NOTE 5 —STOCK-BASED COMPENSATION

The Company issues stock options and restricted stock awards to employees under share-based compensation plans. During the three months ended March 31, 2015 and 2014, total compensation expense related to restricted stock awards reduced income before taxes by $4.0 million and $3.2 million, respectively. The net tax benefit recognized in equity for stock compensation plans was $3.1 million and $3.7 million for the three months ended March 31, 2015 and 2014, respectively.

As of March 31, 2015, there were 3,050,063 shares available to be issued, subject to the Company’s current 1998 Stock Incentive Plan, as amended.

Stock Options — The Company issues fixed stock options to certain employees, officers, and directors. Stock options are issued at the current market price on the date of grant with a four-year vesting period and contractual term of seven years. The Company issues new shares upon the exercise of stock options. The Company did not issue any stock options during the three months ended March 31, 2015 and 2014.

The following table presents the activity for the Company’s stock options as of and for the three months ended March 31, 2015:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (In thousands)
Outstanding at beginning of period	42,116	$	20.75	—	$	—
Granted	—	—		—	—
Exercised	(39,751)	21.09		—	—
Expired	—	—		—	—
Outstanding at end of period	2,365	$	14.95	0.77 years	$	60
Vested or expected to vest at end of period	2,365	$	14.95	0.77 years	$	60
Exercisable at end of period	2,365	$	14.95	0.77 years	$	60

The Company received $838 thousand and $283 thousand during the three months ended March 31, 2015 and 2014, respectively, in cash proceeds from stock option exercises. The intrinsic value of the options exercised was $693 thousand and $194 thousand for the three months ended March 31, 2015 and 2014, respectively. The net tax benefit recognized from stock option exercises was $291 thousand for the three months ended March 31, 2015 compared to $82 thousand for the three months ended March 31, 2014.

As of March 31, 2015, all stock options are fully vested and all compensation cost related to stock options has been recognized.

Restricted Stock Awards — In addition to stock options, the Company also grants restricted stock awards to directors, officers and employees. The restricted stock awards vest ratably in three years or cliff vest in three or five years of continued employment from the date of grant. Additionally, some of the restricted stock awards include a Company financial performance requirement for vesting. The Company becomes entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted stock when the restrictions are released and the shares are issued. Restricted stock awards are forfeited if officers and employees terminate employment prior to the lapsing of restrictions or if established financial goals are not achieved. The Company records forfeitures of issued restricted stock as treasury share repurchases.

The following table presents a summary of the activity for the Company’s time-based and performance-based restricted stock awards as of March 31, 2015, including changes during the three months ended March 31, 2015:


	March 31, 2015
	Restricted Stock Awards
	Time-Based			Performance-Based
	Shares	Weighted Average Price		Shares	Weighted Average Price
Outstanding at beginning of period	751,020	$	30.61	518,553	$	29.64
Granted	411,802	38.85		149,284	39.95
Vested	(207,495)	23.27		(144,445)	22.05
Forfeited	(13,119)	34.05		—	—
Outstanding at end of period	942,208	$	35.78	523,392	$	35.64

There were no restricted stock grants to outside directors during the three months ended March 31, 2015 and 2014.

Restricted stock awards are valued at the closing price of the Company’s stock on the date of award. The weighted average fair values of time-based restricted stock awards granted during the three months ended March 31, 2015 and 2014 were $38.85 and $36.83, respectively. The weighted average fair value of performance-based restricted stock awards granted during the three months ended March 31, 2015 and 2014 were $39.95 and $36.85, respectively. The total fair value of time-based restricted stock awards vested during the three months ended March 31, 2015 and 2014 was $8.4 million and $14.6 million, respectively. The total fair value of performance-based restricted stock awards vested during the three months ended March 31, 2015 and 2014 were $5.8 million and $2.7 million, respectively.

As of March 31, 2015, total unrecognized compensation cost related to time-based and performance-based restricted stock awards amounted to $29.3 million and $12.3 million, respectively. This cost is expected to be recognized over a weighted average period of 2.41 years and 2.29 years, respectively.