Share-Based Compensation

Share-based compensation expense is included in ‘compensation and benefits’ in the condensed consolidated income statements and totaled $0.9 million and $1.1 million for the three months ended March 31, 2015 and 2014, respectively, and $1.8 million and $2.2 million for the six months ended March 31, 2015 and 2014, respectively.

Stock Option Plan

The Company sponsors a stock option plan for its directors, officers and employees. The 2013 Stock Option Plan, which was approved by the Company’s Board of Directors and shareholders, authorizes the Company to issue stock options covering up to 1.0 million shares of the Company’s common stock. As of March 31, 2015, there were 0.8 million shares available for future grant under this plan. Awards that expire or are forfeit generally become available for issuance again under the plan. The Company settles stock option exercises with newly issued shares of common stock.

Fair value is estimated at the grant date based on a Black-Scholes-Merton option-pricing model using the following weighted-average assumptions:



	Six Months Ended March 31, 2015
Expected stock price volatility	34%
Expected dividend yield	—%
Risk free interest rate	0.80%
Average expected life (in years)	2.88

Expected stock price volatility rates are based primarily on the historical volatility. The Company has not paid dividends in the past and does not currently expect to do so in the future. Risk free interest rates are based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option award. The average expected life represents the estimated period of time that options or awards granted are expected to be outstanding, based on the Company’s historical share option exercise experience for similar option grants. The weighted average fair value of options issued during the six months ended March 31, 2015 was $4.31.

The following is a summary of stock option activity for the six months ended March 31, 2015:



	Shares Available for Grant		Number of Options Outstanding		Weighted Average Price		Weighted Average Grant Date Fair Value		Weighted Average Remaining Term (in years)	Aggregate Intrinsic Value ($ millions)
Balances as of September 30, 2014	913,500		1,578,056		$	25.38	$	11.58	4.16	$	1.9
Granted	(91,000	)	91,000		$	20.54	$	4.31
Exercised			(281,095	)	$	11.06	$	5.84
Forfeited	—		(5,333	)	$	19.59	$	5.27
Expired	—		(45,359	)	$	27.92	$	12.08
Balances as of March 31, 2015	822,500		1,337,269		$	28.00	$	12.31	4.53	$	7.0
Exercisable as of March 31, 2015			390,636		$	36.17	$	13.32	1.37	$	2.1

The total compensation cost not yet recognized for non-vested awards of $7.4 million as of March 31, 2015 has a weighted-average period of 4.85 years over which the compensation expense is expected to be recognized. Compensation expense is amortized on a straight-line basis over the vesting period. The total intrinsic value of options exercised during the six months ended March 31, 2015 and 2014 was $3.0 million and $1.7 million, respectively.

Restricted Stock Plan

The Company sponsors a restricted stock plan for its directors, officers and employees. As of March 31, 2015, 1.0 million shares were authorized for future grant under the 2012 Restricted Stock Plan. Awards that are forfeit generally become available for issuance again under the plan. The Company utilizes newly issued shares of common stock to make restricted stock grants.

The following is a summary of restricted stock activity for the six months ended March 31, 2015:



	Shares Available for Grant		Number of Shares Outstanding		Weighted Average Grant Date Fair Value		Weighted Average Remaining Term (in years)	Aggregate Intrinsic Value ($ millions)
Balances as of September 30, 2014	1,096,325		229,851		$	20.03	1.79	$	4.0
Granted	(104,964	)	104,964		$	19.20
Vested			(93,467	)	$	21.73
Forfeited	328		(328	)	$	18.12
Balances as of March 31, 2015	991,689		241,020		$	19.01	2.41	$	7.2

The total compensation cost not yet recognized of $3.6 million as of March 31, 2015 has a weighted-average period of 2.41 years over which the compensation expense is expected to be recognized. Compensation expense is amortized on a straight-line basis over the vesting period. Restricted stock grants are included in the Company’s total issued and outstanding common shares.