10. Share Plans

The Company adopted an equity incentive plan on February 10, 2010 in connection with our initial public offering. The plan, as amended, allows for granting of up to 9.1 million stock-based awards to executives, directors and employees. Awards available for grant under the Plan include stock options, stock appreciation rights, restricted stock, other stock-based awards, and performance-based compensation awards. Total share-based compensation cost related to the equity incentive plan was $12,368, $10,780 and $8,646 in 2013, 2012 and 2011, respectively, net of actual forfeitures, which is recorded in operating expenses in the consolidated statements of comprehensive income.

Stock Options - Stock options granted in 2013 have an exercise price of between $29.81 per share and $48.36 per share, stock options granted in 2012 have an exercise price of between $15.94 per share and $32.05 per share, and the stock options granted in 2011 have an exercise price of between $6.15 per share and $13.73 per share. On June 21, 2013, the Company paid a special cash dividend of $5.00 per share on its common stock, and on June 29, 2012, the Company paid a special cash dividend of $6.00 per share on its common stock. In connection with these special dividends, and pursuant to the terms of the Company’s stock option plan, certain adjustments are required to be made to stock options outstanding under the plan in order to avoid dilution of the intended benefits which would otherwise result as a consequence of the special dividend. As such, the strike price for all outstanding stock options as of the special dividend dates, were adjusted by the $5.00 and $6.00 special dividend amounts. There was no change to compensation expense as a result of these adjustments. On June 10, 2013 and July 2, 2012, the strike price of all stock option awards outstanding prior to the special dividend dates were restated to reflect these $5.00 and $6.00 adjustments, respectively. The exercise prices noted above reflect these adjustments. Stock options issued in 2013 and 2012 vest in equal installments over four years, subject to the grantee’s continued employment or service and expire 10 years after the date of grant. Stock options issued in 2011 and 2010 vest in equal installments over five years, subject to the grantee’s continued employment or service and expire 10 years after the date of grant.

Beginning in 2011, stock option exercises are net-share settled such that the Company withholds shares with value equivalent to the exercise price of the stock option awards plus the employees’ minimum statutory obligation for the applicable income and other employment taxes. Total shares withheld were approximately 323,427, 667,041 and 55,202 in 2013, 2012 and 2011, respectively, and were based on the value of the stock on the exercise dates as determined based upon an average of the Company’s high and low stock sales price on the exercise dates. Total payments for the employees’ tax obligations to the taxing authorities were $8,449, $6,425 and $371 in 2013, 2012 and 2011, respectively, and are reflected as a financing activity within the Consolidated Statement of Cash Flows. The net-share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the option exercise and did not represent an expense to the Company.

The grant-date fair value of each option grant is estimated using the Black-Scholes-Merton option pricing model. The fair value is then amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Since there is limited history for the Company’s stock, expected volatility is calculated based on an analysis of historic and implied volatility measures for a set of peer companies. The average expected life is based on the contractual term of the option using the simplified method. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The compensation expense recognized is net of estimated forfeitures. Forfeitures are estimated based on actual share option forfeiture history. The weighted-average assumptions used in the Black-Scholes-Merton option pricing model for 2013, 2012 and 2011 are as follows:

	2013			2012			2011
Weighted average grant date fair value	$	16.30		$	12.13		$	11.10

Assumptions:
Expected stock price volatility		47	%		45	%		50	%
Risk free interest rate		1.21	%		1.22	%		2.69	%
Expected annual dividend per share	$	-		$	-		$	-
Expected life of options (years)		6.25			6.25			6.5

