Share-Based Awards

The Company has a share-based compensation plan which was approved by its Shareholders in April 2014 (Plan) under which the Board of Directors may grant to employees share-based awards including nonqualified stock options, stock appreciation rights (SARs), shares of restricted stock and restricted stock units (RSUs). The options and SARs granted under the Plan have an exercise price equal to the fair market value of the underlying stock at the date of grant vest ratably over a three-year period with the first one-third of the grant becoming exercisable one year after the date of grant. The options and SARs expire 10 years from the date of grant. Shares of restricted stock and RSUs granted under the Plan vest ratably over a three-year period with the first one-third of the grant vesting one year after the date of grant. Dividends are paid on shares of restricted stock and dividend equivalents are paid on RSUs. At December 31, 2015, there were 8.3 million shares of common stock available for future awards under the Plan.

Stock Options:

The Company estimates the grant date fair value of its option awards granted using a lattice-based option valuation model. The Company believes that the lattice-based option valuation model provides a more precise estimate of fair value than the Black-Scholes option pricing model. Lattice-based option valuation models utilize ranges of assumptions over the expected term of the options. Prior to 2013, the Company used a weighted-average of implied and historical volatility to determine the expected volatility of its stock. Beginning with awards granted in 2013, the Company uses implied volatility to determine the expected volatility of its stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted is derived from the output of the option valuation model and represents the average period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

Assumptions used in calculating the lattice-based fair value of options granted during 2015, 2014 and 2013 were as follows:



	2015		2014		2013
Expected average term (in years)	6.0		6.1		6.1
Expected volatility	24% - 30%		25% - 34%		27% - 36%
Weighted average volatility	28	%	32	%	33	%
Expected dividend yield	2.0	%	1.8	%	1.6	%
Risk-free interest rate	0.1% - 2.0%		0.1% - 2.8%		0.1% - 2.1%

The following table summarizes the stock option transactions for the year ended December 31, 2015 (in thousands except for per share amounts):



	Options		Weighted- Average Price
Options outstanding, beginning of period	2,717		$	43
Options granted	468		$	63
Options exercised	(517	)	$	39
Options forfeited	(165	)	$	64
Options outstanding, end of period	2,503		$	47
Exercisable, end of period	1,888		$	42

The weighted-average fair value of options granted during the years ended December 31, 2015, 2014 and 2013 was $13, $14 and $12, respectively.

As of December 31, 2015, there was $3.3 million of unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 1.7 years.

The following table summarizes the aggregate intrinsic value related to options outstanding, exercisable and exercised as of and for the years ended December 31 (in thousands):



	2015		2014		2013
Exercised	$	9,890	$	31,623	$	28,879
Outstanding	$	16,605	$	61,947	$	100,054
Exercisable	$	16,605	$	54,071	$	81,930

The Company’s policy is to issue new shares of common stock upon the exercise of employee stock options.

Stock options outstanding at December 31, 2015 (options in thousands):



Price Range	Weighted-Average Contractual Life	Options	Weighted-Average Exercise Price
$10.01 to $20	3.1	322	$	13
$20.01 to $30	4.0	200	$	24
$30.01 to $40	2.1	202	$	39
$40.01 to $50	5.1	418	$	44
$50.01 to $60	4.5	464	$	52
$60.01 to $70	6.4	897	$	64
Options outstanding	4.9	2,503	$	47
Options exercisable	3.7	1,888	$	42

Stock Appreciation Rights (SARs)

SARs vest under the same terms and conditions as options; however, they are settled in cash equal to their settlement date fair value. As a result, SARs are recorded in the Company’s consolidated balance sheets as a liability until the date of exercise.

The fair value of each SAR award is estimated using a lattice-based valuation model. In accordance with ASC Topic 718, “Stock Compensation”, the fair value of each SAR award is recalculated at the end of each reporting period and the liability and expense adjusted based on the new fair value and the percent vested.

The assumptions used to determine the fair value of the SAR awards at December 31, 2015 and 2014 were as follows:



	2015		2014
Expected average term (in years)	5.3 - 7.4		3.7 - 5.4
Expected volatility	28% - 30%		25% - 31%
Expected dividend yield	2.7	%	1.7	%
Risk-free interest rate	0.2% - 2.3%		0.0% - 2.3%

The following table summarizes the SAR transactions for the year ended December 31, 2015 (in thousands except for per share amounts):



	SARs		Weighted-Average Price
Outstanding, beginning of period	176		$	30
Granted	12		$	63
Exercised	(26	)	$	26
Forfeited	—		$	—
Outstanding, end of period	162		$	33
Exercisable, end of period	137		$	28

The weighted-average fair value of SARs granted during the years ended December 31, 2015, 2014 and 2013 was $13, $14 and $12, respectively.

Restricted Stock Awards Settled in Stock:

Beginning in 2014, the Company granted certain eligible U.S. employees restricted stock units (RSUs) that settle in Company stock. Prior to 2014, the Company granted restricted, nonvested, stock. The fair value of RSUs settled in stock and restricted stock is determined based on the market price of the Company’s shares on the grant date. The following table summarizes the RSUs settled in stock and restricted stock transactions for the year ended December 31, 2015 (in thousands except for per share amounts):



	Restricted Shares		Grant Date Fair Value Per Share
Nonvested, beginning of period	920		$	54
Granted	472		$	63
Vested	(454	)	$	53
Forfeited	(88	)	$	62
Nonvested, end of period	850		$	59

As of December 31, 2015, there was $21.7 million of unrecognized compensation cost related to RSUs settled in stock and restricted stock that is expected to be recognized over a weighted-average period of 1.7 years.

Restricted Stock Awards Settled in Cash

Restricted stock units, granted to certain eligible non-U.S. employees (RSUIs) vest under the same terms and conditions as RSUs settled in stock and restricted stock; however, they are settled in cash equal to their settlement date fair value. As a result, RSUIs are recorded in the Company’s consolidated balance sheets as a liability until the date of vesting.

The fair value of RSUIs is determined based on the market price of the Company’s shares on the grant date. The following table summarizes the RSUI transactions for the year ended December 31, 2015 (in thousands except for per share amounts):



	Restricted Stock Unit		Weighted-Average Grant Date Fair Value Per Share
Nonvested, beginning of period	129		$	66
Granted	64		$	47
Vested	(64	)	$	56
Forfeited	(20	)	$	50
Nonvested, end of period	109		$	49