STOCKHOLDERS’ EQUITY

Stock Options

As of September 30, 2015, there were 1,787,589 stock options outstanding and 1,140,804 stock options which remain unvested. We did not grant any stock options in the three months ended September 30, 2015. During the first quarter of 2015, we granted 628,000 options to certain employees at an option price of $22.58 and 25,000 options to a new employee at an option price of $24.74. These options will vest in one-third increments over a three-year period and have a seven-year term. The fair value of the total options granted during the first quarter of 2015 was approximately $3.7 million. During the nine months ended September 30, 2015, we have issued a total of 653,000 stock options. We recorded pre-tax stock-based compensation expense for stock options totaling approximately $0.4 million and $0.6 million for the three months ended September 30, 2014 and 2015, respectively, and $1.2 million and $1.8 million for the nine months ended September 30, 2014 and 2015, respectively.

Employee Stock Purchase Plan

During the third quarter of 2015, employees purchased a total of 9,513 shares of common stock through the employee stock purchase plan (“ESPP”) at a weighted average price of $17.17 per share. We recorded pre-tax stock-based compensation expense for the ESPP totaling approximately $42,000 and $37,000 for the three months ended September 30, 2014 and 2015, respectively, and $231,000 and $165,000 for the nine months ended September 30, 2014 and 2015, respectively.

The fair value of the option to purchase shares under the ESPP is estimated on the date of grant (January 1 of each year) associated with the four quarterly purchase dates using the following assumptions:



	2015
Dividend yield	0.4	%
Expected volatility	24.35	%
Risk-free interest rate	0.02%, 0.11%, 0.18%, 0.25%
Expected life (years)	0.25, 0.50, 0.75, 1.00

Expected volatilities are based on the historical volatility during the previous twelve months of the underlying common stock. The risk-free rate for the quarterly purchase periods is based on the U.S. Treasury yields in effect at the time of the purchase. The expected life of the ESPP grants represents the calendar quarters from the beginning of the year to the purchase date (end of each quarter).

Restricted Stock Grants

From time to time, we issue shares of restricted common stock to certain officers and key employees of the Company from our stock benefit plans. The restricted stock shares issued to officers and key employees vest over three to five-year terms. During the three months ended September 30, 2015, we did not issue any restricted stock. During the first quarter of 2015, we issued a total of 37,900 restricted stock grants that vest over a three-year period with an aggregate grant date market value of approximately $0.9 million. During the nine months ended September 30, 2015, we have issued a total of 37,900 restricted stock grants.

Related to the vesting of restricted stock awards granted to our officers and key employees, we recorded $0.5 million and $0.4 million of pre-tax compensation expense, which is included in general, administrative and other expenses for the three months ended September 30, 2014 and 2015, respectively, and approximately $1.3 million and $1.2 million for the nine months ended September 30, 2014 and 2015, respectively.

As of September 30, 2015, we had approximately $4.2 million of total unrecognized compensation costs related to unvested restricted stock awards, which are expected to be recognized over a weighted average period of approximately 2.4 years.

Director Compensation Policy

We compensate our directors through cash payments, including retainers and meeting attendance fees, and through stock-based awards. Refer to our definitive proxy statement related to our 2015 annual meeting for a full discussion concerning our Director Compensation Policy. On September 28, 2015, a new director joined our Board of Directors at which time he was granted 4,837 shares of our common stock valued at approximately $100,000 pursuant to our Director Compensation Policy. One-half of these shares vested immediately, while the remainder will vest equally over the two-year period following the grant date.

We recorded $46,000 and $148,000 of pre-tax compensation expense, which is included in general, administrative and other expenses, for the three months ended September 30, 2014 and 2015, respectively, and $695,000 and $554,000 for the nine months ended September 30, 2014 and 2015, respectively, related to the director fees and annual retainers.

Share Repurchase Program

On May 19, 2015, our Board of Directors approved a share repurchase program authorizing us to purchase up to an aggregate of $25.0 million of our common stock in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended. On September 28, 2015, our Board of Directors approved a $20.0 million increase in its authorization for repurchases of the Company's common stock bringing the total amount authorized to $45.0 million. The shares may be purchased from time to time in the open market or in privately negotiated transactions. Purchases will be at times and in amounts as management deems appropriate based on factors such as market conditions, legal requirements and other business considerations. During the three and nine months ended September 30, 2015, we purchased 1,079,985 and 1,204,985 shares of our common stock for a total cost of $24.2 million and $27.3 million, respectively. Approximately $3.4 million, or 160,946 shares, settled after the quarter ended.

Accumulated other comprehensive income

Our components of Accumulated other comprehensive income are as follows:



	Accumulated Other Comprehensive Income
Balance at December 31, 2014	$	—
Decrease in net unrealized gains associated with available-for-sale securities of the trusts	(25,287		)
Reclassification of net unrealized gain activity attributable to the Deferred preneed funeral and cemetery receipts held in trust and Care trusts’ corpus	25,287
Balance at September 30, 2015	$	—