Share-Based Compensation

6 Months Ended

Jun. 30, 2015

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

Our non-employee directors and key employees are granted 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, 2015 and 2014:



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
(in thousands)
Awards to non-employee directors	$	160		$	132		$	311		$	256
Awards to key employees	250			295			636			809
Total compensation expense	410			427			947			1,065
Less: tax benefit	(165		)	(172		)	(381		)	(429		)
Share-based compensation amounts included in net income	$	245		$	255		$	566		$	636

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 2015, each of our non-employee directors received an annual retainer of 1,207 shares of common stock under the SICP for Board service through the 2016 Annual Meeting of Stockholders. A summary of the stock activity for our non-employee directors during the six months ended June 30, 2015 is presented below:



	Number of Shares		Weighted Average Fair Value
Outstanding— December 31, 2014	—		$	—
Granted	14,484		$	45.54
Vested	(14,484	)	$	45.54
Outstanding— June 30, 2015	—		$	—

At June 30, 2015, there was $550,000 of unrecognized compensation expense related to these awards. This expense will be recognized over the directors' remaining service periods ending April 30, 2016.

Key Employees

The table below presents the summary of the stock activity for awards to key employees for the six months ended June 30, 2015:



	Number of Shares		Weighted Average Fair Value
Outstanding— December 31, 2014	123,038		$	32.60
Granted	29,763		$	48.21
Vested	(43,839	)	$	28.01
Expired	(2,520	)	$	28.83
Outstanding— June 30, 2015	106,442		$	37.97

In January 2015, our Board of Directors granted awards of 29,763 shares of common stock to key employees under the SICP. The shares granted in January 2015 are multi-year awards that will vest at the end of the three-year service period ending December 31, 2017. 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, 2015, the aggregate intrinsic value of the SICP awards granted to key employees was $5.7 million. At June 30, 2015, there was $1.9 million of unrecognized compensation cost related to these awards, which is expected to be recognized during 2015 through 2017.