XML 31 R16.htm IDEA: XBRL DOCUMENT v3.7.0.1
SHARE-BASED AWARDS AND OPTIONS
 3 Months Ended
Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
SHARE-BASED AWARDS AND OPTIONS
SHARE-BASED AWARDS AND OPTIONS

The following table summarizes share-based compensation expense and the related income tax benefit recognized for our share-based awards and stock options:
 
Three Months Ended
 
March 31, 2017
 
March 31, 2016
 
 
 
 
 
(in thousands)
 
 
 
 
Share-based compensation expense
$
8,816

 
$
7,047

Income tax benefit
$
3,065

 
$
2,344


 
Share-Based Awards

The following table summarizes the changes in unvested share-based awards for the three months ended March 31, 2017:
 
Shares
 
Weighted-Average
Grant-Date
Fair Value
 
(in thousands)
 
 
 
 
 
 
Unvested at December 31, 2016
1,263

 

$49.55

Granted
441

 
79.47

Vested
(3
)
 
42.90

Forfeited
(24
)
 
56.74

Unvested at March 31, 2017
1,677

 

$57.30



The total fair value of share-based awards vested during the three months ended March 31, 2017 and March 31, 2016 was $0.1 million and $0.2 million, respectively.

For these share-based awards, we recognized compensation expense of $8.0 million and $6.5 million during the three months ended March 31, 2017 and March 31, 2016, respectively. As of March 31, 2017, there was $72.2 million of unrecognized compensation expense related to unvested share-based awards that we expect to recognize over a weighted-average period of 2.38 years. Our share-based award plans provide for accelerated vesting under certain conditions.

Stock Options

Stock options are granted with an exercise price equal to 100% of fair market value of our common stock on the date of grant and have a term of ten years. Stock options granted before the year ended May 31, 2015 vest in equal installments on each of the first four anniversaries of the grant date. Stock options granted during the year ended May 31, 2015 and thereafter vest in equal installments on each of the first three anniversaries of the grant date. During the three months ended March 31, 2017, we granted stock options to purchase 0.1 million shares of our common stock. There were no stock options granted during the three months ended March 31, 2016. Our stock option plans provide for accelerated vesting under certain conditions.

The following summarizes changes in unvested stock option activity for the three months ended March 31, 2017: 
 
Options
 
Weighted-Average Exercise Price
 
Weighted-Average Remaining Contractual Term
 
Aggregate Intrinsic Value
 
(in thousands)
 
 
 
(years)
 
(in millions)
Outstanding at December 31, 2016
759

 
$37.51
 
6.0
 
$24.5
Granted
124

 
79.45

 
 
 
 
Forfeited
—

 
—

 
 
 
 
Exercised
(52
)
 
23.68

 
 
 
 
Outstanding at March 31, 2017
831

 
$44.65
 
6.6
 
$29.9
 
 
 
 
 
 
 
 
Options vested and exercisable at March 31, 2017
449

 
$29.49
 
4.7
 
$23.0


We recognized compensation expense for stock options of $0.6 million and $0.4 million during the three months ended March 31, 2017 and March 31, 2016, respectively. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2017 and March 31, 2016 was $2.8 million and $0.3 million, respectively. As of March 31, 2017, we had $2.5 million of unrecognized compensation expense related to unvested stock options that we expect to recognize over a weighted-average period of 2.37 years.

The weighted-average grant-date fair value of each stock option granted during the three months ended March 31, 2017 was $10.28. Fair value was estimated on the date of grant using the Black-Scholes valuation model with the following weighted-average assumptions:
 
Three Months Ended
 
March 31, 2017
Risk-free interest rate
1.99%
Expected volatility
30%
Dividend yield
0.06%
Expected term (years)
5


The risk-free interest rate is based on the yield of a zero coupon U.S. Treasury security with a maturity equal to the expected life of the option from the date of the grant. Our assumption on expected volatility is based on our historical volatility. The dividend yield assumption is calculated using our average stock price over the preceding year and the annualized amount of our most current quarterly dividend per share. We based our assumptions on the expected term of the options on our analysis of the historical exercise patterns of the options and our assumption on the future exercise pattern of options.