Share-Based Compensation

In connection with our initial public offering, the Board of Directors adopted the 2005 Long-Term Equity Incentive Plan (the “Plan”), which provides for grants up to a maximum of 5.0 million shares of restricted stock, stock options, restricted stock units and other equity-based awards. In June 2014, the Board of Directors approved, and in July 2014, the stockholders ratified, an increase of an additional 1.8 million shares of our common stock, for issuance under the Plan and increased the maximum number of shares subject to stock options that may be awarded to any one participant under the Plan during any 12-month period from 1.0 million to 2.5 million shares and extended the term of the Plan by ten years, to February 2025. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing services for the Company, are eligible for grants under the Plan.

During the three months ended June 30, 2015 and 2014, pre-tax share-based compensation costs charged against income were $3.0 million and $1.9 million, respectively, and the related income tax benefit recognized was $1.1 million and $0.7 million, respectively.

On April 22, 2015, we announced that Matthew M. Mannelly, our President and Chief Executive Officer and member of the Board of Directors, would retire effective June 1, 2015. In conjunction with his retirement, the Board of Directors accelerated the vesting of his previously unvested restricted stock units and stock options, and we recorded additional compensation expense of approximately $0.8 million associated with this acceleration. Following his retirement, and effective June 1, 2015, the Board of Directors appointed Ron Lombardi, our then current Chief Financial Officer, to succeed Mr. Mannelly as President and Chief Executive Officer and as a member of the Board of Directors. In connection with his appointment, Mr. Lombardi was granted 57,924 restricted stock units on April 22, 2015.

On May 11, 2015, the Compensation Committee of our Board of Directors granted 185,904 restricted stock units and stock options to acquire 186,302 shares of our common stock to certain executive officers and employees under the Plan. Of those grants, 163,404 restricted stock units vest in their entirety on the three-year anniversary of the date of grant and 22,500 restricted stock units vest 33.3% per year over three years. Upon vesting, the units will be settled in shares of our common stock. The stock options will vest 33.3% per year over three years and are exercisable for up to ten years from the date of grant. These stock options were granted at an exercise price of $41.44 per share, which is equal to the closing price of our common stock on the date of grant.

Restricted Shares

Restricted shares granted to employees under the Plan generally vest in three to five years, primarily upon the attainment of certain time vesting thresholds, and may also be contingent on the attainment of certain performance goals of the Company, including revenue and earnings before income taxes, depreciation and amortization targets. The restricted share awards provide for accelerated vesting if there is a change of control, as defined in the Plan. The restricted stock units granted to employees generally vest in their entirety on the three-year anniversary of the date of the grant. Termination of employment prior to vesting will result in forfeiture of the restricted stock units, unless otherwise accelerated by the Compensation Committee of the Board of Directors. The restricted stock units granted to directors will vest in their entirety one year after the date of grant so long as the membership on the Board of Directors continues through the vesting date, with the settlement in common stock to occur on the earliest of the director's death, disability or six-month anniversary of the date on which the director's Board membership ceases for reasons other than death or disability. Upon vesting, the units will be settled in shares of our common stock.

The fair value of the restricted stock units is determined using the closing price of our common stock on the date of the grant. The weighted-average grant-date fair value during the three months ended June 30, 2015 and 2014 was $41.85 and $33.50, respectively.

A summary of the Company's restricted shares granted under the Plan is presented below:



Restricted Shares	Shares (in thousands)		Weighted- Average Grant-Date Fair Value
Three months ended June 30, 2014
Vested and nonvested at March 31, 2014	437.5		$	16.76
Granted	96.6		33.50
Vested and issued	(93.7	)	15.12
Forfeited	(14.4	)	20.78
Vested and nonvested at June 30, 2014	426.0		20.78
Vested at June 30, 2014	69.6		9.34

Three months ended June 30, 2015
Vested and nonvested at March 31, 2015	362.3		$	22.74
Granted	243.8		41.85
Vested and issued	(138.9	)	19.35
Forfeited	(1.4	)	33.50
Vested and nonvested at June 30, 2015	465.8		33.72
Vested at June 30, 2015	76.6		11.62

Options

The Plan provides that the exercise price of options granted shall be no less than the fair market value of the Company's common stock on the date the options are granted. Options granted have a term of no greater than ten years from the date of grant and vest in accordance with a schedule determined at the time the option is granted, generally three to five years. The option awards provide for accelerated vesting in the event of a change in control, as defined in the Plan. Termination of employment prior to vesting will result in forfeiture of the unvested stock options. Vested stock options will remain exercisable by the employee after termination, subject to the terms of in the Plan.

The fair value of each option award is estimated on the date of grant using the Black-Scholes Option Pricing Model that uses the assumptions noted in the table below. Expected volatilities are based on the historical volatility of our common stock and other factors, including the historical volatilities of comparable companies. We use appropriate historical data, as well as current data, to estimate option exercise and employee termination behaviors. Employees that are expected to exhibit similar exercise or termination behaviors are grouped together for the purposes of valuation. The expected terms of the options granted are derived from our historical experience, management's estimates, and consideration of information derived from the public filings of companies similar to us, and represent the period of time that options granted are expected to be outstanding. The risk-free rate represents the yield on U.S. Treasury bonds with a maturity equal to the expected term of the granted options.

The weighted-average grant-date fair values of the options granted during the three months ended June 30, 2015 and 2014 was $16.95 and $15.93, respectively.



	Three Months Ended June 30,
	2015			2014
Expected volatility	40.2		%	47.3		%
Expected dividends	$	—		$	—
Expected term in years	6.0			6.0
Risk-free rate	1.7		%	2.2		%

A summary of option activity under the Plan is as follows:



Options	Shares (in thousands)		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Three months ended June 30, 2014:
Outstanding at March 31, 2014	994.9		$	15.24
Granted	307.5		33.50
Exercised	(93.8	)	13.80
Forfeited or expired	(31.6	)	25.49
Outstanding at June 30, 2014	1,177.0		19.85		7.8	$	16,527
Exercisable at June 30, 2014	375.1		15.23		7.3	6,998

Three months ended June 30, 2015:
Outstanding at March 31, 2015	871.2		$	23.40
Granted	186.3		41.44
Exercised	(330.4	)	19.15
Forfeited or expired	(0.9	)	33.50
Outstanding at June 30, 2015	726.2		29.95		8.3	$	11,830
Exercisable at June 30, 2015	322.5		21.54		7.2	7,966

The aggregate intrinsic value of options exercised in the three months ended June 30, 2015 was $8.1 million.

At June 30, 2015, there were $14.5 million of unrecognized compensation costs related to nonvested share-based compensation arrangements under the Plan, based on management's estimate of the shares that will ultimately vest. We expect to recognize such costs over a weighted-average period of 1.3 years. The total fair value of options and restricted shares vested during the three months ended June 30, 2015 and 2014 was $6.2 million and $4.7 million, respectively. For the three months ended June 30, 2015 and 2014, cash received from the exercise of stock options was $6.3 million and $1.3 million, respectively, and we realized $1.0 million and $1.0 million, respectively, in tax benefits from the tax deductions resulting from these option exercises. At June 30, 2015, there were 2.6 million shares available for issuance under the Plan.