Share-Based Compensation

3 Months Ended

Mar. 31, 2015

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

Share-Based Compensation

Share-Based Compensation

During the three months ended March 31, 2015, the Company granted approximately 0.4 million stock options, 0.1 million unvested shares and 0.1 million performance share units. During the three months ended March 31, 2014, the Company granted approximately 0.5 million stock options, 0.1 million unvested shares and 0.1 million performance share units.

Weighted average option fair values and assumptions for the periods specified are disclosed below. The fair value of each option grant was estimated on the date of the grant using the Binomial lattice option pricing model.

	Three Months Ended   March 31,
	2015	2014
Weighted average fair value of option grants	$20.40	$19.53
Dividend yield	1.42%	1.26%
Volatility	29.94%	30.36%
Risk-free forward interest rate	0.23% - 2.75%	0.12% - 4.69%
Expected life (in years)	5.90	5.89

Weighted average performance share unit fair values and assumptions for the period specified are disclosed below. The performance share units are market condition awards and have been assessed at fair value on the date of grant using a Monte Carlo simulation model.

	Three Months Ended March 31,
	2015	2014
Weighted average fair value of performance share units	$95.07	$94.55
Dividend yield	0.00%	0.00%
Volatility	19.14%	26.41%
Risk-free forward interest rate	1.01%	0.65%
Expected life (in years)	2.86	2.88

Total compensation cost for stock options is as follows:

	Three Months Ended   March 31,
	2015			2014
Cost of goods sold	$	226		$	242
Selling, general and administrative expenses	2,197			2,190
Total expense before income taxes	2,423			2,432
Income tax benefit	(767		)	(755		)
Total expense after income taxes	$	1,656		$	1,677

Total compensation cost for unvested shares is as follows:

	Three Months Ended   March 31,
	2015			2014
Cost of goods sold	$	420		$	472
Selling, general and administrative expenses	2,697			2,746
Total expense before income taxes	3,117			3,218
Income tax benefit	(806		)	(687		)
Total expense after income taxes	$	2,311		$	2,531

Total compensation cost for performance share units is as follows:

	Three Months Ended   March 31,
	2015			2014
Cost of goods sold	$	—		$	—
Selling, general and administrative expenses	1,342			661
Total expense before income taxes	1,342			661
Income tax benefit	(430		)	(186		)
Total expense after income taxes	$	912		$	475

The Company’s policy is to recognize compensation cost on a straight-line basis, assuming forfeitures, over the requisite service period for the entire award. Classification of stock compensation cost within the Consolidated Statements of Operations is consistent with classification of cash compensation for the same employees.

As of March 31, 2015, there was $15.0 million of total unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 1.6 years, $13.5 million of total unrecognized compensation cost related to unvested shares/units that is expected to be recognized over a weighted-average period of 1.2 years, and $10.1 million of total unrecognized compensation cost related to performance share units that is expected to be recognized over a weighted-average period of 1.2 years.

A summary of the Company’s stock option activity as of March 31, 2015, and changes during the three months endedMarch 31, 2015, is presented in the following table:

Stock Options	Shares		Weighted Average Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2015	2,378,559		$	46.91	6.69	$	73,561,785
Granted	440,945		78.43
Exercised	(238,352	)	38.75
Forfeited	(12,082	)	57.62
Outstanding at March 31, 2015	2,569,070		$	53.03	7.15	$	59,729,867
Vested and expected to vest as of March 31, 2015	2,409,629		$	51.87	7.02	$	58,689,128
Exercisable at March 31, 2015	1,394,118		$	41.37	5.72	$	48,047,309