Share-Based Compensation

6 Months Ended

Jun. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Effective May 2, 2013, our non-employee directors and key employees are awarded share-based awards through our SICP. We record these share-based awards as compensation costs over the respective service period for which services are received in exchange for an award of equity or equity-based compensation. The compensation cost is based primarily on the fair value of the shares awarded, using the estimated fair value of each share on the date it was granted and the number of shares to be issued at the end of the service period.

The table below presents the amounts included in net income related to share-based compensation expense for the three and six months ended June 30, 2014 and 2013:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
(in thousands)
Awards to non-employee directors	$	132	$	120	$	256	$	231
Awards to key employees	295		341		809		630
Total compensation expense	427		461		1,065		861
Less: tax benefit	172		186		429		347
Share-Based Compensation amounts included in net income	$	255	$	275	$	636	$	514

Non-employee Directors

Shares granted to non-employee directors are issued in advance of the directors’ service periods and are fully vested as of the date of the grant. We record a prepaid expense equal to the fair value of the shares issued and amortize the expense equally over a service period of one year. In May 2014, each of our non-employee directors received an annual retainer of 806 shares of common stock under the SICP. A summary of the stock activity for our non-employee directors during the six months ended June 30, 2014 is presented below.



	Number of Shares	Weighted Average Grant date Fair Value
Outstanding - December 31, 2013	—	$	—
Granted	8,866	$	62.00
Vested	8,866	$	62.00
Outstanding - June 30, 2014	—	$	—

At June 30, 2014, there was $458,000 of unrecognized compensation expense related to these awards. This expense will be recognized over the period ending April 30, 2015, which approximates the expected remaining service period of those directors.

Key Employees

The table below presents the summary of the stock activity for the awards to key employees for the six months ended June 30, 2014:



	Number of Shares	Weighted Average Fair Value
Outstanding—December 31, 2013	80,761	$	42.30
Granted	27,628	$	59.98
Vested	26,364	$	40.30
Outstanding—June 30, 2014	82,025	$	48.90

In January and March 2014, the Board of Directors granted awards of 27,628 shares to key employees under the SICP. The awards of 23,200 shares granted in January 2014 are multi-year awards that will vest at the end of the three-year service period ending December 31, 2016. Another award of 4,428 shares granted in March 2014 to one key employee is a multi-year award that will vest at the end of the three-year service period ending December 31, 2015. All of these stock awards are earned based upon the successful achievement of long-term goals, growth and financial results, which comprise both market-based and performance-based conditions or targets. The fair value of each performance-based condition or target is equal to the market price of our common stock on the date each award is granted. For the market-based conditions, we used the Black-Scholes pricing model to estimate the fair value of each market-based award granted.

At June 30, 2014, the aggregate intrinsic value of the SICP awards awarded to key employees was $5.9 million.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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