Stock Plans

Under various stock plans, officers, employees, and outside directors have received or may receive grants of restricted stock, stock units, stock appreciation rights or options to purchase common stock. Grants have been made at the discretion of the Committees of the Board of Directors. Grants generally vest either on a straight-line basis over four years or on a cliff basis over three years. Shares offered under the plan are authorized but unissued shares or treasury shares.

Recipients of restricted stock do not pay any cash consideration to the Company for the shares, have the right to vote all shares subject to such grant, and for the years of 2016, 2015 and 2014, there were no grants outstanding that received dividends prior to vesting. Restricted stock grants made on or after July 28, 2009, contain forfeitable rights to dividends. Dividends for these grants are accrued on the dividend payment dates but are not paid until the shares vest, and dividends accrued for shares that ultimately do not vest are forfeited. Recipients of stock units do not pay any cash consideration for the units, do not have the right to vote, and do not receive dividends with respect to such units.

FASB authoritative guidance requires that excess tax benefits be recognized as an addition to capital surplus and that unrealized tax benefits be recognized as income tax expense unless there are excess tax benefits from previous equity awards to which it can be offset. The Company calculates the amount of eligible excess tax benefits that are available to offset future tax shortfalls in accordance with the long-form method described in the FASB authoritative guidance.

The Company recognizes compensation expense equal to the grant-date fair value for all stock-based payment awards that are expected to vest. This expense is recorded on a straight-line basis over the requisite service period of the entire award, unless the awards are subject to performance conditions, in which case the Company recognizes compensation expense over the requisite service period of each separate vesting tranche. The Company determines the grant-date fair value of its restricted stock and stock unit awards using the fair market value on the grant date, unless the awards are subject to market conditions, in which case the Company utilizes a binomial-lattice model (i.e., Monte Carlo simulation model). The Monte Carlo simulation model utilizes multiple input variables to determine the stock-based compensation expense.

During the year ended December 31, 2016, the Company granted performance shares to its executives in the form of restricted stock. The shares granted contain (1) a performance condition based on target net income per share, and (2) a market condition based on Total Shareholder Return (“TSR”). The TSR market condition measures the Company’s performance against a peer group. Shares will be delivered at the end of the three year vesting and TSR performance period based on the Company’s actual performance compared to the peer group. Actual shares earned will range from fifty percent (50%) to one hundred fifty percent (150%) of the target award after any adjustment made for the performance condition. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: an historical volatility of 22.82%, 0% dividend yield and a risk-free interest rate of 0.99%. The historical volatility was based on the most recent 2.77-year period for the Company and the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is equal to the yield, as of the measurement date, of the zero-coupon U.S. Treasury bill that is commensurate with the remaining performance measurement period.

Stock-based compensation expense consisted of the following (in thousands):



	Years Ended December 31,
	2016		2015		2014
Restricted stock and stock units - expense	$	42,699	$	41,292	$	40,821

Unrecognized compensation cost is expected to be recognized over the next four years. Total unrecognized compensation cost, net of estimated forfeitures, consisted of the following (in thousands):



	December 31,
	2016		2015		2014
Restricted stock and stock units - unrecognized future costs	$	60,481	$	60,627	$	54,968

The following table reflects activity under all stock plans from December 31, 2013 through December 31, 2016, and the weighted average exercise prices (in thousands, except per share amounts):



	Restricted Stock Plans without Market-Condition				Restricted Stock Plans with Market-Condition				Stock Option Plans
	Number of Shares/ Units			Weighted Average Grant Date Fair Value	Number of Shares/ Units			Weighted Average Grant Date Fair Value	Number of Shares/ Units			Weighted Average Exercise Price Per Share
Outstanding, December 31, 2013		1,317		$31.68		899		$36.58		632		$27.41
Granted		585		$41.60		335		$50.09		—		—
Exercised		—		—		—		—		(528	)	$27.12
Restrictions lapsed		(712	)	$31.96		—		—		—		—
Forfeited		(25	)	$32.82		—		—		(27	)	$27.83
Outstanding, December 31, 2014		1,165		$36.47		1,234		$40.24		77		$29.22
Granted		502		$58.14		257		$71.86		—		—
Exercised		—		—		—		—		(54	)	$28.18
Restrictions lapsed		(599	)	$36.30		(499	)	$31.41		—		—
Forfeited		(16	)	$37.63		—		—		(11	)	$30.94
Outstanding, December 31, 2015		1,052		$46.88		992		$52.89		12		$32.36
Granted		772		$38.47		358		$45.93		—		—
Exercised		—		—		—		—		(7	)	$32.36
Restrictions lapsed		(545	)	$42.42		(364	)	$43.04		—		—
Forfeited		(36	)	$41.28		(36	)	$43.04		(5	)	$32.36
Outstanding, December 31, 2016		1,243		$43.78		950		$54.42		—		—

The total pre-tax intrinsic value of stock options exercised and the total fair value of shares vested during the years ended December 31, 2016, 2014 and 2013, are reflected in the following table (in thousands):



	Years Ended December 31,
	2016		2015		2014
Total pre-tax intrinsic value of stock options exercised	$	52	$	1,709	$	9,150
Total fair value of shares vested	$	39,302	$	56,570	$	38,566

At December 31, 2016, the total number of available shares to grant under the plans (consisting of either restricted stock, stock units, stock appreciation rights or options to purchase common stock) was approximately 4.7 million.