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Treasury Stock and Share Based Awards | 3 Months Ended
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Mar. 31, 2014
Treasury Stock and Share Based Awards |
10. | Treasury Stock and Share Based Awards
Treasury Stock — Treasury stock represents shares of common stock repurchased or withheld by the Company and not yet retired. The Company has applied the cost method in recording its treasury shares. Below is a summary of the Company’s treasury stock activity for the three months ended March 31, 2014:
|  | Number of |  |  |  |
|  | Treasury |  |  |  |
|  | Shares |  |  | Cost |
Balance at January 1, 2014 |  |  | 3,694,935 |  |  | $ | 51,946 |
Restricted stock withholdings (1) |  |  | 333,507 |  |  |  | 9,776 |
Restricted stock forfeitures |  |  | 786 |  |  |  | — |
Balance at March 31, 2014 |  |  | 4,029,228 |  |  | $ | 61,722 |
(1) | The Company withheld restricted shares as a result of the election by certain employees to satisfy their tax liabilities upon vesting in restricted stock and restricted stock units. The Company determined the number of shares to be withheld based upon market values ranging from $28.84 to $30.75 per share.
As of March 31, 2014, the Company had no plans to retire any shares of treasury stock. Stock Options – During the three months ended March 31, 2014, 14,584 stock options were exercised at a weighted average exercise price of $7.63 and a total intrinsic value of $296. The Company recognized a tax benefit of approximately $124 related to the stock option exercises. As of March 31, 2014, there were no stock options outstanding. Restricted Stock – During the three months ended March 31, 2014, the Company granted 234,813 shares of restricted stock to employees. The fair value of the restricted stock granted was determined based on the market value of the Company’s common stock on the date of grant, which was $28.54 per share. The Company assumed forfeiture rates ranging from 0% to 5% for the restricted stock awards. Certain of the restricted stock granted to employees vests over two years based on continued service and the remaining restricted stock granted to employees vests over four years based on continued service. The recipients of restricted stock are entitled to receive dividends and to vote their respective shares, however, the sale and transfer of the restricted shares is prohibited during the restriction period. Below is a summary of restricted stock activity for the three months ended March 31, 2014:
|  | Shares of |  |  | Weighted Average |
|  | Restricted |  |  | Grant Date |
|  | Stock |  |  | Fair Value |
Outstanding at January 1, 2014 |  |  | 1,260,913 |  |  | $ | 21.85 |
Granted |  |  | 234,813 |  |  | $ | 28.54 |
Vested |  |  | (586,955 | ) |  | $ | 20.04 |
Forfeited |  |  | (786 | ) |  | $ | 23.36 |
Outstanding at March 31, 2014 |  |  | 907,985 |  |  | $ | 24.75 |
Unvested restricted stock at March 31, 2014 |  |  | 907,985 |  |  | $ | 24.75 |
The Company receives an income tax deduction upon vesting of the restricted stock awards. The total fair value of shares that vested during the three months ended March 31, 2014 was $17,466. The Company recognized a tax benefit of approximately $6,645 during the three months ended March 31, 2014 related to these vested shares. The Company recorded compensation expense of $2,616 and $2,588 related to restricted stock awards during the three months ended March 31, 2014 and 2013, respectively. As of March 31, 2014, the estimated remaining unrecognized compensation expense related to restricted stock awards was $18,397 and the weighted average period over which this remaining compensation expense will be recognized is approximately two years. Restricted Stock Units – During the three months ended March 31, 2014, the Company granted restricted stock units representing 197,515 hypothetical shares of common stock to employees. The restricted stock units vest based on a combination of financial performance factors and continued service. The financial performance factors are based on an implied equity value concept that determines an internal rate of return (“IRR”) during the two fiscal year periods ending December 31, 2015 based on a formula utilizing a multiple of Adjusted EBITDA subject to certain specified adjustments as defined in the restricted stock unit award agreement. The financial performance factors for the restricted stock units have a threshold, target and maximum level of payment opportunity and vest on a prorata basis according to the IRR achieved by the Company during the performance period. If the IRR for the two year period is at least 8.5%, which is the threshold, one-third of the restricted stock units vest. If the IRR for the two year period is at least 10.5%, which is the target, two-thirds of the restricted stock units vest. If the IRR for the two year period is at least 12.5%, which is the maximum, 100% of the restricted stock units vest. Grantees are eligible to receive a ratable portion of the common stock issuable if the IRR is within the targets previously noted. All payouts of restricted stock units that vest will be subject to an additional two year service requirement and will be paid in the form of common stock if the participant continues to provide services through March 2018, which is the fourth anniversary of the grant date. Restricted stock unit award participants are eligible to receive dividend equivalent payments if and at the time the restricted stock unit awards vest. Below is a table summarizing the potential number of shares that could vest under restricted stock unit awards granted during the three months ended March 31, 2014 at each of the three target levels of financial performance (excluding forfeiture assumptions):
|  | Number of |  |  |  |
|  | Shares |  |  | Value at |
|  | Vesting |  |  | Grant |
at IRR of at least 8.5% |  |  | 65,832 |  |  | $ | 1,879 |
at IRR of at least 10.5% |  |  | 131,683 |  |  | $ | 3,758 |
at IRR of at least 12.5% |  |  | 197,515 |  |  | $ | 5,637 |
Due to the fact that the IRR for the two year performance period could not be determined at the time of grant, the Company estimated that the most likely outcome is the achievement of the mid-point IRR level. The fair value of the restricted stock unit awards was determined based on the market value of the Company’s common stock on the date of grant, which was $28.54 per share. The Company assumed forfeiture rates ranging from 0% to 5% for the restricted stock unit awards. If during the service period, additional information becomes available to lead the Company to believe a different IRR level will be achieved for the two year performance period, the Company will reassess the number of units that will vest for the grant and adjust its compensation expense accordingly on a prospective basis over the remaining service period. The Company recorded compensation expense of $907 and $862 related to restricted stock unit awards during the three months ended March 31, 2014 and 2013, respectively. During the three months ended March 31, 2014, 392,238 restricted stock unit awards vested. Upon vesting, each restricted stock unit was converted into one share of the Company’s common stock. The fair value of the restricted stock unit awards that vested during the three months ended March 31, 2014 was approximately $11,194. The Company recognized a tax benefit of approximately $4,751 during the three months ended March 31, 2014 related to these vested awards. As of March 31, 2014, the estimated remaining unrecognized compensation expense related to the outstanding restricted stock unit awards was $6,777. The weighted average period over which this remaining compensation expense will be recognized is approximately two years. As of March 31, 2014, the Company had restricted stock units outstanding that represented a total of 607,806 hypothetical shares of common stock, net of actual cumulative forfeitures of 11,498 units, assuming the maximum IRR level is achieved for each of the grants.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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