Share-based Compensation

Under the Amended and Restated 2005 Stock Incentive Plan (“Stock Incentive Plan”) which became effective in October 2005, the Company could grant stock options, stock appreciation rights (“SARs”), restricted stock units (“RSUs”), stock awards and performance based stock awards to employees and directors. The Stock Incentive Plan had reserved 3,421 shares of the Company’s common stock for issuance. As of December 31, 2014, 138 options were outstanding under the Stock Incentive Plan. The Company no longer grants awards under this plan.

Under the Amended and Restated 2009 Omnibus Equity Plan (“Omnibus Equity Plan”) which was originally approved by the shareholders in May 2009 and reapproved by shareholders in May 2012 as amended and restated, the Company may grant stock options, SARs, RSUs, restricted stock, performance shares, leveraged restricted shares, and common shares to employees and directors. The maximum number of shares available for grant is 3,350, which may be treasury shares or unissued shares. As of December 31, 2014, 414 stock options, 88 shares of restricted stock and RSUs, 51 performance units, and 59 leveraged restricted share units were outstanding under the Omnibus Equity Plan.

The Company recognized share-based compensation expense of $9,692, $9,989 and $7,461 for the years ended December 31, 2014, 2013 and 2012, respectively. This expense is included in selling, general and administrative expenses in the consolidated statements of income. The Company also recognized related tax benefits of $1,859, $6,673 and $8,972 for the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014, total share-based compensation of $8,340 is expected to be recognized over the remaining weighted-average period of approximately 1.8 years.

Stock Options

The Company uses a Black-Scholes option pricing model to estimate the fair value of stock options. The expected volatility was based on historical information. The simplified method as defined in SEC Staff Accounting Bulletin No. 107 was used to determine the expected term. The risk free rate is based on the U.S. Treasury yield in effect at the time of the grant. Weighted-average grant-date fair values of stock options and the assumptions used in estimating the fair values are as follows:



	Year Ended December 31,
	2014			2013			2012
Weighted-average grant-date fair value per share	$	56.15		$	41.52		$	35.69
Expected term (years)	6.25			6.25			6.25
Risk-free interest rate	1.00		%	1.00		%	1.15		%
Expected volatility	63.73		%	66.80		%	70.71		%

Under the terms of the Omnibus Equity Plan, stock options generally have a 4 year graded vesting period, an exercise price equal to the fair market value of a share of common stock on the date of grant, and a contractual term of 10 years. The following table summarizes the Company’s stock option activity:



	December 31, 2014
	Number of Shares		Weighted-average Exercise Price		Aggregate Intrinsic Value		Weighted- average Remaining Contractual Term
Outstanding at beginning of year	510		$	35.54
Granted	74		93.34
Exercised	(23	)	33.84
Forfeited	(9	)	59.53
Outstanding at end of year	552		$	42.92	$	4,040	5.9 years
Vested and expected to vest at end of year	547		$	42.61	$	4,040	5.9 years
Exercisable at end of year	344		$	26.85	$	4,040	4.8 years

As of December 31, 2014, total unrecognized compensation cost related to stock options expected to be recognized over the weighted-average period of approximately 2.3 years is $2,302.

The total intrinsic value of options exercised during the years ended December 31, 2014, 2013 and 2012 was $940, $21,199 and $18,310, respectively. The total fair value of stock options vested during the years ended December 31, 2014, 2013 and 2012 was $3,163, $2,673 and $2,216, respectively.

Restricted Stock and RSUs

Restricted stock and RSUs generally vest ratably over a three-year period and are valued based on the Company’s market price on the date of grant. The following table summarizes the Company’s unvested restricted stock and RSUs activity:



	December 31, 2014
	Number of Shares		Weighted-Average Grant-Date Fair Value
Unvested at beginning of year	97		$	61.48
Granted	37		92.17
Forfeited	(3	)	76.48
Vested	(43	)	53.17
Unvested at end of year	88		$	77.94

As of December 31, 2014, total unrecognized compensation cost related to unvested restricted stock and RSUs expected to be recognized over the weighted-average period of approximately 1.6 years is $2,528.

The weighted-average grant-date fair value of restricted stock and RSUs granted during the years ended December 31, 2014, 2013 and 2012 was $92.17, $69.72 and $60.80, respectively. The total fair value of restricted stock and RSUs that vested during the years ended December 31, 2014, 2013 and 2012 was $3,930, $5,782 and $4,654, respectively.

Performance Units

Performance units are earned over a three-year period. Based on the attainment of pre-determined performance condition targets as determined by the Compensation Committee of the Board of Directors, performance units earned may be in the range of between 0% and 200%. The probability of performance units being earned is evaluated each reporting period, and the fair value of the performance units is adjusted accordingly. The following table summarizes the Company’s performance units activity:



	December 31, 2014
	Number of Shares		Weighted-Average Grant-Date Fair Value
Unvested at beginning of year	86		$	46.94
Granted	16		93.34
Vested	(51	)	36.45
Unvested at end of year	51		$	72.57

As of December 31, 2014, total unrecognized compensation cost related to performance units expected to be recognized over a weighted-average period of approximately 2.0 years is $1,095.

The weighted-average grant-date fair value of performance units granted during the years ended December 31, 2014, 2013 and 2012 was $93.34, $68.21 and $55.93, respectively. The total fair value of performance units that vested during the years ended December 31, 2014 and 2012 was $2,650 and $9,386, respectively. No performance units vested during the year ended December 31, 2013.

Leveraged Restricted Share Units

Leveraged restricted share unit awards vest based on the attainment of pre-determined market condition targets as determined by the Compensation Committee of the Board of Directors over a three-year performance period. Units earned may be in the range of between 50% and 150%. The Company valued the leverage restricted share unit awards based on market conditions using a Monte Carlo Simulation model. The following table summarizes the Company’s leveraged restricted share unit awards activity:



	December 31, 2014
	Number of Shares	Weighted-average Grant-Date Fair Value
Unvested at beginning of year	40	$	74.36
Granted	19	106.90
Unvested at end of year	59	$	84.85

As of December 31, 2014, total unrecognized compensation cost related to leveraged restricted share awards expected to be recognized over the weighted-average period of approximately 1.5 years is $2,415.

The weighted-average grant-date fair value of leveraged restricted share awards granted during the years ended December 31, 2014, 2013 and 2012 was $106.90, $80.34, and $67.05 respectively.

Directors’ Stock Grants

In 2014, 2013 and 2012, the Company granted the non-employee directors stock awards covering 8, 4 and 5 shares of common stock, respectively, which had fair values of $588, $393 and $368, respectively. These stock awards were fully vested on the grant date. Likewise, the fair values were recognized immediately on the grant date.