Note 9 — Equity Compensation

Our performance-based restricted stock awards and time-vested restricted stock awards are valued as liability awards, in accordance with fair value guidelines. We allow employees to elect to have taxes in excess of the minimum statutory requirements withheld from their awards and, therefore, the awards are classified as liability instruments under the ASC guidance on share based payment. Awards treated as liability instruments must be revalued each period until settled, and cost is accrued over the requisite service period and adjusted to fair value at each reporting period until settlement or expiration of the award. Grants were made in the first quarter of 2015 (the effect of which is included in the table below) but did not have a material impact on our results of operations. We had unrecognized compensation expense of $1.2 million as of March 31, 2015 which will be recognized over the remaining requisite service period.

We recognized the following amounts in compensation expense and tax benefits for all of our stock-based awards and programs for the applicable periods ended March 31 (in thousands):

	Three Months Ended				Twelve Months Ended
	2015		2014		2015		2014
Compensation expense	$	742	$	1,349	$	3,081	$	2,636
Tax benefit recognized	271		502		1,127		955

Time-Vested Restricted Stock Awards

Our time-vested restricted stock awards vest after a three-year period. No dividend rights accumulate during the vesting period. Time-vested restricted stock is valued at an amount equal to the fair market value of our common stock on the date of grant. If employment terminates during the vesting period because of death, retirement, or disability, the participant is entitled to a pro-rata portion of the time-vested restricted stock awards such participant would otherwise have earned, which is distributed six months following the date of termination, with the remainder of the award forfeited. If employment is terminated during the vesting period for reasons other than those listed above, the time-vested restricted stock awards will be forfeited on the date of the termination, unless the Board of Directors Compensation Committee determines, in its sole discretion, that the participant is entitled to a pro-rata portion of the award.

A summary of time vested restricted stock activity under the plan for 2014 and 2015 is presented in the table below:

	2015				2014
			Weighted				Weighted
	Number of		Average Fair		Number of		Average Fair
	shares		Market Value		shares		Market Value
Outstanding at January 1,	41,000		$	21.89	24,900		$	22.68
Granted	19,000		30.40		22,600		22.40
Vested	(1,654	)	21.92		710		24.29
Distributed					(3,300	)	22.98
Forfeited	(2,746	)	25.91		(2,490	)	—
Vested but not distributed	1,654		21.92		(710	)	—
Outstanding at end of period	57,254		$	24.81	41,710		$	21.89

Performance-Based Restricted Stock Awards

Performance-based restricted stock awards consisting of the right to receive a number of shares of common stock at the end of the restricted period (assuming performance criteria are met) are granted to qualified individuals. We estimate the fair value of outstanding restricted stock awards using a Monte Carlo option valuation model.

Non-vested performance-based restricted stock awards (based on target number) as of March 31, 2015 and 2014 and changes during the three months ended March 31, 2015 and 2014 were as follows:

	2015				2014
	Number of shares		Weighted Average Grant Date Price		Number of shares		Weighted Average Grant Date Price
Outstanding at January 1,	63,300		$	21.74	47,200		$	21.39
Granted	21,800		$	30.40	27,000		$	22.40
Awarded	(13,653	)	$	30.55	—		—
Awarded in excess of target	3,653		$	30.55	—		—
Not awarded	0		$	0	(10,900	)	$	21.84
Granted, nonvested at March 31,	75,100		$	24.36	63,300		$	21.74

Stock Options

Beginning in 2011, we began issuing time-vested restricted stock in lieu of stock options and dividend equivalents. Prior to 2011 stock options were issued with an exercise price equal to the fair market value of the shares on the date of grant. They became exercisable after three years and expired ten years after the date granted. Dividend equivalent awards, under which dividend equivalents accumulated during the vesting period, were also issued to recipients of the stock options. Participants’ options and dividend equivalents that were not vested were forfeited when participants left Empire, except for terminations of employment under certain specified circumstances. There were no stock options or dividend equivalents granted in 2015 or 2014, and all outstanding options were exercised prior to December 31, 2014.

Stock option grants vest upon satisfaction of service conditions. The cost of the awards is generally recognized over the requisite (explicit) service period. There were no outstanding options at March 31, 2015. The fair value of the outstanding options was estimated as of March 31, 2014, under a Black-Scholes methodology.

A summary of option activity under the plan during the quarter March 31, 2014 is presented below:

	2014
		Weighted Average
	Options	Exercise Price
Outstanding at January 1,	112,500	$	23.27
Granted	—	—
Exercised	48,300	$	23.70
Outstanding at March 31,	64,200	$	23.81
Exercisable at March 31,	64,200	$	23.81