Stock-Based Compensation Plans

3 Months Ended

Mar. 31, 2014

Stock-Based Compensation Plans

Stock-Based Compensation Plans

9.  Stock-Based Compensation Plans

Information with respect to stock options granted under the Company’s 1994 Stock Option and Incentive Plan (the “1994 Plan”) and its 2009 Stock Option and Incentive Plan (the “2009 Plan”) are as follows (dollars in thousands, other than per share amounts):

			Weighted				Weighted
			average				average
	2009 Plan		exercise price		1994 Plan		exercise price
	shares		per share		shares		per share
Options Outstanding, December 31, 2013	501,568		$	120.77	691,526		$	106.19
Exercised	(37,572	)	111.34		(47,264	)	80.37
Forfeited	—		—		(550	)	49.09
Options Outstanding, March 31, 2014	463,996		$	121.53	643,712		$	108.13
Options Exercisable March 31, 2014	285,517		$	116.32	643,712		$	108.13

During the three months ended March 31, 2014, the Company issued 104,060 shares of restricted stock with a fair value of $13,331,000. The Company granted 131,941 restricted stock units with an estimated aggregate compensation cost of $15,627,000, as part of its stock-based compensation plan, during the three months ended March 31, 2014. The amount of restricted stock ultimately earned is based on the total shareholder return metrics related to the Company’s common stock for 57,493 restricted units, with the remaining amount to be earned for the balance of the grant determined by operating performance metrics.  For the portion of the grant for which the award is determined by the total shareholder return of the Company’s common stock, the Company used a Monte Carlo model to assess the compensation cost associated with the restricted stock units.  The estimated compensation cost was derived using the following assumptions: baseline share value of $128.97; dividend yield of approximately 3.5%; estimated volatility figures ranging from 17.6% to 18.6% over the life of the plan for the Company using 50% historical volatility and 50% implied volatility; and risk free rates over the life of the plan ranging from 0.04% to 0.72%, resulting in an average estimated fair value per restricted stock unit of $104.80.

At March 31, 2014, the Company had 211,967 outstanding unvested shares granted under restricted stock awards. Restricted stock vesting during the three months ended March 31, 2014 totaled 74,091 shares and had fair values at the grant date ranging from $74.20 to $149.05 per share.  The total grant date fair value of shares vested was $8,763,000 and $8,981,000 for the three months ended March 31, 2014 and 2013, respectively.

Total employee stock-based compensation cost recognized in income was $3,154,000 and $5,617,000 for the three months ended March 31, 2014 and 2013, respectively, and total capitalized stock-based compensation cost was $1,435,000 and $1,860,000 for the three months ended March 31, 2014 and 2013, respectively.  At March 31, 2014, there was a total of $2,242,000 and $32,631,000 in unrecognized compensation cost for unvested stock options and unvested restricted stock and restricted stock units, respectively, which does not include estimated forfeitures. The unrecognized compensation cost for unvested stock options, and restricted stock and restricted stock units is expected to be recognized over a weighted average period of 1.65 years and 4.16 years, respectively.