EMPLOYEE STOCK COMPENSATION

Share-based Compensation Expense

For the years ended December 31, 2015, 2014, and 2013, share-based compensation expense on stock option awards, restricted stock awards and restricted stock units was $9.1 million, $6.3 million, and $2.9 million respectively, and the related tax benefits were $3.8 million, $2.7 million and $0, respectively. Share-based compensation expense on stock appreciation rights was $202 thousand, $2.0 million, and $1.1 million, respectively, and the related tax benefits were $85 thousand, $827 thousand, and $0, respectively, for the years ended December 31, 2015, 2014, and 2013.

On July 16, 2013, the Company’s stockholders approved the Company’s 2013 Omnibus Stock Incentive Plan (the 2013 Omnibus Plan). Upon the approval of the 2013 Omnibus Plan, the Company ceased being able to grant new awards under the Company’s 2011 Omnibus Incentive Plan or any prior equity incentive plans. The 2013 Omnibus Plan provides that the aggregate number of shares of Company common stock that may be subject to awards under the 2013 Omnibus Plan will be 20 percent of the then outstanding shares of Company common stock (the Share Limit), provided that in no event will the Share Limit be less than the greater of 2,384,711 shares of Company common stock and the aggregate number of shares of Company common stock with respect to which awards have been properly granted under the 2013 Omnibus Plan up to that point in time. As of December 31, 2015, based on the number of shares then-registered for issuance under the 2013 Omnibus Plan, 2,171,553 shares were available for future awards under the 2013 Omnibus Plan.

Unrecognized Share-based Compensation Expense

The following table presents unrecognized share-based compensation expense as of December 31, 2015:



	Unrecognized Expense		Average Expected Recognition Period
	($ in thousands)
Stock option awards	$	1,260	3.2 years
Restricted stock awards and restricted stock units	10,448		2.9 years
Stock appreciation rights	$	27	1.4 years
Total	$	11,735	3.0 years

Stock Options

The Company has issued stock options to certain employees, officers and directors. Stock options are issued at the closing market price immediately before the grant date, and generally have a three to five year vesting period and contractual terms of seven to ten years.

The weighted-average estimated fair value per share options granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions.



	Year Ended December 31,
	2015		2014		2013
	($ in thousands, except per share data)
Granted date fair value of options granted	$	729	$	781	$	1,399
Fair value of options vested	$	481	$	346	$	1,090
Total intrinsic value of options exercised	$	75	$	110	$	104
Cash received from options exercised	$	501	$	993	$	—
Weighted-average estimated fair value per share of options granted	$	3.76	$	3.38	$	3.52

Expected volatility was determined based on the historical monthly volatility of our stock price over a period equal to the expected term of the options granted. The expected term of the options represents the period that options granted are expected to be outstanding based primarily on the historical exercise behavior associated with previous options grants. The risk-free interest rate was based on the U.S. Treasury yield curve at the time of grant for a period equal to the expected term of the options granted.

The following table presents a summary of weighted-average assumptions used for calculating fair value options for the periods indicated:



	Year Ended December 31,
	2015		2014		2013
Weighted-average assumptions
Dividend yield	4.14	%	3.69	%	3.87	%
Expected volatility	43.04	%	40.26	%	41.06	%
Expected term	6.4 years		6.0 years		5.0 years
Risk-free interest rate	1.68	%	1.99	%	1.21	%

The following table represents stock option activity and weighted-average exercise price per share for the periods indicated:



	Year Ended December 31,
	2015				2014				2013
	Number of Shares		Weighted- Average Exercise Price per Share		Number of Shares		Weighted- Average Exercise Price per Share		Number of Shares		Weighted- Average Exercise Price per Share
Outstanding at beginning of year	879,070		$	12.67	734,721		$	12.73	525,799		$	12.16
Granted	193,696		$	13.28	231,016		$	12.05	389,569		$	13.72
Replacement awards issued	—		$	—	—		$	—	22,581		$	12.65
Exercised	(43,333	)	$	11.55	(86,667	)	$	11.46	(44,988	)	$	12.00
Forfeited	(68,554	)	$	12.38	—		$	—	(158,240	)	$	13.41
Outstanding at end of year	960,879		$	12.86	879,070		$	12.67	734,721		$	12.73
Exercisable at end of year	394,613		$	12.70	166,016		$	11.28	526,667		$	12.00

