Share-Based Compensation

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

8 - Share–Based Compensation

We measure all share-based payments to employees, including grants of stock options, and use a fair-value-based method for the recording of related compensation expense in our consolidated statements of income. In determining the expense we record for stock options granted to directors and employees of our subsidiaries and affiliates, we estimate the fair value of each option award on the date of grant using the Black-Scholes option pricing model. The significant assumptions we utilize in applying the Black-Scholes option pricing model are the risk-free interest rate, the expected term, the dividend yield and the expected volatility.

We charged compensation expense related to our stock compensation plans against income before income taxes of $494,974 and $155,069 for the three months ended September 30, 2014 and 2013, respectively, with a corresponding income tax benefit of $173,241 and $54,274, respectively. We charged compensation expense related to our stock compensation plans against income before income taxes of $1.5 million and $482,897 for the nine months ended September 30, 2014 and 2013, respectively, with a corresponding income tax benefit of $536,725 and $169,014, respectively. At September 30, 2014, we had $3.1 million of unrecognized compensation expense related to nonvested share-based compensation granted under our stock compensation plans. We expect to recognize this cost over a weighted average period of 1.7 years.

We received cash from option exercises under all stock compensation plans for the three months ended September 30, 2014 and 2013 of $3.9 million and $910,838, respectively. We received cash from option exercises under all stock compensation plans for the nine months ended September 30, 2014 and 2013 of $5.2 million and $4.5 million, respectively. We realized actual tax benefits for the tax deductions from option exercises of share-based compensation of $177,717 and $21,986 for the three months ended September 30, 2014 and 2013, respectively. We realized actual tax benefits for the tax deductions from option exercises of share-based compensation of $241,391 and $208,867 for the nine months ended September 30, 2014 and 2013, respectively.