Incentive, Retirement and Deferred Compensation Plans

Annual Incentive Plan. In June 2013, the Compensation Committee of the Company’s Board (the “Compensation Committee”) approved an annual incentive plan effective June 2013 for all employees and discontinued the Company’s then existing cash bonus program with final payments under the program of approximately $10.9 million made in July 2013. For certain members of management, the annual incentive plan incorporates objective performance criteria, individual performance goals and competitive target award levels for the 2013 performance year with payout percentages ranging from 0% to 200% of specified target levels based on actual performance. As of December 31, 2013, the Company had accrued approximately $30.2 million for the 2013 annual incentive for all employees, including an accrual for an annual incentive for specified members of management based on actual performance compared to target levels specified in the annual incentive plan.

Performance Units. In July 2013, subsequent to approval by the Compensation Committee, the Company granted 31,142 performance units to certain members of senior management under the Company’s existing long-term incentive plan which vest over a performance period from July 2013 to December 2015. The value, and ultimate payout, of the performance units is determined based upon the Company’s total shareholder return relative to that of a predetermined peer group over a specific performance period. If performance exceeds the minimum thresholds, payout percentages could range from 50% to 200% of specified target values. If minimum target thresholds are not met, the payout is reduced to zero.

The performance units are valued for accounting purposes using a Monte Carlo simulation based on certain assumptions, including (i) a volatility assumption based on the historical realized price volatility of the Company’s common stock and the common stock of the predetermined peer group and (ii) a risk-free interest rate based on the U.S. Treasury bond yields for a term commensurate with the approximate remaining vesting period. As of December 31, 2013, the Company had a liability of $1.8 million, equal to the fair value of the portion of performance units for which requisite service has been completed. The following table presents a summary of the fair value of the performance units and the related assumptions as of December 31, 2013.




Expected price volatility range	27.0	%	-	44.8		%
Risk-free interest rate				0.4		%
Fair value per unit (at grant date)				$	69.38
Fair value per unit (at December 31, 2013)				$	97.06

For the year ended December 31, 2013, the Company recognized equity compensation expense of $1.6 million, net of $0.2 million capitalized, related to performance units. The total fair value of the 12,178 performance units that vested during the year ended December 31, 2013 was $1.2 million. There were no performance units forfeited during 2013. As of December 31, 2013, there was approximately $1.2 million of unrecognized compensation cost related to unvested performance units, which is expected to be recognized over a weighted average period of 2.0 years.

Deferred Compensation Plans. The Company maintains a 401(k) retirement plan for its employees. Under the plan, eligible employees may elect to defer a portion of their earnings up to the maximum allowed by regulations promulgated by the Internal Revenue Service (“IRS”). For the years ended December 31, 2013, 2012 and 2011, the Company made matching contributions of cash purchases of Company stock to the plan equal to 100% on the first 15% of employee deferred wages. Retirement plan expense for the years ended December 31, 2013, 2012 and 2011 was approximately $11.0 million, $11.4 million and $7.4 million, respectively.

The Company maintains a non-qualified deferred compensation plan that allows eligible highly compensated employees to elect to defer income exceeding the IRS annual limitations on qualified 401(k) retirement plans. The Company makes matching contributions on non-qualified contributions up to a maximum of 15% of employee compensation. For the years ended December 31, 2013, 2012 and 2011, employer contributions of cash purchases of Company stock were approximately $2.7 million, $3.5 million and $3.1 million, respectively.

Any assets placed in trust by the Company to fund future obligations of the Company’s non-qualified deferred compensation plan are subject to the claims of creditors in the event of insolvency or bankruptcy, and participants are general creditors of the Company as to their own deferred compensation in, and the Company’s contributions to, the plan.