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Share-Based Compensation
 9 Months Ended
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-Based Compensation
Share-Based Compensation
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 nine months ended September 30, 2016 and 2015:
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2016
 
2015
 
2016
 
2015
(in thousands)
 
 
 
 
 
 
 
 
Awards to non-employee directors
 
$
135

 
$
165

 
$
445

 
$
475

Awards to key employees
 
488

 
334

 
1,442

 
970

Total compensation expense
 
623

 
499

 
1,887

 
1,445

Less: tax benefit
 
(251
)
 
(201
)
 
(760
)
 
(582
)
Share-based compensation amounts included in net income
 
$
372

 
$
298

 
$
1,127

 
$
863


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 2016, each of our non-employee directors received an annual retainer of 953 shares of common stock under the SICP for service as a director through the 2017 Annual Meeting of Stockholders.
A summary of the stock activity for our non-employee directors during the nine months ended September 30, 2016 is presented below:

 
 
Number of Shares
 
Weighted Average
Fair Value
Outstanding— December 31, 2015
 
—

 
$
—

Granted
 
8,577

 
$
62.90

Vested
 
(8,577
)
 
$
62.90

Outstanding— September 30, 2016
 
—

 
$
—


At September 30, 2016, there was approximately $314,000 of unrecognized compensation expense related to these awards. This expense will be recognized over the directors' remaining service period ending April 30, 2017.

Key Employees
The table below presents the summary of the stock activity for awards to key employees for the nine months ended September 30, 2016:
 
 
 
Number of Shares
 
Weighted Average
Fair Value
Outstanding— December 31, 2015
 
110,398

 
$
38.34

Granted
 
46,571

 
$
67.90

Vested
 
(39,553
)
 
$
31.79

Expired
 
(2,325
)
 
$
42.25

Outstanding— September 30, 2016
 
115,091

 
$
52.36


In February 2016, our Board of Directors granted awards of 46,571 shares of common stock to key employees under the SICP. The shares granted in February 2016 are multi-year awards that will vest at the end of the three-year service period ending December 31, 2018. 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, 2016, the aggregate intrinsic value of the SICP awards granted to key employees was approximately $7.0 million. At September 30, 2016, there was approximately $2.7 million of unrecognized compensation cost related to these awards, which is expected to be recognized from 2016 through 2018.