Stock-Based Compensation	3 Months Ended
Mar. 31, 2015
Stock-Based Compensation
Stock-Based Compensation	Note 6. Stock-Based Compensation Stock Option The Company granted options to purchase 355,667 shares and 372,010 shares of common stock to employees during the three months ended March 31, 2015 and 2014, respectively. For the three months ended March 31, 2015, the Company issued 157,067 shares of common stock in connection with the exercise of stock options with a weighted-average exercise price of $15.14 per share. For the three months ended March 31, 2014, the Company issued 94,309 shares of common stock in connection with the exercise of stock options with a weighted-average exercise price of $10.56 per share. Performance-Based Vesting Stock Options During the three months ended March 31, 2015, the Company granted performance-based vesting stock options to purchase 148,100 shares of common stock (“PV stock options”). There were no PV stock options granted during the three months ended March 31, 2014. The number of shares potentially available under PV stock options is subject to the attainment of pre-established, objective performance goals over a specified period. In addition, the awards also have a service vesting criteria following the achievement of performance criteria through February 2019. The Company recognizes the fair value of these awards to the extent the achievement of the related performance criteria is estimated to be probable. If a performance criteria is subsequently determined to not be probable of achievement, any related expense is reversed in the period such determination is made. Conversely, if a performance criteria is not currently expected to be achieved but is later determined to be probable of achievement, a “catch-up” entry is recorded in the period such determination is made for the expense that would have been recognized had the performance criteria been probable of achievement since the grant of the award. As of March 31, 2015, the achievement of the performance criteria is estimated to be probable and $119,000 of stock-based compensation expense has been recognized related to the PV stock options during the three months ended March 31, 2015. Changes in the Company’s assessment of the probability of achievement of performance criteria could result in expense being reversed in future periods. Restricted Stock Units During the three months ended March 31, 2015, the Company awarded 359,616 RSUs with a grant-date fair value of $11.2 million, or $31.14 per share. During the three months ended March 31, 2014, the Company awarded 331,253 RSUs with a grant-date fair value of $9.7 million, or $29.27 per share. Each RSU entitles the recipient to receive one share of the Company’s common stock upon vesting. RSUs awarded to employees generally vest as to one-third of the total number of shares awarded annually over a three-year period. During the three months ended March 31, 2015, the Company issued 156,838 shares of common stock in connection with the vesting of RSUs with a weighted-average grant date fair value of $29.59 per share. During the three months ended March 31, 2014, the Company issued 164,532 shares of common stock in connection with the vesting of RSUs with a weighted-average grant date fair value of $27.98 per share. Performance-Based Vesting Restricted Stock Units During the three months ended March 31, 2015, the Company awarded 22,980 performance-based restricted stock units (“PVRSUs”) with a grant-date fair value of $715,000, or $31.12 per share. The amount potentially available under a PVRSU is subject to the attainment of pre-established, objective performance goals over a specified period. In addition, the awards also have a service vesting criteria following the achievement of performance criteria through February 2018. During the three months ended March 31, 2014, the Company awarded 44,630 PVRSUs with a grant-date fair value of $1.2 million or $27.21 per share. In addition, these awards also have a service vesting criteria following the achievement of performance criteria through February 2016. During the three months ended March, 31, 2015, the Company issued 4,227 shares of common stock in connection with the vesting of PVRSUs with a weighted-average grant date fair value of $27.21 per share. As of March 31, 2015, there were 29,133 PVRSUs outstanding with a grant date fair value of $883,000. The Company recognizes the fair value of these awards to the extent the achievement of the related performance criteria is estimated to be probable. If a performance criteria is subsequently determined to not be probable of achievement, any related expense is reversed in the period such determination is made. Conversely, if a performance criteria is not currently expected to be achieved but is later determined to be probable of achievement, a “catch-up” entry is recorded in the period such determination is made for the expense that would have been recognized had the performance criteria been probable of achievement since the grant of the award. As of March 31, 2015, the achievement of the performance criteria is estimated to be probable and $108,000 has been recognized related to the PVRSUs during the three months ended March 31, 2015. Changes in the Company’s assessment of the probability of achievement of performance criteria could result in expense being recorded in future periods. Restricted Stock in Lieu of Directors’ Fees Outside members of the Company’s Board of Directors may elect to receive fully-vested restricted stock in lieu of cash compensation for services as a director. During the three months ended March 31, 2015, the Company issued 1,560 shares of restricted stock to outside directors, with a grant date fair value of $50,000, and a weighted-average grant date fair value of $31.97 per share. During the three months ended March 31, 2014, the Company issued 1,705 shares of restricted stock to outside directors, with a grant date fair value of $50,000, and a weighted-average grant date fair value of $29.27 per share. Employee Stock Purchase Plan During the three months ended March 31, 2015 and 2014, no shares were issued under the employee stock purchase plan (“ESPP”). A total of 1,250,000 shares of common stock have been reserved for issuance under the ESPP, of which 759,738 shares were available for issuance as of March 31, 2015. As of March 31, 2015, there was $229,000 of unrecognized compensation expense related to the ESPP, which is expected to be recognized over a period of two months. Employee Stock-Based Compensation Expense The Company recognized employee stock-based compensation expense of $4.2 million and $4.4 million for the three months ended March 31, 2015 and 2014, respectively. Employee stock-based compensation expense includes expense related to stock option grants, RSU awards to employees, and stock purchased under the Company’s ESPP. Stock-based compensation expense is calculated based on options and RSUs ultimately expected to vest and has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates Valuation Assumptions The Company values its stock option grants using the Black-Scholes option valuation model. Option valuation models require the input of highly subjective assumptions that can vary over time. The Company’s assumptions regarding expected volatility are based on the historical volatility of the Company’s common stock. The expected life of options granted is estimated based on historical option exercise data and assumptions related to unsettled options. The risk-free interest rate is estimated using published rates for U.S. Treasury securities with a remaining term approximating the expected life of the options granted. The Company uses a dividend yield of zero as it has never paid cash dividends and does not anticipate paying cash dividends in the foreseeable future.

