Stock Incentive Plans

2010 Long-Term Incentive Plan

On May 25, 2010, the Company’s stockholders approved the 2010 Long-Term Incentive Plan (“2010 LTIP”) which provided for the granting of awards of the Company’s common stock to officers, employees and non-employee directors. On May 20, 2014, the Company’s stockholders approved an amendment to the 2010 LTIP increasing the shares reserved for issuance to 3,131,904 shares of the Company’s common stock and reapproved the performance measures that may apply to awards granted thereunder. The 2010 LTIP became effective on April 1, 2010 and awards may be made under the plan through March 31, 2020. The available awards under the 2010 LTIP include: stock options, stock appreciation rights, RSUs, other stock-based awards and performance shares. The 2010 LTIP limits awards to 200,000 shares to any one participant in any one year. The majority of awards issued under the 2010 LTIP through December 31, 2014, have been RSUs and performance shares, which generally vest over three years. The Company issues new shares upon stock option exercises and vesting of RSUs and performance shares.

Prior Long-Term Incentive Plans

The 2004 Long-Term Incentive Plan (“2004 LTIP”) provided for issuance of shares of non-qualified stock options and RSUs to officers and key employees. The 2005 Long-Term Incentive Plan (“2005 LTIP”) provided for the granting of RSUs to officers and key employees. The 2007 Long-Term Incentive Plan (“2007 LTIP”) provided for the granting of stock options, RSUs and performance share awards of the Company’s common stock to officers, employees and non-employee directors.

The majority of awards granted by the Company vested over a three-year period: one-third of the awards cliff-vested on the first anniversary of the vesting commencement date and the remaining awards vested in equal monthly installments for the 2004 LTIP and equal quarterly installments for the 2005 LTIP and the 2007 LTIP, over the two-year period following the first anniversary of the vesting commencement date.

For option grants, the exercise price equaled the fair value of the Company’s common stock on the date of grant. Stock options expire seven years after the date of grant. RSUs do not have an expiration date. The Company consolidated any previously granted shares that may become available again under the 2004 LTIP and 2005 LTIP with the 2010 LTIP. Any shares subject to awards granted under 2004 LTIP and 2005 LTIP that (i) expire or otherwise terminate without having been exercised or (ii) are forfeited to or repurchased by the Company, will become available for grant under the 2010 LTIP, up to a maximum of 912,000 shares. No further grants will be made under the 2004 LTIP, the 2005 LTIP, or the 2007 LTIP.

The following table summarizes the number of securities to be issued and remaining available for future issuance under all of the Company’s stock incentive plans as of December 31, 2014:



	Number of securities to be issued upon exercise of outstanding options and vesting of RSUs	Weighted-average exercise price of outstanding options and vesting of RSUs		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column 1)
2004 Long-Term Incentive Plan
-Options	2,252	$	9.60	—
2005 Long-Term Incentive Plan
-RSUs	6,106	$	0.01	—
2007 Long-Term Incentive Plan⁽¹⁾	42,312	$	10.28	—
2010 Long-Term Incentive Plan⁽¹⁾	347,414	$	0.72	1,412,522

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(1)	Includes non-qualified stock options, RSUs and performance shares.

The following table summarizes the activity for all stock options, RSUs and performance shares under all of the Long-Term Incentive Plans (“LTIPs”) for the year ended December 31, 2014:



		December 31, 2013			Activity during 2014												December 31, 2014
		Outstanding			Granted				Vested / Exercised				Canceled				Outstanding			Exercisable
Plans	Securities	Number	Price		Number		Price		Number		Price		Number		Price		Number	Price		Number	Price
2004 LTIP	Options	8,752	$	15.85	—		$	—	(6,500	)	$	18.02	—		$	—	2,252	$	9.60	2,252	$	9.60
2005 LTIP	RSUs	6,106	0.01		—		—		—		—		—		—		6,106	0.01		6,106	0.01
2007 LTIP	RSUs	812	0.01		—		—		—		—		—		—		812	0.01		812	0.01
	Options	193,104	12.37		—		—		(151,604	)	12.88		—		—		41,500	10.48		41,500	10.48
2010 LTIP	RSUs	224,350	0.01		96,572	⁽¹⁾	0.01		(126,770	)	0.01		(1,534	)	0.01		192,618	0.01		—	—
	Options	15,000	16.39		—		—		—		—		—		—		15,000	16.39		15,000	16.39
	Performance shares	23,716	0.01		138,794	⁽²⁾	0.01		(22,714	)	0.01		—		—		139,796	0.01		—	—
Total		471,840			235,366				(307,588	)			(1,534	)			398,084			65,670

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Note: Price is weighted-average price per share.


