Stock-Based Compensation

3 Months Ended

Mar. 31, 2016

5. Stock-based Compensation

During the three months ended March 31, 2016, the Company granted stock only stock appreciation rights (“SOSARs”) on 423 shares of its common stock to eligible employees. The weighted average grant date fair value of the SOSARs was $115.19 per share with a weighted average exercise price of $461.19 per share based on the closing price of common stock on the date of grant. The SOSARs vest in two equal installments on the second and third anniversary of the grant date. During the three months ended March 31, 2016, 19 SOSARs were exercised, and 20 SOSARs were forfeited.

During the first quarter of 2016, the Company awarded shares that are subject to both service and market vesting conditions. The quantity of shares that will vest may range from 0% to 400% of a targeted number of shares, and will be determined based on the price of the Company’s common stock reaching certain targets for a consecutive number of days during the three year period starting on the grant date. If the minimum defined stock price target is not met, then no shares will vest.

The following table sets forth total stock based compensation expense:



	Three months ended March 31,
	2016		2015
Stock based compensation expense	$	10,847	$	16,561
Stock based compensation expense (net of tax)	$	6,632	$	10,213
Stock based compensation expense recognized as capitalized development	$	342	$	425

The Company adjusted its estimate of stock awards expected to vest based on performance conditions, which resulted in a cumulative reduction of expense of $6,031 ($3,687 net of tax and $0.12 to basic and diluted earnings (loss) per share).