Stock-Based Compensation Plans

In 2006, the Company adopted the 2006 Stock Incentive Plan (the "Plan"). Upon adoption, all previously existing plans were merged into the Plan and ceased to separately exist. The Plan was amended and restated effective June 2014 resulting in an increase in the maximum number of shares of common stock that may be issued under the Plan by 2,200,000, from 5,650,000 to 7,850,000. The Company’s policy is to issue shares resulting from the exercise of stock options and conversion of restricted stock as new shares.

The Company recorded $5.9 million, $5.4 million and $4.7 million in compensation expense related to stock-based compensation for the years ended December 31, 2015, 2014 and 2013, respectively. All stock-based compensation expense is recorded net of an estimated forfeiture rate and adjusted to reflect actual forfeiture activity. The estimated forfeiture rates applied as of December 31, 2015 ranged from 7.0% to 8.0% for various types of employees. The Company recorded $1.0 million, $0.5 million and $0.5 million of additional stock-based compensation expense for the years ended December 31, 2015, 2014 and 2013, respectively, for awards vested which exceeded the expense recorded using the estimated forfeiture rate.

Stock Options

Eligible employees receive non-qualified stock options as a portion of their total compensation. The options vest over various time periods depending upon the grant, but generally vest ratably over a four to five year service period. Vested options may be exercised and converted to one share of the Company’s common stock in exchange for the exercise price which is generally equal to the share price on the grant date. The Company measures the compensation cost based on the Black-Scholes option valuation model at the grant date. The stock-based compensation expense related to stock options for the years ended December 31, 2015, 2014 and 2013 was $2.4 million, $1.7 million and $2.1 million, respectively.

A summary of stock option activity for the years ended December 31, 2015, 2014 and 2013 is as follows (in thousands, except per share amounts):



	Outstanding Options		Weighted- Average Exercise Price		Aggregate Intrinsic Value
Outstanding at December 31, 2012	3,921		$	5.07	$	28,048
Granted	227		14.60		—
Exercised	(415	)	4.83		3,190
Forfeited	(179	)	8.97		—

Outstanding at December 31, 2013	3,554		8.52		4,779
Granted	779		7.23		—
Exercised	(162	)	4.82		3,302
Forfeited	(125	)	4.11		—

Outstanding at December 31, 2014	4,046		8.35		4,725
Granted	975		6.87		—
Exercised	(405	)	2.95		1,604
Forfeited	(556	)	9.58		—

Outstanding at December 31, 2015	4,060		$	8.37	$	2,760

Options vested and exercisable at December 31, 2015	2,467		$	8.80	$	2,026

The weighted-average fair values and ranges of exercise prices for stock options granted during the years ended December 31, 2015, 2014 and 2013, which vest ratably from one to five years, are as follows (in thousands, except per share amounts):



	Options Granted	Weighted-Average Fair Value		Exercise Prices
2013	227	$	5.58	$10.76 - $15.05
2014	779	3.57		$7.18 - $8.72
2015	975	3.39		$6.21 - $8.20

Vested options totaled 2.5 million, 2.7 million and 2.6 million as of December 31, 2015, 2014 and 2013, respectively.

The aggregate intrinsic value of options outstanding and exercisable represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of each fiscal year and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options in 2015, 2014 and 2013, respectively. These amounts change based on the fair market value of the Company’s stock which was $7.50, $7.79 and $7.79 on the last business day of the years ended December 31, 2015, 2014 and 2013, respectively.

The following assumptions were utilized in the Black-Scholes valuation model for options granted in 2015, 2014 and 2013:



	2015		2014	2013
Dividend yield	—		—	—
Risk-free interest rate	1.92%-2.12%		1.32%-2.17%	1.32%-1.41%
Expected life	6 years		6 years	6 years
Volatility	50.0	%	38.0%-50.0%	38.0	%

Expected term is estimated based on historical experience related to similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior. The Company believes that its historical experience provides the best estimate of future expected life. The risk-free interest rate is based on actual U.S. Treasury zero-coupon rates for bonds commensurate with the expected term. The expected volatility assumption is based on the historical volatility of the Company’s common stock over a period commensurate with the expected term.

There was $5.6 million, $5.8 million and $2.9 million of unrecognized compensation costs related to the stock options granted under the Plan as of December 31, 2015, 2014 and 2013, respectively. This cost is expected to be recognized over a weighted average period of 2.8, 2.4 and 2.6 years, respectively.

The following table summarizes information about all stock options outstanding for the Company as of December 31, 2015 (share amounts in thousands):



Options Outstanding					Options Vested
Exercise Price	Number Outstanding	Weighted-Average Life Remaining (Years)	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Exercise Price
$2.36 - $4.92	264	1.07	$	4.48	264	$	4.48
$5.19 - $7.95	2,366	7.04	6.69		998	6.29
$8.07 - $11.97	588	5.56	9.38		511	9.36
$12.10 - $16.41	842	4.46	13.61		694	13.65
	4,060		$	8.37	2,467	$	8.80

Restricted Common Shares

Eligible employees receive restricted common shares as a portion of their total compensation. The restricted common shares vest over various time periods depending upon the grant, but generally vest from zero to five years and convert to common stock at the conclusion of the vesting period. The Company measures the compensation cost based on the closing market price of the Company’s common stock at the grant date. The stock-based compensation expense related to restricted common shares for the years ended December 31, 2015, 2014 and 2013 was $3.5 million, $3.6 million and $2.6 million, respectively.

A summary of restricted share activity is as follows (in thousands, except per share amounts):



	Outstanding Restricted Common Shares		Weighted- Average Grant- Date Fair Value
Nonvested Restricted Common shares at December 31, 2012	692		$	8.95
Granted	448		11.46
Vested and transferred to unrestricted common stock	(278	)	9.22
Forfeited	(127	)	8.56

Nonvested Restricted Common shares at December 31, 2013	735		10.45
Granted	736		7.59
Vested and transferred to unrestricted common stock	(362	)	8.90
Forfeited	(19	)	8.02

Nonvested Restricted Common shares at December 31, 2014	1,090		8.92
Granted	688		6.90
Vested and transferred to unrestricted common stock	(465	)	8.40
Forfeited	(356	)	8.19
Nonvested Restricted Common shares at December 31, 2015	957		$	7.66

There was $6.9 million, $8.9 million $4.5 million of total unrecognized compensation costs related to the restricted common shares as of December 31, 2015, 2014 and 2013, respectively. This cost is expected to be recognized over a weighted average period of 2.7, 2.4 and 2.9 years, as of December 31, 2015, 2014 and 2013, respectively.