Stock Compensation Plans

The Company's 2005 Long-Term Performance Compensation Plan, dated May 6, 2005 (the “LT Plan”), authorizes the Board of Directors to grant options, stock appreciation rights, performance shares and share awards to employees and outside directors for up to 600,000 of the Company's common shares plus 639,000 common shares that remained available under a prior plan. In 2008, shareholders approved an additional 750,000 of the Company's common shares to be available under the LT Plan. As of December 31, 2013, approximately 637,500 shares remain available for grant under the LT Plan. Options granted have a maximum term of 10 years.

Stock-based compensation expense for all stock-based compensation awards are based on the grant-date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award. Total compensation expense recognized in the Consolidated Statement of Income for all stock compensation programs was $4.3 million, $4.0 million and $4.1 million in 2013, 2012 and 2011, respectively.

Stock Only Stock Appreciation Rights (“SOSARs”) and Stock Options

Beginning in 2006, the Company discontinued granting options to directors and management and instead began granting SOSARs. SOSARs granted to directors and management personnel under the LT Plan beginning in 2008 have a term of five years and have three year graded vesting. The SOSARs granted in 2006 and 2007 have a term of five years and vest after three years. SOSARs granted under the LT Plan are structured as fixed grants with the exercise price equal to the market value of the underlying stock on the date of the grant. The related compensation expense is recognized on a straight-line basis over the service period.

Beginning in 2011, the Company replaced the SOSAR equity awards with full value Restricted Stock Awards (“RSAs”). No SOSAR equity awards have been granted since 2010.

A reconciliation of the number of SOSARs outstanding and exercisable under the Long-Term Performance Compensation Plan as of December 31, 2013, and changes during the period then ended is as follows:



	Shares (000's)		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (000's)
Options & SOSARs outstanding at January 1, 2013	473		$	19.10
Options exercised	(300	)	20.90
Options & SOSARs cancelled / forfeited	—		—
Options and SOSARs outstanding at December 31, 2013	173		$	15.99	0.76	$	7,510
Vested and expected to vest at December 31, 2013	173		$	15.99	0.76	$	7,510
Options exercisable at December 31, 2013	173		$	15.99	0.76	$	7,510



	Year ended December 31,
(in thousands)	2013		2012		2011
Total intrinsic value of options exercised	$	4,678	$	1,937	$	3,817
Total fair value of shares vested	$	576	$	818	$	816
Weighted average fair value of options granted	$	—	$	—	$	—

As of December 31, 2013, there was no unrecognized compensation cost related to stock options and SOSARs granted under the LT Plan.

Restricted Stock Awards

The LT Plan permits awards of restricted stock. These shares carry voting and dividend rights; however, sale of the shares is restricted prior to vesting. Restricted shares granted prior to 2013 vest over a period of 3 years. Restricted shares granted in 2013 vest over a period of 2.25 years. Total restricted stock expense is equal to the market value of the Company's common shares on the date of the award and is recognized over the service period. In 2013, there were 60,168 shares issued to members of management and directors.

A summary of the status of the Company's nonvested restricted shares as of December 31, 2013, and changes during the period then ended, is presented below:



	Shares (000)'s		Weighted-Average Grant-Date Fair Value
Nonvested restricted shares at January 1, 2013	180		$	28.82
Granted	60		47.65
Vested	(50	)	25.27
Forfeited	(2	)	29.93
Nonvested restricted shares at December 31, 2013	188		$	35.74



	Year ended December 31,
	2013	2012	2011
Total fair value of shares vested (000's)	$1,121	$590	$1,367
Weighted average fair value of restricted shares granted	$47.65	$28.99	$31.87

As of December 31, 2013, there was $3.2 million of total unrecognized compensation cost related to nonvested restricted shares granted under the LT Plan. That cost is expected to be recognized over the next 2.0 years.

Performance Share Units (“PSUs”)

The LT Plan also allows for the award of PSUs. Each PSU gives the participant the right to receive common shares dependent on the achievement of specified performance results over a specified performance period. For PSUs granted prior to 2013, the performance period is 3 years. For PSUs granted in 2013, the performance period is 2.25 years. At the end of the performance period, the number of shares of stock issued will be determined by adjusting the award upward or downward from a target award. Fair value of PSUs issued is based on the market value of the Company's common shares on the date of the award. The related compensation expense is recognized over the performance period when achievement of the award is probable and is adjusted for changes in the number of shares expected to be issued if changes in performance are expected. In 2013, there were 103,272 PSUs issued to members of management. Currently, the Company is accounting for the awards granted in 2011, 2012 and 2013 at 100%, 40%, and 50%, respectively, of the maximum amount available for issuance.

PSUs Activity

A summary of the status of the Company's PSUs as of December 31, 2013, and changes during the period then ended, is presented below:



	Shares (000)'s		Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2013	306		$	28.81
Granted	104		47.32
Vested	(54	)	22.09
Forfeited	(6	)	32.56
Nonvested at December 31, 2013	350		$	35.27



	Year ended December 31,
	2013	2012	2011
Weighted average fair value of PSUs granted	$47.32	$28.99	$31.87

As of December 31, 2013, there was $2.6 million of total unrecognized compensation cost related to nonvested PSUs granted under the LT Plan. That cost is expected to be recognized over the next 2.0 years.

Employee Share Purchase Plan (the “ESP Plan”)

The Company's 2004 ESP Plan allows employees to purchase common shares through payroll withholdings. The Company has approximately 285,000 common shares remaining available for issuance to and purchase by employees under this plan. The ESP Plan also contains an option component. The purchase price per share under the ESP Plan is the lower of the market price at the beginning or end of the year. The Company records a liability for withholdings not yet applied towards the purchase of common stock.

The fair value of the option component of the ESP Plan is estimated at the date of grant under the Black-Scholes option pricing model with the following assumptions for the appropriate year. Expected volatility was estimated based on the historical volatility of the Company's common shares over the past year. The average expected life was based on the contractual term of the plan. The risk-free rate is based on the U.S. Treasury issues with a one year term. Forfeitures are estimated at the date of grant based on historical experience.



	2013		2012		2011
Risk free interest rate	0.16	%	0.11	%	0.27	%
Dividend yield	1.49	%	1.37	%	1.21	%
Volatility factor of the expected market price of the common shares	0.27		0.41		0.34
Expected life for the options (in years)	1.00		1.00		1.00