Note 12 — Stock-Based Compensation

Incentive Plans

The Company currently has outstanding stock options and restricted stock granted under the 2007 Stock Option and Incentive Plan and the 2012 Omnibus Incentive Plan. Only the 2012 Plan is available for future grants. At September 30, 2014, there were 4,244,115 shares available for grant under the 2012 Plan.

Stock Options

Stock options granted and outstanding under the incentive plans vest over periods ranging from immediately vested to five years and are exercisable over the contractual term of ten years.

A summary of the stock option activity for the three and nine months ended September 30, 2014 and 2013 is as follows (option amounts not in thousands):


	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value

Outstanding at January 1, 2014		280,000		$	2.91		3.9 years	$	14,166
Exercised		(50,000	)	$	2.50

Outstanding at March 31, 2014		230,000		$	3.00		3.8 years	$	7,683

Outstanding at June 30, 2014		230,000		$	3.00		3.5 years	$	8,649

Outstanding at September 30, 2014		230,000		$	3.00		3.3 years	$	7,589

Exercisable at September 30, 2014		230,000		$	3.00		3.3 years	$	7,589


Outstanding at January 1, 2013		280,000		$	2.91		4.9 years	$	5,007
Outstanding at March 31, 2013		280,000		$	2.91		4.7 years	$	6,816

Outstanding at June 30, 2013		280,000		$	2.91		4.4 years	$	7,788

Outstanding at September 30, 2013		280,000		$	2.91		4.2 years	$	10,621

Exercisable at September 30, 2013		270,000		$	2.78		4.0 years	$	10,276

There were no options exercised during the three months ended September 30, 2014 and 2013. The following table summarizes information about options exercised during the nine months ended September 30, 2014 and 2013 (option amounts not in thousands):


	Nine Months Ended September 30,
	2014		2013
Options exercised		50,000		—
Total intrinsic value of exercised options	$	1,970		—
Fair value of vested stock options	$	17	$	17
Tax benefits realized	$	603		—

The Company recognized compensation expense related to stock options, which is included in other operating expenses, of approximately $0 and $5, respectively, for the three months ended September 30, 2014 and 2013 and $6 and $14, respectively, for the nine months ended September 30, 2014 and 2013. At September 30, 2014, there was no unrecognized compensation expense related to stock options. Deferred tax benefits related to stock options for the three and nine months ended September 30, 2014 and 2013 were immaterial.

Restricted Stock Awards

From time to time, the Company has granted and may grant restricted stock awards to certain executive officers, other employees and nonemployee directors in connection with their service to the Company. The terms of the Company’s outstanding restricted stock grants may include service, performance and market-based conditions. The fair value of the awards with market-based conditions is determined using a Monte Carlo simulation method, which calculates many potential outcomes for an award and then establishes fair value based on the most likely outcome. The determination of fair value with respect to the awards with only performance or service-based conditions is based on the market value of the Company’s common stock on the grant date.

Information with respect to the activity of unvested restricted stock awards during the three and nine months ended September 30, 2014 and 2013 is as follows (share amounts not in thousands):


	Number of Restricted Stock Awards			Weighted Average Grant Date Fair Value

Nonvested at January 1, 2014		735,650		$	25.48
Granted		98,720		$	48.42
Vested		(21,825	)	$	21.56
Forfeited		(505	)	$	32.20

Nonvested at March 31, 2014		812,040		$	28.37

Vested		(32,000	)	$	12.95
Forfeited		(2,825	)	$	43.43

Nonvested at June 30, 2014		777,215		$	28.95

Granted		10,000		$	37.28
Vested		(2,000	)	$	37.68
Forfeited		(5,155	)	$	39.85

Nonvested at September 30, 2014		780,060		$	28.96


Nonvested at January 1, 2013		246,320		$	14.54
Forfeited		(920	)	$	21.56

Nonvested at March 31, 2013		245,400		$	14.51

Granted		544,000		$	26.58
Vested		(29,000	)	$	13.06
Forfeited		(28,160	)	$	14.68

Nonvested at June 30, 2013		732,240		$	23.53

Granted		20,000		$	32.85
Vested		(56,000	)	$	11.57
Forfeited		(180	)	$	21.56

Nonvested at September 30, 2013		696,060		$	24.75

The Company recognized compensation expense related to restricted stock, which is included in other operating expenses, of $2,267 and $1,939, respectively, for the three months ended September 30, 2014 and 2013 and $6,594 and $3,404, respectively, for the nine months ended September 30, 2014 and 2013. At September 30, 2014 and 2013, there was approximately $11,947 and $14,078, respectively, of total unrecognized compensation expense related to nonvested restricted stock arrangements. The Company expects to recognize the remaining compensation expense over a weighted-average period of 26 months. The following table summarizes information about deferred tax benefits recognized and tax benefits realized related to restricted stock awards as well as their paid dividends, and the fair value of vested restricted stock for the three and nine months ended September 30, 2014 and 2013:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Deferred tax benefits recognized	$	875	$	748	$	2,544	$	1,313
Tax benefits realized	$	80	$	612	$	781	$	892
Fair value of vested restricted stock	$	75	$	648	$	960	$	1,027

The following presents assumptions used in a Monte Carlo simulation model to determine the fair value of the awards with market-based conditions:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Expected dividends per share	$1.10	$0.90	$1.10	$0.90
Expected volatility	42.1 – 42.6%	41.5 – 48.7%	42.1 – 42.6%	41.5 – 51.6%
Risk-free interest rate	0.1 – 1.5%	0.0 – 1.1%	0.1 – 1.5%	0.0 – 1.1%
Estimated cost of capital	11.5%	9.9%	11.5%	9.3 – 9.9%
Expected life (in years)	4.00	4.00	4.00	4.00 – 6.00