Share-Based Compensation

9 Months Ended

Sep. 30, 2015

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

Our non-employee directors and key employees are granted share-based awards through the 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 grant date 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 nine months ended September 30, 2015 and 2014:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
(in thousands)
Awards to non-employee directors	$	165		$	137		$	475		$	394
Awards to key employees	334			317			970			1,125
Total compensation expense	499			454			1,445			1,519
Less: tax benefit	(201		)	(183		)	(582		)	(612		)
Share-based compensation amounts included in net income	$	298		$	271		$	863		$	907

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 grant date. 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 nine months ended September 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— September 30, 2015	—		$	—

At September 30, 2015, there was $385,000 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 nine months ended September 30, 2015:



	Number of Shares		Weighted Average Fair Value
Outstanding— December 31, 2014	123,038		$	32.60
Granted	33,719		$	48.21
Vested	(43,839	)	$	28.01
Expired	(2,520	)	$	28.83
Outstanding— September 30, 2015	110,398		$	38.34

In January and March 2015, our Board of Directors granted awards of 33,719 shares of common stock to key employees under the SICP. The shares granted in January and March 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 grant date of each award. For the market-based conditions, we used the Black-Scholes pricing model to estimate the fair value of each market-based award granted.

At September 30, 2015, the aggregate intrinsic value of the SICP awards granted to key employees was $5.9 million. At September 30, 2015, there was $1.7 million of unrecognized compensation cost related to these awards, which is expected to be recognized during 2015 through 2017.