(1)	Consists of non-performance RSUs.


(2)	In February 2014, the Company awarded a maximum of 138,794 performance shares that would have been received if the highest level of performance was achieved. Subsequent to December 31, 2014, 116,800 performance shares were determined to be earned based upon achievement of 2014 performance criteria.

The aggregate intrinsic value of stock options exercised in 2014, 2013 and 2012 was $5.2 million, $2.3 million and $2.2 million, respectively. The aggregate intrinsic value of RSUs exercised in 2014, 2013 and 2012 was $5.3 million, $7.6 million and $6.4 million, respectively. The aggregate intrinsic value of performance shares exercised in 2014, 2013 and 2012 was $1.1 million, $2.6 million and $1.1 million, respectively.

The following table summarizes stock options, RSUs and performance shares that have vested and are expected to vest as of December 31, 2014:



		December 31, 2014
		Outstanding		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value⁽¹⁾ (dollars in thousands)
Plans	Securities	Vested	Expected to vest⁽²⁾	Vested	Expected to vest⁽²⁾	Vested		Expected to vest⁽²⁾
2004 LTIP	Options	2,252	—	1.1	—	$	118	$	—
2005 LTIP	RSUs	6,106	—	—	—	378		—
2007 LTIP	RSUs	812	—	—	—	50		—
	Options	41,500	—	1.3	—	2,135		—
2010 LTIP	RSUs	—	192,618	—	—	—		11,927
	Performance shares	—	117,802	—	—	—		7,294
	Options	15,000	—	3.8	—	683		—
Total		65,670	310,420			$	3,364	$	19,221

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(1)	Aggregate intrinsic value is calculated based upon the difference between the exercise price of options or RSUs and the Company’s closing common stock price on December 31, 2014 of $61.93, multiplied by the number of instruments that are vested or expected to vest. Options and RSUs having exercise prices greater than the closing stock price noted above are excluded from this calculation.


(2)	Options, RSUs and performance shares that are expected to vest are net of estimated future forfeitures.

The aggregate fair value of options vested in 2014, 2013 and 2012 was $0.3 million, $0.2 million and $0.1 million, respectively. The aggregate fair value of RSUs vested in 2014, 2013 and 2012 was $5.4 million, $8.5 million and $6.4 million, respectively. The aggregate fair value of performance shares vested in 2014, 2013 and 2012 was $1.1 million, $0.9 million and $1.1 million, respectively.

Assumptions Used for Fair Value

The fair values for RSUs and performance shares, which are based on the fair market value of the Company’s stock at date of grant, are included below for shares granted during 2014, 2013 and 2012. For stock options, the Company uses the Black-Scholes option-pricing model to determine the grant date fair value. Option-pricing models require the input of assumptions that are estimated at the date of grant. The Company did not grant stock options in 2014, 2013, or 2012.



	Year Ended December 31,
	2014		2013		2012
Weighted-average fair value per share of grants:
RSUs	$	37.14	$	49.39	$	39.98
Performance shares ⁽¹⁾	$	36.80	N/A		$	39.59

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(1)	Performance shares awarded in 2013 were ultimately canceled as the Company did not achieve the related performance targets for 2013.

Stock-based Compensation Expense

The Company recognized stock-based compensation expense of $6.1 million, $4.6 million and $5.8 million for the years ended December 31, 2014, 2013 and 2012, respectively. Stock-based compensation expense is included in selling, general and administrative expenses on the consolidated statements of operations. Stock-based compensation expense recognized for 2014 was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. The Company’s forfeiture experience since inception of its plans has been approximately 4% of the total grants. The historical rate of forfeiture is a component of the basis for predicting the future rate of forfeitures, which are also dependent on the remaining service period related to grants and on the limited number of approximately 88 plan participants that have been awarded grants since the inception of the Company’s plans.

As of December 31, 2014, total unrecognized compensation cost related to non-vested share-based compensation arrangements was $5.2 million, which is expected to be recognized over a weighted-average period of 1.6 years.