Stock Compensation

As of December 31, 2015, the Company has an Omnibus Incentive Plan under which 700,000 shares are reserved for restricted stock and stock options grants for employees, as well as stock grants for directors. The plan was approved in 2011 and replaced all prior stock-based plans except for shares and options previously issued under those plans. As of December 31, 2015 and 2014, there were 409,000 shares and 456,000 shares of the Company’s Common Stock available for grant under the 2011 Omnibus Incentive Plan. The Company recognizes the cost of stock-based awards in net earnings for all of its stock-based compensation plans on a straight-line basis over the service period of the awards. The following sections describe the three types of grants in more detail.

Stock Options

The Company estimates the fair value of its option awards using the Black-Scholes option-pricing formula, and records compensation expense for stock options ratably over the stock option grant’s vesting period. Stock option compensation expense recognized by the Company for the year ended December 31, 2015 related to stock options was $0.5 million compared to $0.4 million in 2014 and $0.5 million in 2013.

The following table summarizes the transactions of the Company’s stock option plans for the three-year period ended December 31, 2015:



	Number of shares		Weighted-average exercise price
Options outstanding - December 31, 2012	247,580		$	34.26
Options granted	23,258		$	51.29
Options exercised	(66,660	)	$	24.91
Options forfeited	(1,800	)	$	37.78
Options outstanding - December 31, 2013	202,378		$	39.27
Options granted	23,958		$	54.36
Options exercised	(23,016	)	$	32.57
Options forfeited	—		n/a
Options outstanding - December 31, 2014	203,320		$	41.80
Options granted	24,755		$	56.66
Options exercised	(43,269	)	$	37.96
Options forfeited	—		n/a
Options outstanding - December 31, 2015	184,806		$	44.69
Price range $24.94 — $36.59
(weighted-average contractual life of 5.8 years)	59,500		$	35.87
Price range $36.60 — $51.29
(weighted-average contractual life of 5.0 years)	62,434		$	42.83
Price range $51.30 — $56.66
(weighted-average contractual life of 3.5 years)	62,872		$	54.89
Options outstanding - December 31, 2015	184,806
Exercisable options —
December 31, 2013	113,060		$	38.18
December 31, 2014	111,016		$	39.68
December 31, 2015	105,470		$	40.96

The following assumptions were used for valuing options granted in the years ended December 31:



	2015		2014
Per share fair value of options granted during the period	$23.08		$22.35
Risk-free interest rate	1.74	%	1.73	%
Dividend yield	1.32	%	1.31	%
Volatility factor	49.5	%	49.9	%
Weighted-average expected life in years	5.3		5.3

The expected life is based on historical exercise behavior and the projected exercise of unexercised stock options. The risk-free interest rate is based on the U.S. Treasury yield curve in effect on the date of grant for the respective expected life of the option. The expected dividend yield is based on the expected annual dividends divided by the grant date market value of the Company’s Common Stock. The expected volatility is based on the historical volatility of the Company’s Common Stock.

The following table summarizes the aggregate intrinsic value related to options exercised, outstanding and exercisable as of and for the years ended December 31:



	2015		2014
	(In thousands)
Exercised	$	1,058	$	493
Outstanding	$	2,569	$	3,568
Exercisable	$	1,859	$	2,184

As of December 31, 2015, the unrecognized compensation cost related to stock options was approximately $1.2 million, which will be recognized over a weighted average period of 2.5 years.

Director Stock Grant

Non-employee directors receive an annual award of $50,000 worth of shares of the Company’s Common Stock under the shareholder-approved 2011 Omnibus Incentive Plan. The Company values stock grants for directors on the closing price of the Company’s stock on the day the grant was awarded. The Company records compensation expense for this plan ratably over the annual service period beginning May 1. Director stock compensation expense recognized by the Company for the year ended December 31, 2015, 2014 and 2013 was $0.4 million in each year. As of December 31, 2015, the unrecognized compensation cost related to the director stock award that is expected to be recognized over the remaining four months is estimated to be approximately $0.1 million.

Restricted Stock

The Company periodically issues nonvested shares of the Company's Common Stock to certain eligible employees, generally with a three-year cliff vesting period contingent on employment. The Company values restricted stock on the closing price of the Company's stock on the day the grant was awarded. The Company records compensation expense for these plans ratably over the vesting periods. Nonvested stock compensation expense recognized by the Company for the year ended December 31, 2015 was $1.1 million compared to $1.0 million in 2014 and $0.9 million in 2013.

The fair value of nonvested shares is determined based on the market price of the shares on the grant date.



	Shares		Fair value per share
Nonvested at December 31, 2012	73,825		$	37.01
Granted	21,425		$	51.12
Vested	(16,875	)	$	38.41
Forfeited	(3,900	)	$	37.69
Nonvested at December 31, 2013	74,475		$	40.54
Granted	21,956		$	54.36
Vested	(24,350	)	$	36.59
Forfeited	(3,625	)	$	41.61
Nonvested at December 31, 2014	68,456		$	46.32
Granted	19,193		$	56.66
Vested	(26,075	)	$	36.15
Forfeited	(1,450	)	$	48.87
Nonvested at December 31, 2015	60,124		$	53.97

As of December 31, 2015, there was $1.2 million of unrecognized compensation cost related to nonvested restricted stock that is expected to be recognized over a weighted average period of 1.2 years.