The following table represents changes in unvested stock options and related information as of and for the periods indicated:



	Year Ended December 31,
	2015				2014				2013
	Number of Shares		Weighted- Average Exercise Price per Share		Number of Shares		Weighted- Average Exercise Price per Share		Number of Shares		Weighted- Average Exercise Price per Share
Outstanding at beginning of year	552,672		$	12.74	419,569		$	13.16	266,668		$	11.70
Granted	193,696		$	13.28	231,016		$	12.05	389,569		$	13.72
Vested	(170,102	)	$	12.57	(97,913	)	$	12.94	(93,334	)	$	11.68
Forfeited	(10,000	)	$	12.03	—		$	—	(143,334	)	$	12.95
Outstanding at end of year	566,266		$	12.99	552,672		$	12.74	419,569		$	13.16

The following table presents a summary of stock options outstanding as of December 31, 2015:



	Options Outstanding						Options Exercisable
	Number of Shares	Intrinsic Value		Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Life	Number of Shares	Intrinsic Value		Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Life
$10.89 to $11.87	177,683	$	583,747	$	11.33	6.5 years	125,529	$	404,201	$	11.40	6.0 years
$11.87 to $12.85	285,000	675,700		$	12.25	8.0 years	128,327	305,752		$	12.24	7.5 years
$12.85 to $13.83	298,696	402,016		$	13.27	8.2 years	40,000	60,400		$	13.11	7.4 years
$13.83 to $14.81	166,622	61,744		$	14.25	3.5 years	67,879	25,609		$	14.24	3.5 years
$14.81 to $15.81	32,878	—		$	15.81	5.5 years	32,878	—		$	15.81	5.5 years
Total	960,879	$	1,723,207	$	12.86	6.9 years	394,613	$	795,962	$	12.70	6.1 years

Restricted Stock Awards and Restricted Stock Units

The Company also has granted restricted stock awards and restricted stock units to certain employees, officers and directors. The restricted stock awards and units are valued at the closing price of the Company’s stock on the date of award. The restricted stock awards and units fully vest after a specified number of years (ranging from one to five years) of continued service from the date of grant. The Company recognizes an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted stock, generally when vested or, in the case of restricted stock units, when settled.

The following table represents restricted stock awards and restricted stock units activity for the periods indicated:



	Year Ended December 31,
	2015				2014				2013
	Number of Shares		Weighted- Average Price per Share		Number of Shares		Weighted- Average Price per Share		Number of Shares		Weighted- Average Price per Share
Outstanding at beginning of year	1,287,302		$	12.53	893,886		$	13.78	163,682		$	11.43
Granted	930,830		$	12.31	915,077		$	11.77	936,542		$	13.82
Vested	(451,196	)	$	12.64	(261,952	)	$	13.51	(88,169	)	$	11.98
Forfeited	(250,575	)	$	12.29	(259,709	)	$	13.21	(118,169	)	$	12.70
Outstanding at end of year	1,516,361		$	12.40	1,287,302		$	12.53	893,886		$	13.78

Stock Appreciation Rights

On August 21, 2012, the Company granted to its chief executive officer a ten-year stock appreciation right (SAR) with respect to 500,000 shares (Initial SAR) of the Company’s common stock with a base price of $12.12 per share. One-third of the Initial SAR vested on the grant date, one-third vested on the first anniversary of the grant date and one-third vested on the second anniversary of the grant date such that the SAR was fully vested on August 21, 2014, the second anniversary of the grant date. Upon cessation of the chief executive officer’s service with the Company for “Cause” or without “Good Reason” (including a cessation of service following the expiration of the term of the chief executive officer’s employment agreement), the vested portion of all SARs will expire 90 days following the cessation of service.

The SARs originally were to be settled in cash and the compensation expense for the SARs was recognized over the vesting period based on the fair value as calculated using Black Scholes as of the grant date and adjusted each quarter. The Company amended the Initial SAR agreement to provide that the SARs be settled in shares of voting common stock rather than cash, with all other terms remaining substantially the same on December 13, 2013 (the Conversion Date). Currently, compensation expense has been recognized over the expected term of the SARs based on the fair value as calculated using Black Scholes as of the Conversion Date for the SARs issued before the Conversion Date and grant dates for the SARs issued after the Conversion Date.

