6. Stock-Based Compensation

The Company maintains two equity compensation plans under which stock-based compensation has been granted, the 2006 Stock Option Plan (the “2006 Plan”) and the 2007 Long-Term Incentive Plan (Amended and Restated as of May 1, 2014) (the “LTIP”). Upon the adoption of the LTIP in 2007, awards were no longer granted under the 2006 Plan. The LTIP provides for grants of (a) incentive stock options qualified as such under U.S. federal income tax laws, (b) stock options that do not qualify as incentive stock options, (c) stock appreciation rights, (d) restricted stock awards, (e) performance awards, (f) phantom stock, (g) stock bonuses, (h) dividend equivalents, and (i) any combination of such awards.

All awards were made with an exercise price or base price, as the case may be, that was not less than the fair market value per share on the grant date. The grant date fair value of restricted stock awards and performance share awards with performance conditions was equal to the closing market price of the Company’s common stock on the date of grant. The grant date fair value of performance share awards with market conditions was measured using a Monte Carlo simulation model.

Stock Options

The following summarizes the stock option activity for the nine months ended September 30, 2014:

	Options		Weighted-Average Exercise Price

Outstanding at January 1, 2014		1,147,320	$	13.21
Exercised		(81,027)	$	5.56
Forfeited		(957)	$	22.16
Outstanding at September 30, 2014		1,065,336	$	13.78

Restricted Stock

The following summarizes restricted stock activity for the nine months ended September 30, 2014:

	Shares		Weighted-Average Grant Date Fair Value

Outstanding at January 1, 2014		211,716	$	21.33
Granted		82,351	$	24.46
Vested		(64,657)	$	20.85
Forfeited		(1,512)	$	22.55
Outstanding at September 30, 2014		227,898	$	22.59

The shares of restricted stock that vested became taxable to the individual holders of the awards upon vesting. The Company received 18,819 of those shares as payment for withholding taxes due by holders of the restricted stock awards. The withheld shares were returned to authorized but unissued stock.

Performance Awards

The following summarizes the performance share activity at target and as of September 30, 2014:

	Shares		Weighted-Average Grant Date Fair Value

Outstanding at January 1, 2014		87,194	$	21.29
Granted at target		85,078	$	27.69
Forfeited		(1,419)	$	23.55
Outstanding at September 30, 2014		170,853	$	24.46

The Company has granted performance awards under which shares of the Company’s common stock may be earned based on the Company’s performance compared to certain metrics. The number of shares actually earned under a performance award may vary from zero to 200% of the target shares awarded, based upon the Company’s performance compared to the metrics. The metrics used are determined at grant by the Compensation Committee of the Board of Directors and may be either based on performance compared to an internal measure, such as return on invested capital (“ROIC”) or return on equity (“ROE”), or the metric may be based on market performance, such as total shareholder return (“TSR”). The 2014 performance award grants were allocated evenly between two performance metrics; ROIC and TSR.

ROIC is defined as net income, less any dividends, divided by stockholders’ equity plus net debt (total debt less cash and marketable securities) at the beginning of the performance period. The ROIC-based target shares awarded were valued at $24.72, which represented the closing price of the Company’s stock on the date of grant, and ROIC is measured over a three-year performance period ending December 31, 2016.

TSR is defined as the change in the fair market value, adjusted for dividends, of a company’s stock. The TSR of the Company’s stock will be compared to the TSR of a peer group of companies defined at the time of the grant. For the 2014 grant of TSR-based performance awards, TSR will be calculated using the average stock price of the 20 trading days prior to January 1, 2014 and compared to the average stock price of the 20 trading days prior to December 31, 2016. Because TSR is a market-based performance metric, the Company used a Monte Carlo simulation model to calculate the fair value of the grant, which resulted in a fair value of $30.66 per share.

Target performance shares awarded prior to 2014 were based on the Company’s ROE performance. ROE is defined as net income divided by stockholders’ equity at the beginning of the period.

The following summarizes the performance shares awarded at target outstanding by performance measure as of September 30, 2014.

	Performance
	Shares

Shares with ROE measures		86,381
Shares with ROIC measures		42,236
Shares with TSR measures		42,236
		170,853