Share-Based Compensation

Share-based compensation expense is included in ‘compensation and benefits’ in the consolidated income statements and totaled $5.1 million, $3.6 million and $4.3 million for the fiscal years ended September 30, 2016, 2015, and 2014, respectively.

Stock Option Plans

The Company sponsors a stock option plan for its directors, officers, employees and consultants. 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 September 30, 2016, there were 0.8 million shares authorized for future grant under this plan. Awards that expire or are canceled 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:



	Year Ended September 30,
	2016		2015		2014
Expected stock price volatility	28	%	28	%	34	%
Expected dividend yield	—	%	—	%	—	%
Risk free interest rate	0.83	%	0.66	%	0.80	%
Average expected life (in years)	3.06		3.22		2.88

Expected stock price volatility rates are primarily based 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 or 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 fiscal years ended September 30, 2016, 2015, and 2014 was $6.40, $4.31 and $4.48, respectively.

The following is a summary of stock option activity for the year ended September 30, 2016:



	Shares Available for Grant		Number of Options Outstanding		Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Weighted Average Remaining Term (in years)	Aggregate Intrinsic Value ($ millions)
Balances at September 30, 2015	828,665		1,297,984		$	28.28	$	12.37	4.24	$	1.8
Granted	(90,500	)	90,500		$	31.37	$	6.40
Exercised			(147,205	)	$	18.52	$	1.50
Forfeited	15,998		(16,498	)	$	25.23	$	5.28
Expired			(8,960	)	$	54.23	$	20.04
Balances at September 30, 2016	754,163		1,215,821		$	29.55	$	12.88	3.80	$	14.1
Exercisable at September 30, 2016			306,520		$	40.58	$	15.09	0.92	$	2.2

The total compensation cost not yet recognized for non-vested awards of $5.3 million as of September 30, 2016 has a weighted-average period of 4.76 years over which the compensation expense is expected to be recognized. The total intrinsic value of options exercised during fiscal years 2016, 2015 and 2014 was $1.9 million, $3.6 million and $1.8 million, respectively.

The options outstanding as of September 30, 2016 broken down by exercise price are as follows:



Exercise Price					Number of Options Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Term (in Years)
$	—	-	$	5.00	—	n/a		n/a
$	5.00	-	$	10.00	—	n/a		n/a
$	10.00	-	$	15.00	—	n/a		n/a
$	15.00	-	$	20.00	75,325	$	18.77	1.00
$	20.00	-	$	25.00	156,997	$	22.07	1.73
$	25.00	-	$	30.00	720,000	$	25.91	5.38
$	30.00	-	$	35.00	83,000	$	31.37	3.28
$	35.00	-	$	40.00	—	n/a		n/a
$	40.00	-	$	45.00	—	n/a		n/a
$	45.00	-	$	50.00	—	n/a		n/a
$	50.00	-	$	55.00	180,499	$	54.23	0.68
					1,215,821	$	29.55	3.80

Restricted Stock Plan

The Company sponsors a restricted stock plan for its directors, officers and employees. The Company’s 2012 restricted stock plan, which was approved by the Company’s Board of Directors and shareholders, authorizes up to 1.5 million shares to be issued. As of September 30, 2016, 0.7 million shares were authorized for future grant under the restricted stock plan. Awards that expire or are canceled 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 through September 30, 2016:



	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 at September 30, 2015	974,919		230,043		$	20.10	2.17	$	5.7
Granted	(229,886	)	229,886		$	31.40
Vested			(99,428	)	$	19.84
Forfeited	2,749		(2,749	)	$	21.89
Balances at September 30, 2016	747,782		357,752		$	27.39	1.39	$	13.9

The total compensation cost not yet recognized of $7.1 million as of September 30, 2016 has a weighted-average period of 1.39 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.