Stock-Based Compensation

The 2013 Equity and Incentive Compensation Plan authorizes the issuance of up to 6,800,000 shares of the Company's common stock for use in paying incentive compensation awards in the form of stock options or other equity awards such as restricted stock, restricted stock units ("RSUs") or stock appreciation rights ("SARs"). Of the 6,800,000 shares authorized, a maximum of 3,400,000 shares may be issued for awards other than option rights or SARs, as defined in the plan. The 1995 Non-Employee Directors' Stock Plan authorizes the issuance of up to 600,000 shares of the Company's common stock for equity awards. Both plans have been approved by the Company's stockholders. At December 31, 2013, there were 6,019,212 shares available for granting equity awards under the 2013 Equity and Incentive Compensation Plan, of which 3,271,831 shares were available for awards other than option rights or SARs. At December 31, 2013, there were 143,903 shares available for granting under the 1995 Non-Employee Directors' Stock Plan.

Restricted Stock Units

The Board approves the granting of performance-based RSUs as the long-term equity component of director, officer and certain key employee compensation. The RSUs require no payment from the recipient and compensation cost is measured based on the market price on the grant date and is generally recorded over the vesting period. The vesting period for RSUs granted to non-employee directors is one year, and each restricted stock unit is exchanged for a like number of shares of Company stock following the termination of the participant's service as a director. Generally, RSUs granted to officers and certain key employees prior to 2012 vest on a pro rata basis over a three-year period, and the specified retirement age is 62. RSUs granted in May of 2013 "cliff" vest at the end of three years, and the specified retirement age is 62. Upon vesting, each restricted stock unit is exchanged for a like number of new shares of the Company's stock. RSUs do not have an option for cash payment.

The following table summarizes RSUs issued and the compensation expense recorded for 2013, 2012 and 2011:

Stock-Based Compensation Expense



	Restricted Stock Units	Weighted Average Fair Value	Expense
(Dollars in thousands, except per unit)	Restricted Stock Units	Weighted Average Fair Value	2013		2012		2011
Directors:
2010	16,000	30.99	$	—	$	—	$	165
2011	20,192	34.79	—		234		468
2012	30,618	21.44	255		402		—
2013	46,287	20.60	636		—		—
Employees:
2008	130,950	45.95	—		—		68
2009	121,625	25.98	—		43		626
2010	26,000	23.78	—		21		383
2011	17,250	23.55	69		195		140
2012	141,486	18.75	383		525		—
2013	170,582	20.63	633		—		—

Total			$	1,976	$	1,420	$	1,850

Restricted stock unit activity for 2013, 2012 and 2011 was as follows:



	Restricted Stock Units		Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2011	140,535		$	30.83
Granted	37,442		29.61
Vested	(113,136	)	33.55
Forfeited	(2,200	)	25.15
Nonvested at December 31, 2011	62,641		25.39
Granted	172,104		19.23
Vested	(67,861	)	24.86
Forfeited	(25,411	)	20.35
Nonvested at December 31, 2012	141,473		19.19
Granted	216,869		20.62
Vested	(69,955	)	20.54
Forfeited	(74,546	)	22.61
Nonvested at December 31, 2013	213,841		$	19.95

At December 31, 2013, the total unrecognized compensation cost related to nonvested RSUs was $2.8 million, which will be recognized over a weighted-average period of approximately two years.

Stock Options

From time to time, the Company may grant incentive stock options and nonqualified stock options to officers, certain key employees and non-employee directors under the plans noted above. The stock options would generally vest three years from the date of grant, which is the date the Board approved the grants, and expire no later than seven years after the date of grant. The exercise price of the stock would be fair value on the grant date. Upon exercise, a new share of Company common stock is issued for each option.

Stock option activity for 2013, 2012 and 2011 was as follows:



	Shares Under Option		Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions)(a)
Outstanding, January 1, 2011	273,672		$	16.46	$	3.3
Granted	617,500		31.75		—
Exercised	(199,032	)	15.95		—
Expired	(30,300	)	30.92		—
Outstanding, December 31, 2011	661,840		30.22		0.2
Exercised	(38,900	)	18.23		—
Forfeited/Expired	(294,940	)	31.29		—
Outstanding, December 31, 2012	328,000		30.67		0.2
Exercised	(20,000	)	16.96
Forfeited/Expired	(79,000	)	31.00
Outstanding, December 31, 2013	229,000		$	31.75	$	—


(a)	Intrinsic value is defined as the difference between the current market value and the exercise price, for those options where the market price exceeds the exercise price.

In January 2011, 617,500 stock options were granted. The Company used a binomial lattice model to estimate the fair value of $10.90 for this stock-based award. The fair value was estimated with the following assumptions: Dividend yield—2.5%; Volatility—40.6%; Risk-free interest rate—0.6%; and Expected life—seven years. These assumptions are based on multiple factors, including the historical volatility of the Company's stock price. The options vest three years from the grant date and expire seven years after the grant date. Compensation expense recognized in 2013 and 2011 totaled $0.2 million and $2.0 million, respectively. There was no compensation expense recognized in 2012. The decrease in compensation expense related for 2013 and 2012 was primarily due to forfeitures.

At December 31, 2013, the total unrecognized compensation cost related to nonvested stock options was less than $0.1 million, which is expected to be recognized in 2014.

Net cash proceeds from the exercise of stock options totaled $0.4 million, $0.7 million and $2.4 million in 2013, 2012 and 2011, respectively.