Note 6. Stock-Based Compensation

Stock Option

The Company granted options to purchase 355,667 shares and 372,010 shares of common stock to employees during the three months ended March 31, 2015 and 2014, respectively. For the three months ended March 31, 2015, the Company issued 157,067 shares of common stock in connection with the exercise of stock options with a weighted-average exercise price of $15.14 per share. For the three months ended March 31, 2014, the Company issued 94,309 shares of common stock in connection with the exercise of stock options with a weighted-average exercise price of $10.56 per share.

Performance-Based Vesting Stock Options

During the three months ended March 31, 2015, the Company granted performance-based vesting stock options to purchase 148,100 shares of common stock (“PV stock options”). There were no PV stock options granted during the three months ended March 31, 2014. The number of shares potentially available under PV stock options is subject to the attainment of pre-established, objective performance goals over a specified period. In addition, the awards also have a service vesting criteria following the achievement of performance criteria through February 2019.

The Company recognizes the fair value of these awards to the extent the achievement of the related performance criteria is estimated to be probable. If a performance criteria is subsequently determined to not be probable of achievement, any related expense is reversed in the period such determination is made. Conversely, if a performance criteria is not currently expected to be achieved but is later determined to be probable of achievement, a “catch-up” entry is recorded in the period such determination is made for the expense that would have been recognized had the performance criteria been probable of achievement since the grant of the award. As of March 31, 2015, the achievement of the performance criteria is estimated to be probable and $119,000 of stock-based compensation expense has been recognized related to the PV stock options during the three months ended March 31, 2015. Changes in the Company’s assessment of the probability of achievement of performance criteria could result in expense being reversed in future periods.

