from PSUs for the years ended December 31, 2015, 2014, and 2013 were $0.3 million, zero, and zero, respectively.