The SAR agreement, as amended, provides that the SAR (whether vested or unvested) is entitled to dividend equivalent rights and also contains an anti-dilution provision pursuant to which additional SARs (Additional SARs) are (and have been) issued to the Company’s chief executive officer with a base price determined as of the date of issuance, but otherwise with the same terms and conditions (including vesting and dividend equivalent rights) as the Initial SAR. These Additional SARs are (and have been) issued upon the Company’s subsequent issuances of shares of common stock; however, the anti-dilution adjustment does not apply to certain issuances of common stock for compensatory purposes as described more fully under the terms of the SAR agreement, as amended.

The weighted-average estimated fair value per share of SARs granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions.



	Year Ended December 31,
	2015			2014			2013
Dividend yield	—		%	—		%	—		%
Expected volatility	23.79		%	27.28		%	30.54		%
Expected term	2.0 years			2.7 years			2.6 years
Risk-free interest rate	0.64		%	0.70		%	0.36		%
Weighted-average estimated fair value per share of SARs granted	$	1.72		$	1.93		$	2.33

The Initial SAR and Additional SARs have the same vesting and dividend equivalent terms, except for an additional SAR for 300,219 shares granted on May 21, 2014 (Additional TEU SAR) to the Company’s chief executive officer relating to a public offering of the Company’s tangible equity units (TEUs). Each TEU is comprised of a prepaid stock purchase contract (each, a Purchase Contract) and a junior subordinated amortizing note due May 15, 2017 issued by the Company (each, an Amortizing Note).The Purchase Contracts are settled in shares of the Company’s voting common stock based on a maximum settlement rate (subject to adjustment) and a minimum settlement rate (subject to adjustment) as more fully described under Note 18. The number of settlement shares underlying the Additional TEU SAR was calculated using the initial maximum settlement rate and, therefore, the number of shares underlying the Additional TEU SAR is subject to adjustment and forfeiture if the aggregate number of shares of stock issued in settlement of any single Purchase Contract is less than the initial maximum settlement rate. The Additional TEU SAR vests in full on May 21, 2017, which is the date each Purchase Contract is required to be settled in shares of voting common stock, unless settled earlier at the holder’s option. Until the Additional TEU SAR vests in full on May 21, 2017 or accelerates in vesting due to early settlement of a Purchase Contract at the holders' option, the Additional TEU SAR has no dividend equivalent rights and the shares underlying the Additional TEU SAR are subject to forfeiture.

The following table represents SARs activity and the weighted-average exercise price per share for the periods indicated:



	Year Ended December 31,
	2015				2014				2013
	Number of Shares		Weighted- Average Exercise Price per Share		Number of Shares		Weighted- Average Exercise Price per Share		Number of Shares	Weighted- Average Exercise Price per Share
Outstanding at beginning of year	1,575,394		$	11.58	825,451		$	12.54	500,000	$	12.12
Granted	2,973		$	12.27	768,576		$	10.52	325,451	$	13.18
Exercised	—		$	—	—		$	—	—	$	—
Forfeited	(16,686	)	$	10.09	(18,633	)	$	10.09	—	$	—
Outstanding at end of year	1,561,681		$	11.60	1,575,394		$	11.58	825,451	$	12.54
Exercisable at end of year	1,535,718		$	11.63	1,427,805		$	11.74	550,299	$	12.54

The following table represents changes in unvested SARs and related information as of and for the periods indicated:



	Year Ended December 31,
	2015				2014				2013
	Number of Shares		Weighted- Average Exercise Price per Share		Number of Shares		Weighted- Average Exercise Price per Share		Number of Shares		Weighted- Average Exercise Price per Share
Outstanding at beginning of year	147,589		$	10.09	275,152		$	12.54	333,334		$	12.12
Granted	2,973		$	12.27	768,576		$	10.52	325,451		$	13.18
Vested	(107,913	)	$	10.15	(877,506	)	$	11.23	(383,633	)	$	12.72
Forfeited	(16,686	)	$	10.09	(18,633	)	$	10.09	—		$	—
Outstanding at end of year	25,963		$	10.09	147,589		$	10.09	275,152		$	12.54