11. STOCK-BASED COMPENSATION

The Company has an equity incentive plan which reserves a total of 3.5 million shares of common stock for issuance pursuant to its terms. The plan provides for the granting of shares of stock, including options to purchase shares of common stock, stock appreciation rights tied to the value of common stock, restricted stock, and restricted and deferred stock unit awards to eligible employees, non-employee directors and consultants. The Company measures share-based compensation grants at fair value on the grant date, adjusted for estimated forfeitures. The Company records noncash compensation expense related to equity awards in its consolidated financial statements over the requisite service period on a straight-line basis. Substantially all of the Company’s existing share-based compensation awards have been determined to be equity awards.

Grants under the equity incentive plans may include:

Options – Stock options may be granted that are currently exercisable, that become exercisable in installments, or that are not exercisable until a fixed future date. Certain options that have been issued are exercisable during their term regardless of termination of employment while other options have been issued that terminate at a designated time following the date employment is terminated. Options issued to date may be exercised immediately and/or at future vesting dates, and must be exercised no later than five to eight years after the grant date or they will expire.

Stock Awards – Stock awards may be granted to directors and employees with ownership of the common stock vesting immediately or over a period determined by the Compensation Committee and stated in the award. Stock awards granted to date vested in some cases immediately and at other times over a period determined by the Compensation Committee and were restricted as to sales for a specified period. Compensation expense was recognized upon the grant award date if fully vested, or over the requisite vesting period.

Deferred Stock Units – Deferred stock units may be granted to directors and employees with ownership of the common stock vesting immediately or over a period determined by the Compensation Committee and stated in the award. As determined by the Compensation Committee, deferred stock units granted to date vest over a specific period with underlying shares of common stock issuable in a period beyond the vesting date. Compensation expense was recognized upon the grant award date if fully vested, or over the requisite vesting period.

For stock options granted during the periods indicated below, the fair value of options granted was estimated on the date of grant using the Black‑Scholes option‑pricing model, a pricing model acceptable under GAAP. The Company did not grant any stock option awards during the years ended December 31, 2014 and 2013. The fair value of stock option awards granted in 2012 were calculated using assumptions of an expected life of 6.0 years, an interest rate of 0.63% and a volatility rate of 76.26%.

The expected life of options granted represents the period of time in years that options granted are expected to be outstanding. The interest rate represents the annual interest rate a risk-free investment could potentially earn during the expected life of the option grant. Expected volatility is based on weighted-average historical volatility of the Company’s common stock.

All of the Company’s existing share-based compensation awards have been determined to be equity awards. The Company recognizes compensation costs for stock option awards which vest with the passage of time with only service conditions on a straight-line basis over the requisite service period.

The following table summarizes exercisable stock option activity for the year ended December 31, 2014:



	Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2013	610,250	$	10.71	3.4	$	5,310
Granted	-		-
Exercised	(270,500)		10.56			5,270
Forfeited	-		-
Expired	-		-
Outstanding at December 31, 2014	339,750	$	10.82	3.1	$	4,763
Exercisable at December 31, 2014 (1)	339,750	$	10.82	3.1	$	4,763

(1)

Includes in-the-money options totaling 339,750 shares at a weighted-average exercise price of $10.82.

The Company’s option awards allow employees to exercise options through cash payment to the Company for the shares of common stock or through a simultaneous broker-assisted cashless exercise of a share option, through which the employee authorizes the exercise of an option and the immediate sale of the option shares in the open market. The Company uses newly-issued shares of common stock to satisfy its share-based payment obligations.

The following table summarizes non-vested stock award and deferred stock unit activity for the year ended December 31, 2014:




	Non-Vested Shares and Deferred Stock Units	Weighted-Average Grant-Date Fair Value		Weighted-Average Remaining Vesting Term (in years)
Nonvested at December 31, 2013	738,950	$	10.39
Granted	407,393		23.56
Forfeited	(5,516)		10.88
Vested	(462,323)		13.49
Nonvested at December 31, 2014	678,504	$	16.18	1.8

Compensation costs expensed for the Company’s share-based payment plan described above were approximately $7.2 million, $5.5 million and $5.5 million for the years ended December 31, 2014, 2013 and 2012, respectively. At December 31, 2014, there were $6.6 million of unrecognized compensation costs from share-based compensation arrangements, which are related to non-vested awards. This compensation is expected to be recognized over a weighted-average period of approximately 1.8 years. The potential tax benefit realizable for the anticipated tax deductions of the exercise of share-based payment arrangements generally would approximate 37.5% of these expense amounts.