10. Stock-Based Compensation Plans

The Company has a stock incentive plan which provides for the grant of stock options, stock appreciation rights, restricted stock, performance shares, performance units, or other stock-based awards as incentives and rewards to encourage employees, consultants and non-employee directors to participate in the long-term success of the Company. As of December 31, 2014, there were 988,059 shares available for grant under the stock incentive plan.

Total stock-based compensation expense was as follows:

	Year Ended December 31,
		2014		2013		2012
	(In thousands)
Employee:
Restricted stock and performance shares	$	8,193	$	7,269	$	7,046
Stock options		676		900		668
		8,869		8,169		7,714
Non-employee directors:
Restricted stock		900		710		671
Total stock-based compensation	$	9,769	$	8,879	$	8,385

The Company records stock-based compensation expense for employees in employee compensation and benefits and for non-employee directors in general and administrative expenses in the Consolidated Statements of Operations.

Stock Options

The exercise price of each option granted is equal to the market price of the Company’s common stock on the date of grant. Generally, option grants have provided for vesting over a three or five-year period. Options expire in ten years from the date of grant. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables, including the expected stock price volatility over the term of the awards, the risk-free interest rate, the expected dividend yield rate and the expected term. Expected volatilities are based on historical volatility of the Company’s stock. The risk-free interest rate is based on U.S. Treasury securities with a maturity value approximating the expected term of the option. The dividend yield rate is based on the expected annual dividends to be paid divided by the expected stock price. The expected term represents the period of time that options granted are expected to be outstanding based on actual and projected employee stock option exercise behavior.

The weighted-average fair value for options granted during 2014, 2013 and 2012 was $19.25, $19.61 and $12.26, respectively. The following table represents the assumptions used for the Black-Scholes option-pricing model to determine the per share weighted-average fair value for options granted for the three years ended December 31, 2014:

	2014		2013		2012
Expected life (years)	5.0		9.9		5.0
Risk-free interest rate	1.7	%	1.9	%	0.7	%
Expected volatility	35.5	%	44.3	%	48.2	%
Expected dividend yield	1.0	%	1.2	%	1.2	%

The following table reports stock option activity during the three years ended December 31, 2014 and the intrinsic value as of December 31, 2014:

				Weighted-		Remaining
	Number of			Average		Contractual
	Shares			Exercise Price ($)		Term		Intrinsic Value ($)
								(In thousands)
Outstanding at December 31, 2011		2,927,737			9.42
Granted		13,292			32.45
Canceled		—			—
Exercised		(1,511,207	)		5.64
Outstanding at December 31, 2012		1,429,822			13.62
Granted		51,597			41.75
Canceled		(4,348	)		33.84
Exercised		(256,622	)		12.33
Outstanding at December 31, 2013		1,220,449			15.01
Granted		382			63.07
Canceled		(41,071	)
Exercised		(165,340	)		15.85				7,518
Outstanding at December 31, 2014		1,014,420			13.81		3.1		58,731
Exercisable at December 31, 2014		928,813			13.05		2.9		54,482

The intrinsic value is the amount by which the closing price of the Company’s common stock on December 31, 2014 of $71.71 or the price on the day of exercise exceeds the exercise price of the stock options multiplied by the number of shares. As of December 31, 2014, there was $0.4 million of total unrecognized compensation cost related to non-vested stock options. That cost is expected to be recognized over a weighted-average period of 1.0 years.

Restricted Stock and Performance Shares

Restricted stock generally vests over a three or five-year period. Compensation expense is measured at the grant date and recognized ratably over the vesting period. Performance share awards are granted to certain senior managers. Each performance share award is earned or forfeited based on the level of achievement by the Company of pre-tax operating income on a per share basis before performance share and cash bonus expense. The pay-out ranges from zero to 150% of the performance share award. For each performance share earned, a participant is awarded an equal number of shares of restricted stock. Any restricted stock awarded to a participant vests and ceases to be restricted stock in two equal installments on each of the second and third anniversaries of the date of grant of the applicable performance share award. Compensation expense for performance shares is measured at the grant date and recognized on a graded basis over the vesting period. The pay-out achievement was 85.0%, 108.0%, and 92.5% of the performance award for 2014, 2013 and 2012, respectively. The following table reports performance share activity for the three years ended December 31, 2014:

Performance year	2014		2013		2012
Share pay-out at plan		29,678		42,908		44,843
Actual share pay-out in following year		25,228		46,340		41,481
Fair value per share on grant date	$	63.07	$	35.98	$	30.64

The following table reports restricted stock and performance share activity during the three years ended December 31, 2014:

				Weighted-Average
	Number of			Grant Date Fair
	Restricted Shares			Value
Outstanding at December 31, 2011		957,711		$	15.69
Granted		206,965
Performance share pay-out		91,498
Canceled		(7,390	)
Vested		(497,525	)
Outstanding at December 31, 2012		751,259		$	21.88
Granted		255,266
Performance share pay-out		41,481
Canceled		(93,358	)
Vested		(384,914	)
Outstanding at December 31, 2013		569,734		$	31.86
Granted		149,349
Performance share pay-out		46,340
Canceled		(43,185	)
Vested		(286,249	)
Outstanding at December 31, 2014		435,989		$	41.83

As of December 31, 2014, there was $11.4 million of total unrecognized compensation expense related to non-vested restricted stock and performance shares. That cost is expected to be recognized over a weighted-average period of 1.5 years.