Share-Based Compensation

2012 Equity Incentive Plan

The Company's 2012 Equity Incentive Plan (the "2012 Plan") provides that current or prospective officers, employees, non-employee directors and advisors can receive share-based awards such as stock options, restricted stock and other stock awards. The 2012 Plan seeks to promote the highest level of performance by providing an economic interest in the long-term success of the Company. As of the adoption of the 2012 Plan, no further grants were permitted under any previously existing stock plans (the "Pre-existing Plans"). Additionally, all remaining shares available for future grants under the Pre-existing Plans became available for issuance under the 2012 Plan.

The Nominating, Compensation and Stock Option Committee of the Board of Directors is responsible for determining the individuals who will be granted stock awards, the number of stock awards each individual will receive, the price per share (in accordance with the terms of our 2012 Plan), and the exercise period of each stock award.

A summary of stock-based compensation expense for the six months ended June 30, 2015 and 2014 is as follows:



	For the Six Months Ended June 30,
	2015		2014
Stock Options	$	1,406,000	$	1,296,000
Restricted Stock	122,000		54,000
Employee Stock Purchase Plan ("ESPP")	205,000		181,000
Total pre-tax stock-based compensation expense charged against income (1)	$	1,733,000	$	1,531,000


(1)	Stock-based compensation expense is recorded in the selling, general and administrative caption in our consolidated statements of comprehensive income.

We have outstanding stock awards that were granted under the Pre-existing Plans to non-employee directors, officers and employees of the Company and other specified groups, depending on the Pre-existing Plan. As of June 30, 2015, 4,412,000 shares of common stock were reserved for issuance under our 2012 Plan, including 1,767,000 shares available for future grant. The stock price will not be less than the fair market value of the common stock on the date the award is granted. No stock award will have a term in excess of ten years. Since 2008, all awards granted under the Pre-existing Plans and the 2012 Plan become vested and exercisable ratably over a five year period on each yearly anniversary date of the option grant.

A summary of our stock option activity under the 2012 Plan as of December 31, 2014 and changes during the six months ended June 30, 2015 is as follows:



	Stock Options Outstanding
	Number of Shares		Weighted Average Exercise Price
December 31, 2014	2,362,000		$	19.45
Granted	561,000		30.30
Cancelled	(41,000	)	26.48
Exercised	(237,000	)	17.69
June 30, 2015	2,645,000		$	21.79

The weighted average grant-date fair value of stock options granted during the six months ended June 30, 2015 and 2014 was $6.64 and $8.24 per common share, respectively.

During the six months ended June 30, 2015, the Company granted 25,000 shares of restricted stock with a weighted average grant date fair value of $30.30 per share. During the six months ended June 30, 2014, the Company granted 14,000 shares of restricted stock with a weighted average grant date fair value of $28.02 per share.

A summary of our non-vested stock-based compensation as of December 31, 2014 and changes during the six months ended June 30, 2015 is as follows:



	Number of Non-vested Shares		Weighted Average Grant Date Fair Value
December 31, 2014	1,465,000		$	6.17
Granted	561,000		6.64
Vested	(488,000	)	5.17
Forfeited	(44,000	)	6.59
June 30, 2015	1,494,000		$	6.66

The following table summarizes other information about our outstanding stock options at June 30, 2015.



	Stock Options
Range of exercise prices	$10.39 - $30.30
Outstanding:
Weighted average remaining contractual life (years)	6.9
Aggregate intrinsic value	$	29,787,000
Exercisable:
Number of shares	1,150,000
Weighted average remaining contractual life (years)	5.2
Aggregate intrinsic value	$	19,172,000
Exercised:
Aggregate intrinsic value	$	3,326,000

Fair Value Estimates

The fair value of stock awards granted in 2015 and 2014 was estimated on the date of grant using the Black-Scholes option valuation model based on the following assumptions:



	June 30, 2015	June 30, 2014
Risk-free interest rate	1.9%	1.9%
Weighted average expected life in years	5.8 years	5.9 years
Expected volatility	27.2%	36.9%
Dividend yield	2.2%	2.4%

Other Information

Other information pertaining to activity of our stock awards during the six months ended June 30, 2015 and 2014 were as follows:



	June 30, 2015		June 30, 2014
Total grant-date fair value of stock awards granted	$	4,027,000	$	4,268,000
Total fair value of stock awards vested during period	$	2,719,000	$	2,051,000
Total unrecognized compensation expense related to non-vested stock awards	$	8,611,000	$	7,847,000

At June 30, 2015, the unrecognized compensation cost related to stock awards granted but not yet vested, as reported above, was expected to be recognized through the fourth quarter of 2019 for the 2015 grants and the fourth quarter of 2018 for the 2014 grants.

Employee Stock Purchase Plan

We have an Employee Stock Purchase Plan ("ESPP") for all eligible employees. All full-time and certain part-time employees who have completed two years of continuous service with us are eligible to participate. On April 12, 2011, the Board of Directors extended the ESPP for an additional five offerings through 2016. Annual offerings commence and terminate on the respective year’s first and last calendar day.

Under the ESPP, we are authorized to issue up to 4,050,000 shares of our common stock to our employees. Pursuant to such authorization, we have 2,421,000 shares available for future grant at June 30, 2015.

The stock-based compensation expense associated with our ESPP was estimated on the date of grant using the Black-Scholes option valuation model based on the following assumptions:



	June 30, 2015	June 30, 2014
Risk-free interest rate	0.18%	0.10%
Weighted average expected life in years	1.0 year	1.0 year
Expected volatility	19.2%	21.9%
Dividend yield	2.2%	2.4%