The total intrinsic value of options exercised during 2013, 2012 and 2011 was $0.1 million, $0.1 million and $2.2 million, respectively.

The following table summarizes information concerning outstanding and exercisable options at December 31, 2013:



	Options Outstanding				Options Exercisable
Range of Exercisable Prices	Vested	Unvested	Weighted Average Exercise Price Per Share	Weighted Average Remaining Contractual Life in Years	Number Exercisable	Weighted Average Exercise Price Per Share
$31.75 - $31.75	80,000	149,000	31.75	4.1	80,000	31.75

At December 31, 2013, outstanding options, substantially all of which are expected to vest, have a weighted-average remaining contractual life of 4.1 years and no intrinsic value. Vested and currently exercisable options have a weighted-average remaining contractual life of 4.1 years and no intrinsic value.

Weighted-average grant-date fair value of unvested options during the year ended December 31, 2013 was as follows:



	Shares Under Option		Weighted Average Grant-Date Fair Value
Outstanding, January 1, 2013	304,000		$	10.90
Vested	(80,000	)	10.90
Forfeited	(75,000	)	10.90
Outstanding, December 31, 2013	149,000		$	10.90

Stock Appreciation Rights

The Company may grant SARs to officers under the 2013 Equity and Incentive Compensation Plan. The SARs would generally vest on a pro-rata basis from one to five years from the date of grant, and expire no later than ten years after the date of grant, and the specified retirement age is 62. SARs require no cash payment from the recipient. The exercise price of the SAR would be fair value on the grant date. Upon exercise, a new share of Company stock is issued based on the increase in the fair value of the stock over the exercise price of the SAR. SARs do not have an option for cash payment.

During 2012, the Company issued SARs covering 318,452 shares in March, 345,502 shares in May and 43,058 shares in September under the 1995 Executive Incentive Compensation Plan to officers and key executive employees. During 2013, SARs covering 903,814 shares, 5,018 shares and 15,000 shares were issued in May, June and November, respectively, under the 2013 Equity and Incentive Compensation Plan.

The fair value of each SAR grant was estimated on the date of grant using a Black-Scholes pricing model with the following assumptions:



	March 2012 Grant			May 2012 Grant			September 2012 Grant			May 2013 Grant			June 2013 Grant			November 2013 Grant
Risk-free interest rate	1.56		%	1.18		%	1.00		%	1.17		%	1.41		%	1.91		%
Dividend yield	3.50		%	4.20		%	3.80		%	3.61		%	3.56		%	3.13		%
Expected life (years)	6.5			6.5			6.5			6.5			6.5			6.5
Volatility	43.9		%	44.0		%	44.3		%	44.1		%	44.1		%	43.8		%
SAR grant price	$	23.73		$	19.65		$	21.37		$	22.70		$	23.03		$	26.22
Fair value of SAR	$	6.10		$	4.77		$	6.20		$	6.86		$	7.07		$	8.60

SARs activity for 2013 and 2012 was as follows:



	SARs
	Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions) (a)
Outstanding, January 1, 2012	—		$	—	$	—
Granted	707,012		21.23
Forfeited/expired	(181,725	)	21.23
Outstanding, December 31, 2012	525,287		21.23		1.2
Granted	923,832		22.76
Exercised	(11,037	)	19.65
Forfeited	(476,624	)	22.28
Outstanding, December 31, 2013	961,458		$	22.20	$	5.6

(a) Intrinsic value is defined as the difference between the current market value and the exercise price, for those SARs where the market price exceeds the exercise price.

The total intrinsic value of SARs exercised during 2013 was $0.1 million. No SARs were exercised in prior years.

The following table summarizes information concerning outstanding and exercisable SARs at December 31, 2013:



	SARs Outstanding					SARs Exercisable
Range of exercisable prices	Vested	Unvested	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Life in Years	Number Exercisable	Weighted-Average Exercise Price per Share
$19.65 - $22.70	77,576	783,239	$	21.98	9.1	77,576	$	20.47
$23.03 - $26.22	44,377	56,266	24.07		8.5	44,377	23.73
	121,953	839,505	$	22.20	9.1	121,953	$	21.65

At December 31, 2013, outstanding SARs, substantially all of which are expected to vest, have a weighted-average remaining contractual life of 9.1 years and an aggregate intrinsic value of $5.6 million. Vested and currently exercisable SARs have a weighted-average remaining contractual life of 8.5 years and an aggregate intrinsic value of $0.8 million.

At December 31, 2013, total unrecognized compensation expense related to nonvested SARs was $4.8 million, which is expected to be recognized over a weighted average period of approximately 4.2 years.

Weighted-average grant date fair value of unvested SARs during the year ended December 31, 2013 was as follows:



	Shares		Weighted-Average Grant Date Fair Value
Unvested shares, January 1, 2013	525,287		$	21.23
Granted	923,832		22.76
Vested	(121,953	)	21.65
Exercised	(11,037	)	19.65
Forfeited	(476,624	)	22.28
Unvested shares, December 31, 2013	839,505		$	22.27

Other Stock Grants

During 2012, the Company issued 43,873 shares to its then Interim Chief Executive Officer as part of his compensation agreement. In addition, 4,000 shares were issued to other employees under incentive award programs. All shares vested immediately and were not subject to any holding period restrictions. Fair value of the grants were based on the market price of Company stock at the grant date. Expense recognized in 2012 for these grants total $1.0 million.

There was a $0.1 million increase, no change and a $1.1 million decrease of excess tax benefits principally from RSUs recognized in 2013, 2012 and 2011, respectively.