Note 14. Stock Option Plans, Stock Grants, Stock Appreciation Rights and Employee Stock Purchase Plan

At our May 2005 Annual Meeting, the stockholders approved the 2005 Stock Incentive Plan. The 2005 Stock Incentive Plan authorizes the issuance in the aggregate of 1,000,000 incentive stock options, non-incentive stock options, restricted shares and stock appreciation rights for our common stock. Upon the approval of the 2005 Amended and Restated Stock Incentive Plan, no further awards are being issued under any of our other stock plans or the stock appreciation rights plan. All stock options issued under the 2005 Amended and Restated Stock Incentive Plan are exercisable upon vesting for one share of our common stock and are granted at exercise prices no less than the fair market value of our common stock on the date of grant.

In April 2009, the stockholders approved an amendment to the 2005 Stock Incentive Plan increasing the available number of restricted shares from 1,000,000 to 1,500,000. In April 2013, the stockholders further amended and restated the 2005 Stock Incentive Plan increasing the available number of restricted shares from 1,500,000 to 2,000,000. As of December 31, 2013, 1,340,885 of such awards were issued leaving 659,115 awards available to be issued in subsequent periods.

Stock-based compensation granted under the Company’s stock plans is expensed in tranches over the vesting period. Options and non-performance based grants generally vest equally over a three or four year period and the options have a maximum term of ten years. Certain non-performance based grants vest over five years with one-third vesting in each of the third, fourth and fifth years. The Company’s performance based share grants generally consist of two types of awards. The restricted stock units issued in 2011 and after will cliff vest over a three year period, with 50% vesting in full, and 50% dependent on the rate of compound annual growth in book value per share for the three years immediately prior to the vesting date, with actual shares that vest ranging between 150% to 0% of that portion of the original award. Those performance based restricted stock units issued prior to 2011 generally vest over five years with one-third vesting in each of the third, fourth and fifth years, dependent on the rolling three-year average return on equity based on the three years prior to the year in which the vesting occurs, with actual shares that vest ranging between 150% to 0% of the original award.

The amounts charged to expense for stock-based compensation for the years ended December 31, 2013, 2012 and 2011 are presented in the following table:


	Year Ended December 31,
In thousands	2013		2012		2011
Restricted stock units	$	3,369	$	7,380	$	139
Directors restricted stock grants⁽¹⁾		413		390		248
Employee stock purchase plan		132		82		173
Stock appreciation rights⁽²⁾		—		—		(100	)

Total stock-based compensation	$	3,914	$	7,852	$	460

(1)	- Relates to non-employee directors serving on the Parent Company’s Board of Directors, all of whom have been elected by the Company’s stockholders, as well as non-employee directors serving on NUAL’s Board of Directors.

(2)	- All outstanding stock appreciation rights were exercised during 2011.

Unvested restricted stock units outstanding as of December 31, 2013, 2012 and 2011, and changes during the years ended on those dates, are presented in the following table:


	December 31,
	2013			2012			2011
Beginning balance		587,629			526,972			590,661
Granted—Performance		114,463			97,145			86,118
Granted—Non Performance		155,463			146,915			98,640

Total Granted		269,926			244,060			184,758
Vested—Performance Earned		(15,714	)		—			(22,993	)
Vested—Performance Unearned		(57,585	)		(46,998	)		(42,334	)
Vested—Non Performance		(60,183	)		(91,323	)		(149,738	)

Total Vested		(133,482	)		(138,321	)		(215,065	)
Forfeited		(97,261	)		(45,082	)		(33,382	)

Ending balance		626,812			587,629			526,972

As included in the table above, there were 15,714 and 22,933 performance based shares that vested during the years ended December 31, 2013 and 2011, respectively. There were no performance based shares that vested during the year ended December 31, 2012.

The fair value of total vested shares for the years ended December 31, 2013, 2012 and 2011 was $3.5 million, $4.6 million and $8.6 million, respectively.

The weighted average grant date fair value of all RSUs granted during the years ended December 31, 2013, 2012 and 2011 was $55.36, $48.21 and $50.06, respectively.

As of December 31, 2013 and 2012, the total unrecognized compensation expense, net of estimated forfeitures, related to unvested RSUs was $10.6 million and $11.9 million, respectively, which is expected to be recognized as expense over weighted average periods of 2.2 years and 2.2 years, respectively. The aggregate fair value of all unvested RSUs as of December 31, 2013 and 2012 was $39.6 million and $30.0 million, respectively.

Stock options outstanding as of December 31, 2013, 2012 and 2011 are as follows:


	December 31,
	2013					2012					2011
				Average					Average					Average
	# of Shares			Exercise Price		# of Shares			Exercise Price		# of Shares			Exercise Price
Beginning balance		90,250		$	29.94		105,250		$	29.50		157,500		$	27.13
Granted		—			—		—			—		—			—
Exercised		(83,500	)	$	29.88		(15,000	)	$	26.90		(52,250	)	$	22.35
Expired or forfeited		—			—		—			—		—		$	—

Ending balance		6,750		$	30.65		90,250		$	29.94		105,250		$	29.50

Number of options exercisable		6,750		$	30.65		90,250		$	29.94		105,250		$	29.50

The following table summarizes information about stock options outstanding as of December 31, 2013:


			Average
	Outstanding		Remaining		Average		Average Aggregate		Exercisable		Average		Average Aggregate
Price Range	Options		Contract Life		Exercise Price		Intrinsic Value		Options		Exercise Price		Intrinsic Value
$21 to $30		5,250		0.2	$	29.11	$	34.05		5,250	$	29.11	$	34.05
$31 to $37		1,500		1.7	$	36.03	$	27.13		1,500	$	36.03	$	27.13

Total		6,750		1.9						6,750

The Company has a Stock Appreciation Rights Plan which allows for the grant of up to 300,000 stock appreciation rights (“SARs”) at prices of no less than 90% of the fair market value of the common stock. As a result of the approval of the 2005 Amended and Restated Stock Incentive Plan, no further awards will be issued from the Stock Appreciation Rights Plan. SARs outstanding as of December 31, 2013, 2012 and 2011 were as follows:


	December 31,
	2013				2012				2011
			Average				Average					Average
			Exercise				Exercise					Exercise
	SARs		Prices		SARs		Prices		SARs			Prices
Beginning balance		—	$	—		—	$	—		16,500		$	18.74
Granted		—		—		—		—		—			—
Exercised		—		—		—	$	—		(16,500	)	$	18.74
Expired or forfeited		—		—		—		—		—			—

Ending balance		—	$	—		—	$	—		—		$	—

Number of SARs exercisable		—	$	—		—	$	—		—		$	—

We offer an Employee Stock Purchase Plan (the “ESPP”) to all of our eligible employees. Employees are offered the opportunity to purchase the Company’s common stock at 90% of fair market value at the lower of the price at the beginning or the end of each six month offering period. Employees can invest up to 10% of their base compensation through payroll withholding towards the purchase of our common stock subject to the lesser of 1,000 shares or total market value of $25,000. There will be 8,738 shares purchased in 2014 from funds withheld during the July 1, 2013 to December 31, 2013 offering period. There were 17,640 shares purchased in 2013 in the aggregate from funds withheld during the offering periods of July 1, 2012 to December 31, 2012 and January 1, 2013 to June 30, 2013. We expense both the value of the 10% discount and the “look-back” option which provides for the more favorable price at either the beginning or end of the offering period.