Share-Based Compensation

9 Months Ended

Sep. 30, 2016

The Company provides compensation benefits by granting stock options and employee stock purchase rights to its employees and restricted shares to its directors. On May 3, 2016, the shareholders approved the 2016 Stock Option Plan, which made available 3 million shares of the Company's common stock for purchase upon exercise of options granted. The Company has historically granted the majority of its options during the second quarter of each fiscal year and 2,973 and 2,956 options were granted in the nine months ended September 30, 2016 and 2015, respectively. Stock options granted under the 2016 Stock Option Plan vest over three years from the date of grant as compared to five years for options granted in prior years. The grant of employee stock purchase rights and the issuance of shares under the employee stock purchase plan are made in the third quarter of each fiscal year and 703 and 699 were issued in the nine-month periods ended September 30, 2016 and 2015, respectively. In the second quarter of 2016 and 2015, respectively, 41 and 34 fully vested shares were granted to non-employee directors.

The Company recognizes stock compensation expense based on an estimate of the fair value of awards granted to employees and directors under the Company’s stock option, director restricted stock and employee stock purchase rights plans. This expense, adjusted for expected forfeitures, is recognized in net earnings on a straight-line basis over the stock awards' vesting periods as salaries and related costs.

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




	Nine months ended September 30,
	2016			2015
Dividend yield	1.70		%	1.60		%
Volatility - stock option plans	24 - 25%			29 - 34%
Volatility - stock purchase rights plans	20		%	20		%
Risk free interest rates	0.51 - 1.42%			0.30 - 2.04%
Expected life (years) - stock option plans	5.50 - 6.50			6.41 - 7.47
Expected life (years) - stock purchase rights plans	1			1
Weighted average fair value of stock options granted during the period	$	9.57		$	13.44
Weighted average fair value of stock purchase rights granted during the period	$	10.99		$	10.45

Total stock compensation expense and the total related tax benefit recognized are as follows:



	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Stock compensation expense	$	10,476	$	10,919	$	34,264	$	32,489
Recognized tax benefit	$	2,149	$	1,571	$	5,928	$	4,305

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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