STOCK BASED COMPENSATION

At December 31, 2014, we had the following stock option plans:


•	the 2014 Incentive Stock Plan, which our stockholders approved in May 2014;


•	the 2011 Incentive Stock Plan, which our stockholders approved in May 2011;


•	the 2008 Incentive Stock Plan, which our stockholders approved in May 2008;


•	the 2005 Incentive Stock Plan, which our stockholders approved in April 2005;


•	the 2000 Nonstatutory Stock Option Plan, which expired in February 2010;


•	the 1997 Stock Option Plan, which expired in January 2007;


•	the 1996 Directors Stock Option Plan, which expired in May 2006; and

At December 31, 2014, we have reserved a total of 9,450,645 shares for issuance under these plans.

In terms of the stock options authorized, the 2014 Plan, 2011 Plan, 2008 Plan, and the 2005 Plan provide for the grant of non-statutory stock options ("NSOs") and incentive stock options ("ISOs") intended to qualify under section 422 of the Internal Revenue Code; the 2000 Plan provides for the grant of NSOs; the 1997 Plan provided for the grant of NSOs and ISOs; and the Directors Plan provided for the grant of NSOs.

The 2014, 2011, 2008 and 2005 Plans authorize awards to our officers, employees and consultants, and following the expiration of the Directors Plan in May 2006, to our directors; the 2000 Plan authorized awards to our employees and consultants but not to our officers and directors; the 1997 Plan authorized awards to our officers, directors, employees and consultants; and the Directors Plan authorized awards to our outside directors.

The exercise price per share of an option granted under any of our stock option plans may not be less than the closing price of a share of our common stock on the date of grant. The maximum term of an option granted under any plan may not exceed 10 years. An option may be exercised only when it is vested and, in the case of an option granted to an employee (including an officer), only while he or she remains an employee and for a limited period following the termination of his or her employment. New shares are issued upon exercise of stock options.

Employee Stock Purchase Plan:

In October 2000, our Board of Directors adopted the Employee Stock Purchase Plan ("ESPP"), which our stock holders approved in May 2001, and was made effective as of July 1, 2001. The ESPP authorizes 900,000 shares of our common stock, which substantially most employees may purchase through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or the end of the six-month offering periods. An employee's payroll deductions, and stock purchase, may not exceed $5,000 during any offering period. During 2014, 2013 and 2012, 60,189 shares, 52,956 shares, and 56,362 shares respectively, were issued through the ESPP. At December 31, 2014, we had 259,503 shares available for issuance under ESPP plan.

Stock Based Compensation Expense:

During 2014, there were no changes to our stock compensation plans or modifications to outstanding stock-based awards which would change the value of any awards outstanding. Compensation expense for all stock-based compensation awards granted subsequent to January 1, 2006 is based on the grant-date fair value determined in accordance with the provisions of FASB accounting standards for share-based payments.

The following table presents the total stock-based compensation expense resulting from stock option awards, restricted stock units ("RSUs"), and the ESPP included in the Consolidated Statements of Income:



	Years Ended December 31,
	2014		2013		2012
Cost of revenues - stock option plan	$	52	$	120	$	136
Selling, general and administrative - stock option plan	15,214		15,212		13,630
Selling, general and administrative - RSUs	1,267		1,116		1,474
Selling, general and administrative - ESPP	1,240		1,009		1,099
Total pre-tax expense	$	17,773	$	17,457	$	16,339

The following table sets forth the tax benefits related to stock compensation:



	Years Ended December 31,
	2014		2013		2012
Tax benefit recognized in Statements of Income	$	4,849	$	4,518	$	5,818
Excess tax benefit realized	17,906		17,153		30,161

Stock Options:

Options granted to directors vest in one year and options granted to officers and employees generally vest over five years. Expense related to the graded vesting options is recognized using the straight-line method over the vesting period. Stock option activity for the year ended December 31, 2014, is summarized as follows:



	Number of Options		Weighted Average Exercise Price per Share
Outstanding at beginning of year	5,540,482		$	70.29
Granted	981,583		115.41
Exercised	(991,201	)	53.49
Forfeited	(151,350	)	96.43
Canceled or expired	(1,657	)	80.96
Outstanding at December 31, 2014	5,377,857		$	80.88
Exercisable at December 31, 2014	2,719,760		$	65.54
Vested and expected to vest at December 31, 2014	5,176,959		$	80.02

At December 31, 2014, there was $44.1 million of total unrecognized compensation expense related to non-vested option awards, which is expected to be recognized over a weighted average period of 2.81 years.

