Note 7. Stock Compensation Plan

The Company established the 2004 Omnibus Stock and Incentive Plan (the “2004 Omnibus Plan”) in December 2004 and reserved 3,500,000 shares of $0.01 par value common stock (“Common Stock”) for issuance under the Omnibus Plan. Pursuant to the terms of the 2004 Omnibus Plan, the compensation committee of the Company’s Board of Directors may grant various types of equity-based compensation awards, including incentive and nonqualified stock options, SARs, restricted stock, restricted stock units, restricted stock units with performance conditions and performance units, in addition to certain cash-based awards.

At the 2013 Annual Meeting of Stockholders, the Company’s stockholders approved an amendment and restatement of the 2004 Omnibus Plan (as amended and restated the “Omnibus Plan”). The amendment and restatement authorized the Company to reserve an additional 1,577,000 shares of Common Stock for future issuance. As of March 31, 2015, the Company had 1,320,000 shares of Common Stock reserved for future issuance under the Omnibus Plan. The Company accounts for stock-based compensation pursuant to the fair value recognition provisions of ASC Topic 718, Compensation—Stock Compensation (“ASC Topic 718”).

Valuation and Expense Information

Substantially all stock-based compensation expense is recorded in selling, general and administrative expenses on the condensed consolidated statements of operations. The following table summarizes stock-based compensation expense and related income tax benefits.

	Three Months Ended March 31,
	2015			2014
Stock-based compensation expense	$	1.9		$	1.4
Income tax benefit	(0.7		)	(0.5		)
Stock-based compensation, net of Income tax benefit	$	1.2		$	0.9

The following table summarizes total compensation costs related to the Company’s equity awards and amounts recognized in the three months ended March 31, 2015.

	Stock Options and SARs		Performance Shares and Restricted Stock
Unrecognized compensation cost — December 31, 2014	$ 1.1		$ 2.2
Grant date fair value of current year grants	1.4		2.1
Compensation expense recognized	(0.9	)	(1.0	)
Unrecognized compensation cost —March 31, 2015	$ 1.6		$ 3.3
Expected amortization period (in years)	2.2		2.2

Stock Options and SARs (“Options”)

The following tables present information regarding Options awarded during the three months ended March 31, 2015:

Options granted	87,900
Per share weighted average exercise price	$	59.72
Per share weighted average grant date fair value	$	16.47

The weighted-average grant date fair value for Options granted during the three months ended March 31, 2015 was estimated using the Black-Scholes option valuation model with the following assumptions:

Expected term in years	5.8
Risk free interest rate	1.4	%
Volatility	34.4	%
Dividend yield	2.0	%

Volatility and the expected term were estimated by reference to the historical stock price performance of the Company and historical data for the Company’s Option awards, respectively. The risk-free interest rate was based on the yield on U.S. Treasury bonds with a remaining term approximately equivalent to the expected term of the Option awards. Forfeitures were estimated at the date of grant.

The following table presents information regarding Options that vested during the three months ended March 31, 2015:

Options vested		89,600
Aggregate grant date fair value of Options vested		$	0.9

For the three months ended March 31, 2015 and 2014, the aggregate pre-tax intrinsic value of Options exercised was $2.0 million and $6.9 million, respectively.

As of March 31, 2015, certain participants met age and service requirements that allowed their Options to qualify for accelerated vesting upon retirement. As of March 31, 2015, such participants held Options to purchase approximately 50,000 shares of common stock that would have been exercisable if they had retired as of such date. The aggregate grant date fair value of Options subject to accelerated vesting was $0.5 million. Options subject to accelerated vesting for expense recognition become exercisable according to the contract terms of the stock-based awards.

The following table presents information regarding outstanding Options:

	March 31, 2015		December 31, 2014
Options vested or expected to vest	619,500		601,100
Aggregate intrinsic value	$	19.7	$	20.3
Per share weighted average grant date fair value	$	30.78	$	26.46
Exercisable Options	314,600		292,900
Aggregate intrinsic value	$	12.4	$	11.4
Unvested Options	309,500		311,100
Per share weighted average grant date fair value	$	12.17	$	10.37

Performance Units

For the three months ended March 31, 2015, the Company granted target awards of approximately 45,100 Performance Units. The measurement period for the Performance Units is January 1, 2015 through December 31, 2015. The Performance Units vest on December 31, 2017. Common Stock equal to not less than 40 percent and not more than 200 percent of the Performance Unit target will be awarded based on the Company’s return on invested capital, consolidated revenue growth, the percentage of consolidated free cash flow to revenue and total return to shareholders relative to the companies in the Russell 2000® Value small cap index. As of March 31, 2015, the Company expects that Common Stock equal to approximately 90 percent of the Performance Unit targets will be earned. The market price on the date of grant for the Performance Units was $59.72 per share. Based on the expected achievement of performance targets, the Company is recognizing stock-based compensation expense pro-rata over the vesting term of the Performance Units.

Excess Tax Benefits

ASC Topic 718 requires the reporting of excess tax benefits related to the exercise or vesting of stock-based awards as cash provided by financing activities within the statement of cash flows. Excess tax benefits represent the difference between the tax deduction the Company will receive on its tax return for compensation recognized by employees upon the vesting or exercise of stock-based awards and the tax benefit recognized for the grant date fair value of such awards. For the three months ended March 31, 2015 and 2014, the Company recognized excess tax benefits related to the exercise or vesting of stock-based awards of $0.5 million and $1.9 million, respectively.