Restricted Stock Units

During the three months ended March 31, 2015, the Company awarded 359,616 RSUs with a grant-date fair value of $11.2 million, or $31.14 per share. During the three months ended March 31, 2014, the Company awarded 331,253 RSUs with a grant-date fair value of $9.7 million, or $29.27 per share. Each RSU entitles the recipient to receive one share of the Company’s common stock upon vesting. RSUs awarded to employees generally vest as to one-third of the total number of shares awarded annually over a three-year period. During the three months ended March 31, 2015, the Company issued 156,838 shares of common stock in connection with the vesting of RSUs with a weighted-average grant date fair value of $29.59 per share. During the three months ended March 31, 2014, the Company issued 164,532 shares of common stock in connection with the vesting of RSUs with a weighted-average grant date fair value of $27.98 per share.

Performance-Based Vesting Restricted Stock Units

During the three months ended March 31, 2015, the Company awarded 22,980 performance-based restricted stock units (“PVRSUs”) with a grant-date fair value of $715,000, or $31.12 per share. The amount potentially available under a PVRSU is subject to the attainment of pre-established, objective performance goals over a specified period. In addition, the awards also have a service vesting criteria following the achievement of performance criteria through February 2018. During the three months ended March 31, 2014, the Company awarded 44,630 PVRSUs with a grant-date fair value of $1.2 million or $27.21 per share. In addition, these awards also have a service vesting criteria following the achievement of performance criteria through February 2016. During the three months ended March, 31, 2015, the Company issued 4,227 shares of common stock in connection with the vesting of PVRSUs with a weighted-average grant date fair value of $27.21 per share. As of March 31, 2015, there were 29,133 PVRSUs outstanding with a grant date fair value of $883,000.

The Company recognizes the fair value of these awards to the extent the achievement of the related performance criteria is estimated to be probable. If a performance criteria is subsequently determined to not be probable of achievement, any related expense is reversed in the period such determination is made. Conversely, if a performance criteria is not currently expected to be achieved but is later determined to be probable of achievement, a “catch-up” entry is recorded in the period such determination is made for the expense that would have been recognized had the performance criteria been probable of achievement since the grant of the award. As of March 31, 2015, the achievement of the performance criteria is estimated to be probable and $108,000 has been recognized related to the PVRSUs during the three months ended March 31, 2015. Changes in the Company’s assessment of the probability of achievement of performance criteria could result in expense being recorded in future periods.

Restricted Stock in Lieu of Directors’ Fees

Outside members of the Company’s Board of Directors may elect to receive fully-vested restricted stock in lieu of cash compensation for services as a director. During the three months ended March 31, 2015, the Company issued 1,560 shares of restricted stock to outside directors, with a grant date fair value of $50,000, and a weighted-average grant date fair value of $31.97 per share. During the three months ended March 31, 2014, the Company issued 1,705 shares of restricted stock to outside directors, with a grant date fair value of $50,000, and a weighted-average grant date fair value of $29.27 per share.

Employee Stock Purchase Plan

During the three months ended March 31, 2015 and 2014, no shares were issued under the employee stock purchase plan (“ESPP”). A total of 1,250,000 shares of common stock have been reserved for issuance under the ESPP, of which 759,738 shares were available for issuance as of March 31, 2015. As of March 31, 2015, there was $229,000 of unrecognized compensation expense related to the ESPP, which is expected to be recognized over a period of two months.

Employee Stock-Based Compensation Expense

The Company recognized employee stock-based compensation expense of $4.2 million and $4.4 million for the three months ended March 31, 2015 and 2014, respectively. Employee stock-based compensation expense includes expense related to stock option grants, RSU awards to employees, and stock purchased under the Company’s ESPP. Stock-based compensation expense is calculated based on options and RSUs ultimately expected to vest and has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates

Valuation Assumptions

The Company values its stock option grants using the Black-Scholes option valuation model. Option valuation models require the input of highly subjective assumptions that can vary over time. The Company’s assumptions regarding expected volatility are based on the historical volatility of the Company’s common stock. The expected life of options granted is estimated based on historical option exercise data and assumptions related to unsettled options. The risk-free interest rate is estimated using published rates for U.S. Treasury securities with a remaining term approximating the expected life of the options granted. The Company uses a dividend yield of zero as it has never paid cash dividends and does not anticipate paying cash dividends in the foreseeable future.