Equity Incentive Plan

Grants of common shares and options to purchase common shares are issued under the 2007 Equity Incentive Plan. Under the 2007 Equity Incentive Plan, an aggregate of 3,650,000 common shares, options to purchase common shares and restricted share units, subject to adjustment in the event of certain capital events, may be granted. At December 31, 2013, there were 1,780,242 shares available for grant under the 2007 Equity Incentive Plan.

Share Options

Share options granted under the 2007 Equity Incentive Plan have exercise prices equal to the fair market value of a common share at the date of grant. The options may be granted for any reasonable term, not to exceed 10 years, and for employees typically become exercisable at a rate of 25% per year over a four-year period. For non-employee Trustees, share options are vested upon issuance, however, the share options may not be exercised for a one year period subsequent to the grant date. The Company generally issues new common shares upon option exercise. A summary of the Company’s share option activity and related information is as follows:



	Number of shares		Option price per share					Weighted avg. exercise price
Outstanding at December 31, 2010	1,071,096		$	16.05	—	$	65.50	$	32.00
Exercised	(135,196	)	18.18		—	42.46		21.96
Granted	70,266		45.73		—	47.77		46.19
Forfeited	(3,333	)	16.05		—	16.05		16.05
Outstanding at December 31, 2011	1,002,833		$	18.18	—	$	65.50	$	34.41
Exercised	(224,181	)	18.18		—	36.56		23.42
Granted	103,082		44.62		—	47.99		45.60
Forfeited	(396	)	18.18		—	46.69		40.03
Outstanding at December 31, 2012	881,338		$	18.18	—	$	65.50	$	38.51
Exercised	(143,272	)	18.18		—	47.20		30.64
Granted	115,257		46.86		—	58.09		47.86
Forfeited	(12,658	)	36.56		—	60.42		56.90
Outstanding at December 31, 2013	840,665		$	18.18	—	$	65.50	$	40.85

The weighted average fair value of options granted was $12.35, $12.08 and $9.29 during 2013, 2012 and 2011, respectively. The intrinsic value of stock options exercised was $2.9 million, $5.1 million, and $2.9 million during the years ended December 31, 2013, 2012 and 2011, respectively. Additionally, the Company repurchased 66,632 shares into treasury shares in conjunction with the stock options exercised during the year ended December 31, 2013 with a total value of $3.4 million.

The expense related to share options included in the determination of net income for the years ended December 31, 2013, 2012 and 2011 was $856 thousand, $937 thousand and $777 thousand, respectively. The following assumptions were used in applying the Black-Scholes option pricing model at the grant dates: risk-free interest rate of 1.0%, 1.1% to 1.4% and 2.5% to 3.1% in 2013, 2012 and 2011, respectively, dividend yield of 5.4% to 6.5%, 6.3% to 6.7%, 6.4% in 2013, 2012 and 2011, respectively, volatility factors in the expected market price of the Company’s common shares of 50.7%, 51.3% to 51.4%, 39.8%, in 2013, 2012 and 2011, respectively, 0.23% to 0.29% and 0.25% expected forfeiture rates for 2013 and 2012 and no expected forfeitures for 2011, and an expected life of approximately six years for both 2013 and 2012 and approximately eight years for 2011. The Company uses historical data to estimate the expected life of the option and the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Additionally, expected volatility is computed based on the average historical volatility of the Company’s publicly traded shares.

At December 31, 2013, stock-option expense to be recognized in future periods was $1.8 million as follows (in thousands):



	Amount
Year:
2014	$	830
2015	605
2016	308
2017	11
Total	$	1,754

The following table summarizes outstanding options at December 31, 2013:



Exercise price range	Options outstanding	Weighted avg. life remaining	Weighted avg. exercise price		Aggregate intrinsic value (in thousands)
$ 18.18 - 19.99	201,859	5.1
20.00 - 29.99	—	0.0
30.00 - 39.99	25,731	4.3
40.00 - 49.99	502,222	5.7
50.00 - 59.99	17,500	6.5
60.00 - 65.50	93,353	3.0
	840,665	5.2	$	40.85	$	8,537

The following table summarizes exercisable options at December 31, 2013:



Exercise price range	Options outstanding	Weighted avg. life remaining	Weighted avg. exercise price		Aggregate intrinsic value (in thousands)
$ 18.18 - 19.99	201,859	5.1
20.00 - 29.99	—	0.0
30.00 - 39.99	18,460	3.5
40.00 - 49.99	292,290	3.7
50.00 - 59.99	10,000	4.3
60.00 - 65.50	93,353	3.0
	615,962	4.1	$	38.78	$	7,883

Nonvested Shares

A summary of the Company’s nonvested share activity and related information is as follows:



	Number of shares		Weighted avg. grant date fair value		Weighted avg. life remaining
Outstanding at December 31, 2012	322,808		$	42.52
Granted	198,833		47.15
Vested	(145,570	)	39.88
Forfeited	(4,207	)	45.39
Outstanding at December 31, 2013	371,864		$	46.00	0.99

The holders of nonvested shares have voting rights and receive dividends from the date of grant. These shares vest ratably over a period of three to four years. The fair value of the nonvested shares that vested was $6.7 million, $7.7 million and $7.3 million for the years ended December 31, 2013, 2012 and 2011, respectively. At December 31, 2013, unamortized share-based compensation expense related to nonvested shares was $8.3 million and will be recognized in future periods as follows (in thousands):



	Amount
Year:
2014	$	3,968
2015	2,892
2016	1,399
Total	$	8,259

Restricted Share Units

A summary of the Company’s restricted share unit activity and related information is as follows:



	Number of Shares		Weighted Average Grant Date Fair Value		Weighted Average Life Remaining
Outstanding at December 31, 2012	10,925		$	44.62
Granted	17,530		58.38
Vested	(10,925	)	44.62
Outstanding at December 31, 2013	17,530		$	58.38	0.36

The holders of restricted share units have voting rights and receive dividends from the date of grant. The share units vest upon the earlier of the day preceding the next annual meeting of shareholders or a change of control. The settlement date for the shares is selected by the non-employee trustee, and ranges from one year from the grant date to upon termination of service. At December 31, 2013, unamortized share-based compensation expense related to restricted share units was $358 thousand which will be recognized in 2014.