Common Stock

The Company’s Certificate of Incorporation, as amended November 9, 2009, authorizes the Company to issue up to 80 million shares of common stock, par value $0.0001 per share, and 100,000 shares of one or more series of preferred stock, par value $0.0001 per share.

A reconciliation of the changes in common shares issued is as follows:



	Year ended December 31,
	2015	2014
Shares issued at the beginning of the year	54,633,726	58,265,911
Issued in acquisitions	60,024	99,681
Issued in payment of accrued liability	—	27,101
Issued upon exercise of warrants	—	1,277,250
Issued as restricted stock award grants	758,904	525,120
Issued upon exercise of stock options	767,560	311,954
Retirement of treasury shares	—	(5,873,291	)
Shares issued at the end of the year	56,220,214	54,633,726

Stock-Based Incentive Plans

Stockholders approved long term incentive plans in 2014, 2010, 2007, 2005, and 2003 (the “2014 Plan,” the “2010 Plan,” the “2007 Plan,” the “2005 Plan” and the “2003 Plan,” respectively) under which the Company may grant equity awards to officers, key employees, and non-employee directors in the form of stock options, restricted stock, and certain other incentive awards. The maximum number of shares that may be issued under the 2014 Plan, 2010 Plan, and 2007 Plan are 2.7 million, 6.0 million, and 2.2 million, respectively. At December 31, 2015, the Company had a total of 1.1 million shares remaining to be granted under the 2014 Plan, 2010 Plan, and 2007 Plan. Shares may no longer be granted under the 2005 Plan and 2003 Plan.

Stock Options

All stock options are granted with an exercise price equal to the market value of the Company’s common stock on the date of grant. Options expire no later than ten years from the date of grant and generally vest in four years or less. Proceeds received from stock option exercises are credited to common stock and additional paid-in capital, as appropriate. The Company uses historical data to estimate pre-vesting option forfeitures. Estimates are adjusted when actual forfeitures differ from the estimate. Stock-based compensation expense is recorded for all equity awards expected to vest.

The fair value of stock options at the date of grant is calculated using the Black-Scholes option pricing model. The risk free interest rate is based on the implied yield of U.S. Treasury zero-coupon securities that correspond to the expected life of the option. Volatility is estimated based on historical and implied volatilities of the Company’s stock and of identified companies considered to be representative peers of the Company. The expected life of awards granted represents the period of time the options are expected to remain outstanding. The Company uses the “simplified” method which is permitted for companies that cannot reasonably estimate the expected life of options based on historical share option exercise experience. The Company does not expect to pay dividends on common stock. No options were granted to employees during 2015, 2014, and 2013.

The Black-Scholes option valuation model was developed to estimate the fair value of traded options that have no vesting restrictions and are fully-transferable. Because option valuation models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value calculation. The Company’s options are not characteristic of traded options; therefore, the option valuation models do not necessarily provide a reliable measure of the fair value of options.

Stock option activity for the year ended December 31, 2015 is as follows:



Options	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding as of January 1, 2015	1,544,960		$	4.81
Exercised	(767,560	)	1.79
Forfeited	—		—
Expired	—		—
Outstanding as of December 31, 2015	777,400		$	7.80	1.31	$	2,828,951
Vested or expected to vest at
December 31, 2015	777,400		$	7.80	1.31	$	2,828,951
Options exercisable as of
December 31, 2015	777,400		$	7.80	1.31	$	2,828,951

The total intrinsic value of stock options exercised during the years ended December 31, 2015, 2014, and 2013 was $8.4 million, $6.0 million, and $5.6 million, respectively. No stock options vested during the year ended December 31, 2015. The total fair value of stock options vesting during the year ended December 31, 2014 was less than $0.1 million and was $4.2 million for the year ended December 31, 2013.

At December 31, 2015, the Company had recognized all compensation expense related to stock options.

Restricted Stock

The Company grants employees either time-vesting or performance-based restricted shares in accordance with terms specified in the Restricted Stock Agreements (“RSAs”). Time-vesting restricted shares vest after a stipulated period of time has elapsed subsequent to the date of grant, generally three to four years. Certain time-vested shares have also been issued with a portion of the shares granted vesting immediately. Performance-based restricted shares are issued with performance criteria defined over a designated performance period and vest only when, and if, the outlined performance criteria are met. During the year ended December 31, 2015, approximately 45% of the restricted shares granted were time-vesting and 55% were performance-based. Grantees of restricted shares retain voting rights for the granted shares.