The Company periodically evaluates its forfeiture rates and updates the rates it uses in the determination of its stock-based compensation expense. The impact of the change to the forfeiture rates on non-cash compensation expense was immaterial for the years ended December 31, 2013, 2012 and 2011. A summary of the Company’s stock option activity and related information for the three years ended December 31, 2013 is as follows:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value ($ in thousands)
Outstanding as of December 31, 2010		4,236,259			13.02		9.1	$	13,349
Granted		179,877			21.26
Exercised		(107,591	)		13.00
Expired		-			-
Forfeited		-			-
Outstanding as of December 31, 2011		4,308,545			13.36		8.2	$	63,193
Granted		256,112			21.28
Exercised		(1,113,827	)		13.21
Expired		-			-
Forfeited		(10,788	)		20.52
Outstanding as of December 31, 2012		3,440,042			14.38		9.0	$	68,549
Granted		253,857			35.04
Exercised		(703,326	)		6.05
Expired		(1,625	)		20.94
Forfeited		(51,647	)		17.02
Outstanding as of December 31, 2013		2,937,301			5.74		9.5	$	148,369
Exercisable as of December 31, 2013		802,034			2.82		9.5	$	42,856

Of the 703,326 and 1,113,827 stock options exercised during the fiscal year 2013 and 2012, respectively, 323,427 and 667,041 shares underlying such exercised options were retained by the Company in a net-share settlement to cover the aggregate exercise price and the required amount of employee withholding taxes.

As of December 31, 2013, there was $11,855 of total unrecognized compensation cost, net of expected forfeitures, related to unvested options. The cost is expected to be recognized over the remaining service period, having a weighted-average period of 2.0 years. Total share-based compensation cost related to the stock options for 2013, 2012 and 2011 was $9,034, $6,835 and $6,475, respectively, which is recorded in operating expenses in the consolidated statements of comprehensive income.

Restricted Stock – For awards issued prior to 2012, restricted stock awards vest in full on the third anniversary of the date of grant, subject to the grantee’s continued employment. Restricted stock awards issued in 2012 and after, vest in equal installments over three years, subject to the grantee’s continued employment or service. The fair market value of the award at the time of the grant is amortized to expense over the period of vesting. The fair value of restricted share awards is determined based on the market value of the Company's shares on the grant date. The compensation expense recognized for restricted share awards is net of estimated forfeitures.

Restricted stock vesting is net-share settled such that the Company withholds shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes. In effect, the Company repurchases these shares and classifies as treasury stock, and uses the cash on behalf of the employees to satisfy the tax withholding requirements. Total shares withheld were approximately 163,458 in 2013, and zero in 2012 and 2011, and were based on the value of the stock on the vesting dates as determined based upon an average of the Company’s high and low stock sales price on the vesting dates. Total payments for the employees’ tax obligations to the taxing authorities were $6,571 in 2013, and zero in 2012 and 2011, and are reflected as a financing activity within the Consolidated Statement of Cash Flows.

A summary of the Company's restricted share awards activity for the three years ended December 31, 2013 is as follows:

Non-vested Stock Awards	Shares			Weighted-Average Grant-Date Fair Value
Non-vested as of December 31, 2010		430,155		$	13.02
Granted		59,147			20.59
Vested		-			-
Forfeited		-			-
Non-vested as of December 31, 2011		489,302		$	13.93
Granted		195,771			26.94
Vested		-			-
Forfeited		(20,002	)	$	11.96
Non-vested as of December 31, 2012		665,071		$	17.75
Granted		112,494			37.82
Vested		(450,537	)		14.21
Forfeited		(22,622	)		25.36
Non-vested as of December 31, 2013		304,406		$	29.68

As of December 31, 2013, there was $5,216 of total unrecognized compensation cost, net of expected forfeitures, related to non-vested stock awards. That cost is expected to be recognized over the remaining service period, having a weighted-average period of 1.9 years. Total share-based compensation cost related to the restricted stock for 2013, 2012 and 2011 was $3,074, $3,645 and 1,871, respectively, which is recorded in operating expenses in the consolidated statements of comprehensive income.

During 2013, 2012 and 2011, 7,291, 10,864 and 16,680 shares, respectively, of fully vested stock were granted to certain members of the Company’s board of directors as a component of their compensation for their service on the board. Total compensation cost for these share grants in 2013, 2012 and 2011 was $260, $300 and $300, respectively, which is recorded in operating expenses in the consolidated statements of comprehensive income.