NOTE 6 – STOCK-BASED COMPENSATION

At March 31, 2017, we had the following incentive stock plans:

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

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

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

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

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the 2000 Non-statutory Stock Option Plan, which expired in February 2010;

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the Employee Stock Purchase Plan ("ESPP"), which our stockholders approved in May 2001.

Stock Based Compensation Expense:

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

In thousands
	Three Months March 31,
	2017		2016
Cost of revenues - stock option plan	$	13	$	15
Selling, general and administrative - stock option plan		4,080		4,752
Selling, general and administrative - RSUs		1,401		559
Selling, general and administrative - PSUs		188		—
Selling, general and administrative - ESPP		317		779
Total pre-tax expense	$	5,999	$	6,105

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 options with graded vesting is recognized using the straight-line method over the vesting period. Stock option activity for the three months ended March 31, 2017, is summarized as follows:

	Number of Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life		Total Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding as of January 1, 2017		5,468,732		$	96.90
Granted		425,599			83.19
Exercised		(90,856	)		48.52
Forfeited		(35,755	)		113.59
Cancelled or expired		(44,687	)		98.31
Outstanding as of March 31, 2017		5,723,033		$	96.53		5.28	$	27,811
Exercisable as of March 31, 2017		3,598,309		$	89.19		4.52	$	27,740

At March 31, 2017, there was $41.2 million of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 3.30 years.

The following table sets forth the intrinsic value of options exercised for the three months ended March 31:

In thousands
	Three Months Ended March 31,
	2017		2016
Total intrinsic value of options exercised	$	2,908	$	13,229

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

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 option pricing model was as follows:

	Three Months Ended March 31,
	2017			2016
Stock options granted (shares)		425,599			1,008,569
Weighted average fair value at grant date	$	19.53		$	20.19
Assumptions:
Expected term (in years)		4.82			4.76
Expected volatility		22.66	%		18.02	%
Expected dividend yield		—	%		—	%
Risk free interest rate		1.91	%		1.26	%

Restricted Stock Units:

The fair value of 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. Our 2008, 2011 and 2014 Plans include a share reserve related to RSUs granted at a 2-1 ratio.

A summary of our RSU activity during the three months ended March 31, 2017, is as follows:

	Number of Units			Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life	Total Aggregate Intrinsic Value
Outstanding as of January 1, 2017		114,838		$	104.22
Granted		183,940			83.24
Vested and released		(30,000	)		76.87
Forfeited		(1,627	)		110.46
Outstanding as of March 31, 2017		267,151		$	92.68	2.56	$	24,760

At March 31, 2017, there was $24.0 million of total unrecognized compensation expense related to RSUs, which is expected to be recognized over a weighted average period of 4.08 years.

Performance-Based Restricted Stock Units:

In February 2017 under the incentive stock plan, our executive officers were granted PSUs. PSUs vest, or not, in three equal annual installments based on the achievement of pre-determined annual earnings per share performance goals as approved by the Compensation Committee. Each of the units granted represent the right to receive one share of the Company’s common stock at a specified future date. The maximum number of common shares issuable upon vesting of these PSUs under the first installment is 10,348 shares. The grant date fair value was $83.35 per share and the total grant date fair value of the shares for which the performance conditions are expected to be met for 2017 was $0.9 million.