Restricted stock share activity for the year ended December 31, 2015 is as follows:



Restricted Stock Shares	Shares		Weighted- Average Fair Value at Date of Grant
Non-vested at January 1, 2015	826,518		$	18.78
Granted	406,650		16.15
RSAs converted from 2014 restricted stock units	352,254		24.66
Vested	(653,211	)	20.90
Forfeited	(32,995	)	22.72
Non-vested at December 31, 2015	899,216		$	18.21

The weighted-average grant-date fair value of restricted stock granted during the years ended December 31, 2015, 2014, and 2013 was $16.15, $27.29, and $15.17 per share, respectively. The total fair value of restricted stock that vested during the years ended December 31, 2015, 2014, and 2013 was $13.7 million, $10.2 million, and $8.4 million, respectively.

At December 31, 2015, there was $11.6 million of unrecognized compensation expense related to non-vested restricted stock. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 1.6 years.

Restricted Stock Units

During the year ended December 31, 2015, the Company granted performance-based restricted stock units (“RSUs”) that will be converted into 386,049 shares of common stock. These shares, which will be issued as RSAs, will vest in equal one-half tranches on December 31, 2016 and 2017.

Restricted stock unit share activity for the year ended December 31, 2015 is as follows:



Restricted Stock Unit Shares	Shares		Weighted- Average Fair Value at Date of Grant
RSU share equivalents at January 1, 2015	352,254		$	24.66
2014 RSUs converted to RSAs in 2015	(352,254	)	24.66
Share equivalents earned in 2015	386,049		21.96
RSU share equivalents at December 31, 2015	386,049		$	21.96

At December 31, 2015, there was $5.7 million of unrecognized compensation expense related to 2015 restricted stock units. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 2.0 years.

Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (ESPP) was approved by stockholders on May 18, 2012. The Company registered 500,000 shares of its common stock, currently held as treasury shares, for issuance under the ESPP. The purpose of the ESPP is to provide employees with an opportunity to purchase shares of the Company’s common stock through accumulated payroll deductions. The ESPP allows participants to purchase common stock at a purchase price equal to 85% of the fair market value of the common stock on the last business day of a three-month offering period which coincides with calendar quarters. Payroll deductions may not exceed 10% of an employee’s compensation and participants may not purchase more than 1,000 shares in any one offering period. The fair value of the discount associated with shares purchased under the plan is recognized as share-based compensation expense and was $0.2 million, $0.2 million, and $0.1 million during the years ended December 31, 2015, 2014, and 2013, respectively. The total fair value of the shares purchased under the plan during the years ended December 31, 2015, 2014, and 2013 was $1.0 million, $1.1 million, and $0.9 million, respectively. The employee payment associated with participation in the plan was satisfied through payroll deductions.

Share-Based Compensation Expense

Non-cash share-based compensation expense related to stock options, restricted stock, restricted stock unit grants, and stock purchased under the Company’s ESPP was $14.7 million, $10.5 million, and $10.9 million during the years ended December 31, 2015, 2014, and 2013, respectively.

Treasury Stock

The Company accounts for treasury stock using the cost method and includes treasury stock as a component of stockholders’ equity. During the years ended December 31, 2015, 2014, and 2013, the Company purchased 473,304 shares, 243,005 shares, and 448,121 shares, respectively, of the Company’s common stock at market value as payment of income tax withholding owed by employees upon the vesting of restricted shares and the exercise of stock options. Shares issued as restricted stock awards to employees that were forfeited are accounted for as treasury stock. During the years ended December 31, 2015, 2014, and 2013, shares surrendered for the exercise of stock options were 106,810, 46,208, and 237,267, respectively. These surrendered shares are also accounted for as treasury stock.

During the year ended December 31, 2013, JP Morgan Chase & Co. returned 2,439,558 shares of the Company’s common stock that had been borrowed under the Share Lending Agreement. These shares were then included in treasury stock.

Retirement of Treasury Stock

On December 31, 2014, the Company retired 5,873,291 shares of its treasury stock with an aggregate cost of $32.6 million. The retirement was recorded as reductions of $32.6 million in treasury stock, $1,000 in common stock, and $32.6 million in additional paid-in capital.

All retired treasury shares were canceled and returned to the status of authorized but unissued shares. The retirement of treasury stock had no impact on the Company’s total consolidated stockholders’ equity.

Stock Repurchase Program

In November 2012, the Company’s Board of Directors authorized the repurchase of up to $25 million of the Company’s common stock. Repurchases may be made in the open market or through privately negotiated transactions. During the year ended December 31, 2015, the Company repurchased 799,723 shares of its outstanding common stock on the open market at a cost of $9.7 million, inclusive of transaction costs, or an average price of $12.13 per share. During the year ended December 31, 2014, the Company repurchased 621,176 shares of its outstanding common stock on the open market at a cost of $10.4 million, inclusive of transaction costs, or an average price of $16.74 per share.

In June 2015, the Company’s Board of Directors authorized the repurchase of up to an additional $50 million of the Company’s common stock. Repurchases may be made in open market or through privately negotiated transactions. Through December 31, 2015, the Company has not repurchased any of its common stock under this authorization.

As of December 31, 2015, the Company has $54.9 million remaining under its share repurchase program.