The following table sets forth the total intrinsic value of options exercised for the years ended December 31:



In thousands
	2014		2013		2012
Total exercise intrinsic value of options exercised	$	65,884	$	55,757	$	97,816

The total exercise intrinsic value represents the total pre-tax value (the difference between the sales price on the trading day the option was exercised and the exercise price associated with the respective option).

The following table sets forth the information related to outstanding and exercisable options for the years ended December 31:



	2014		2013		2012
Weighted average remaining contractual life of outstanding options (in years)	6.10		6.60		6.70
Total aggregate intrinsic value of outstanding options (in thousands)	$	269,900	$	254,200	$	175,200
Weighted average remaining contractual life of exercisable options (in years)	5.10		5.30		5.50
Total aggregate intrinsic value of exercisable options (in thousands)	$	178,300	$	161,100	$	114,500

The total aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between our closing stock price on the last day of trading for the year ended December 31, 2014 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders assuming all option holders had exercised their options on December 31, 2014; this amount changes based on the fair market value of our stock.

Options outstanding and exercisable at December 31, 2014 by price range are presented below:



	Options Outstanding				Options Exercisable
Range of Exercise Price	Shares	Outstanding Average Remaining Life in Years	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
$22.90 - $46.83	663,353	3.03	$	41.99	659,353	$	42.06
$46.87 - $51.20	72,225	4.34	49.70		68,225	49.61
$51.55 - $51.55	539,334	5.10	51.55		380,195	51.55
$51.75 - $83.88	550,039	3.95	57.71		524,647	57.16
$83.95 - $84.91	48,731	7.34	84.01		43,081	83.96
$85.00 - $85.00	614,657	6.10	85.00		327,701	85.00
$85.02 - $86.02	11,450	7.18	85.44		3,300	85.32
$86.24 - $86.24	801,630	7.12	86.24		317,562	86.24
$86.83 - $95.03	179,092	6.83	90.13		124,033	89.22
$95.87 - $132.95	1,897,346	7.73	106.15		271,663	100.63
$22.90 - $132.95	5,377,857	6.14	$	80.88	2,719,760	$	65.54

The Company uses historical data to estimate expected life and volatility. The estimated fair value of stock options at the time of the grant using the Black-Scholes model option pricing model was as follows:



	Years Ended December 31,
	2014			2013			2012
Stock options granted (shares)	981,583			1,057,630			1,142,205
Weighted average fair value at grant date	$	21.31		$	22.02		$	20.14
Assumptions:
Expected term (in years)	4.76			5.81			6.00
Expected volatility	17.23		%	27.03		%	27.87		%
Expected dividend yield	—		%	—		%	—		%
Risk free interest rate	1.53		%	1.00		%	1.05		%

Restricted Stock Units:

The fair value of Restricted stock units ("RSUs") is based on the closing price of the Company's common stock on the date of grant and is amortized to expense over the service period. RSUs vest at the end of three or five years. Our 2008, 2011 and 2014 Plans include a share reserve related to RSUs granted at a 2-1 ratio. The following table sets forth the information related to RSUs for the years ended December 31:



	2014		2013		2012
Total aggregate intrinsic value of outstanding units (in thousands)	$	8,337	$	8,185	$	6,362
Per share fair value of units granted	115.67		96.40		86.24

A summary of the status of our non-vested RSUs and changes during the year ended December 31, 2014, are as follows:



	Number of Units		Weighted Average Grant Date Fair Value

Non-vested at beginning of year	70,457		$	88.32
Granted	16,334		115.67
Vested and released	(17,288	)	85.00
Forfeited	(5,903	)	90.53
Non-vested at December 31, 2014	63,600		$	96.04

At December 31, 2014, there was $4.1 million of total unrecognized compensation expense related to RSUs, which is expected to be recognized over a weighted average period of 2.87 years. The fair value of units that vested during the years ended December 31, 2014, 2013 and 2012 was $2.0 million, $1.2 million, and $0.4 million, respectively.