Stock-Based Compensation Plans

3 Months Ended

Mar. 31, 2015

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation Plans

7. Stock-Based Compensation Plans

Stock-based compensation expense for the three months ended March 31, 2015 and 2014 was as follows:

	Three Months Ended March 31,
		2015		2014
	(In thousands)
Employees	$	2,806	$	2,089
Non-employee directors		236		227
Total stock-based compensation	$	3,042	$	2,316

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

In January 2015, the Company granted 119,981 stock options and a 116,659 performance stock award to the Company’s Chief Executive Officer in consideration for entering into a new employment agreement.  The exercise price for the shares of the Company’s common stock underlying the option award is $88.25, which is equal to 125% of the fair market value of the common stock on the grant date. Subject to the Chief Executive Officer’s continued employment with the Company through the applicable vesting date, one-third of the options under the option award will vest and become exercisable on each of January 15, 2018, 2019 and 2020.  The performance stock award provides that the number of performance shares earned by the Chief Executive Officer will be based on the Company’s achievement of certain performance levels.  Subject to the Chief Executive Officer’s continued employment, if only the minimum performance level is achieved, then the stock will vest 100% on January 15, 2020, and if any performance level above the minimum level is achieved then the stock will vest 50% on each of January 15, 2019 and January 15, 2020. The combined value of the awards as of the date of the grant was $8 million as determined based on valuations performed by an independent third party using a Monte Carlo simulation model.

In addition to the grants above, the Company granted to employees restricted stock or restricted stock units of 91,883 shares, performance shares with an expected pay-out at target of 28,520 shares of common stock and 669 options to purchase shares of common stock during the three months ended March 31, 2015.  The fair value of the restricted stock and performance share awards was based on a weighted-average grant date fair value per share of $70.54 and $70.60, respectively. Based on the Black-Scholes option pricing model, the weighted-average fair value for each option granted was $36.46 per share. The awards vest over a three year period and had an aggregate grant date fair value of $6.5 million.  

  As of March 31, 2015, the total unrecognized compensation cost related to all non-vested awards was $25.2 million. That cost is expected to be recognized over a weighted-average period of 2.7 years.