Stockholders' Equity / Share-Based Compensation

6 Months Ended

Jun. 30, 2015

Stockholders’ Equity / Stock-Based Compensation

Restricted Stock

On May 8, 2015 there were a total of 24,164 restricted shares granted to certain employees with a fair value of $1.2 million. These awards are classified as equity awards and vest annually over three years. The related compensation expense is based on the date of grant share price of $49.54. The compensation expense is amortized on a straight-line basis over the requisite vesting period and accelerated for those employees that are retirement eligible during the vesting period.

Stock Options

On May 8, 2015 the Company granted 102,766 non-qualified stock options at an exercise price of $49.54 per share to certain employees with a fair value of $1.7 million. The non-qualified stock options vest annually over three years with a May 8, 2025 expiration date.

The fair value of the options granted during 2015 was determined using the Black-Scholes option-pricing model. The assumptions used in the Black-Scholes option-pricing model were as follows:



Non-qualified stock options
Expected volatility	46.3		%
Dividend yield	3.3		%
Risk-free interest rate	1.7		%
Expected term (years)	6.3
Weighted average grant date fair value of stock options	$	16.46

For the 2015 grants the expected volatility and the expected term are based on the Company's historical data. The dividend yield is the expected annual dividend payments divided by the average stock price up to the date of grant. The risk-free interest rates are derived from the U.S. Treasury securities in effect on the date of grant whose maturity period equals the options expected term. The Company applies an expected forfeiture rate to stock-based compensation expense. The estimate of the forfeiture rate is based primarily upon historical experience of employee turnover. As actual forfeitures become known, stock-based compensation expense is adjusted accordingly.

Performance Share Awards

On May 8, 2015, the Company granted 40,272 performance shares to certain employees with a fair value of $2.0 million. The performance shares vest at the end of the three year performance cycle and the number of shares distributable depends on the extent to which the Company attains pre-established performance goals. Amounts equivalent to declared dividends will accrue on the performance shares and will vest over the same period.

Stock Grants

In May 2015 the six external members of the Board of Directors were granted a combined total of 9,792 shares of the Company's common stock with an aggregated fair value of approximately $0.5 million which immediately vested as part of their director fees.

The Board of Directors authorized a new stock repurchase program, commencing January 1, 2015, pursuant to which the Company intends to acquire for cash in open market or private transactions from time to time up to $125 million of its common stock over the ensuing 12 months. The timing of repurchases and the exact number of shares of common stock to be purchased will depend upon market conditions and other factors. The repurchase program will be funded through existing liquidity, including possible borrowings from the Senior Credit Facility (see Note 9), and cash from operations. Treasury stock is recognized at the cost to reacquire the shares. Under the stock repurchase program, during the six months ended June 30, 2015, the Company repurchased 1,555,726 shares of its common stock on the open market at an average price of 55.18 per share or $85.8 million.

The following table summarizes the components of stock-based compensation expense, all of which has been classified as selling, general and administrative expense:



	Three Months Ended				Six Months Ended
	June 30, 2015		June 30, 2014		June 30, 2015			June 30, 2014
Stock options	$	454	$	245	$	702		$	815
Restricted stock	392		261		638			557
Performance shares	46		41		(265		)	333
Stock grants	510		270		510			270
Total share-based compensation expense	$	1,402	$	817	$	1,585		$	1,975