Stock-Based Compensation

The Company’s 1994 Stock Plan (the “Plan”) permits the award of Class A stock options, restricted shares, performance shares and other equity awards to key employees and nonemployee directors of the Company. The aggregate maximum number of shares that may be issued under the Plan is 21,750,000 for all types of awards.

As of December 31, 2014, the total number of shares available for granting of all types of awards was 6,217,581. The maximum annual award to an individual is 500,000 of the aggregate stock options and 500,000 of the aggregate restricted shares and performance shares. In addition, the aggregate grant-date fair value of awards granted to a nonemployee director during any calendar year shall not exceed $250,000. Stock options have a maximum term of 10 years and are awarded with an exercise price at least equal to the market value of the stock on the date of grant. Class A common stock issued upon the exercise of stock options may be issued out of authorized and unissued shares or treasury stock. The Plan, which is administered by the Compensation Committee of the Board of Directors, does not allow the reduction of option prices without shareholder approval, except for the anti-dilution adjustments. The Company has not amended the terms of any previously issued equity award. All outstanding stock options have an exercise price equal to the fair market value of the underlying stock at the date of grant, a 10-year term, and graded vesting over three to four years. All outstanding restricted shares have graded vesting over three to four years. The Plan was amended in December 2013 to permit 1-year cliff vesting of awards granted to nonemployee directors beginning in 2014.

Stock-based compensation costs and related deferred income tax benefit recognized in the financial statements are as follows:



	Year Ended			11 Months Ended			Year Ended
	December 31, 2014			December 31, 2013			January 31, 2013
	(in thousands)
Stock option costs	$	3,381		$	3,051		$	3,101
Restricted stock costs	12,279			10,672			10,324
Performance share costs	4,013			2,474			1,326
Total stock-based compensation costs	19,673			16,197			14,751
Less amount capitalized into qualifying real estate projects	(5,944		)	(5,826		)	(5,396		)
Amount charged to operating expenses	13,729			10,371			9,355
Depreciation expense on capitalized stock-based compensation	800			876			827
Total stock-based compensation expense	$	14,529		$	11,247		$	10,182
Deferred income tax benefit	$	5,426		$	4,111		$	3,671

Stock-based compensation expensed at the date of grant for awards granted to retirement-eligible grantees during the year ended December 31, 2014, the 11 months ended December 31, 2013 and the year ended January 31, 2013 was $1,358,000, $973,000 and $726,000, respectively.

Stock Options

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for options granted during the respective years:



	Year Ended		11 Months Ended		Year Ended
	December 31, 2014		December 31, 2013		January 31, 2013
Risk-free interest rate	1.91	%	0.78	%	1.10	%
Expected volatility	71.50	%	74.10	%	74.10	%
Expected dividend yield	0.00	%	0.00	%	0.00	%
Expected term (in years)	5.5		5.5		5.5

The risk-free interest rate was based on published yields of U.S. zero coupon bonds having a maturity date approximating the expected term of the options. Expected volatility was based on the historical volatility of the Company’s stock using the daily closing prices of the Company’s Class A common stock over a period of time equivalent to the expected term of the options. The expected dividend yield was based on the Company’s recent annual dividend divided by the average price of the Company’s Class A common stock during that period. Historical plan experience was used to estimate the expected term of options granted.

The following table provides a summary of stock option activity for the year ended December 31, 2014:



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in months)	Intrinsic Value (in thousands)
Outstanding at January 1, 2014	4,082,065		$	34.98
Granted	233,914		$	18.73
Exercised	(62,175	)	$	12.70
Forfeited/expired	(126,869	)	$	45.74
Outstanding at December 31, 2014	4,126,935		$	34.07	45	$	9,575
Options exercisable (fully vested) at December 31, 2014	3,275,479		$	38.42	32	$	6,176

The weighted average grant-date fair value of stock options granted during the year ended December 31, 2014, the 11 months ended December 31, 2013 and the year ended January 31, 2013 was $11.60, $10.97 and $9.24, respectively. The total intrinsic value of stock options exercised during the year ended December 31, 2014, the 11 months ended December 31, 2013 and the year ended January 31, 2013 was $439,000, $145,000 and $954,000, respectively. Cash received from stock options exercised during the year ended December 31, 2014, the 11 months ended December 31, 2013 and the year ended January 31, 2013 was $789,000, $1,153,000 and $8,368,000, respectively. There was no income tax benefit realized as a reduction of income taxes payable from stock options exercised during the year ended December 31, 2014, the 11 months ended December 31, 2013 and the year ended January 31, 2013. At December 31, 2014, there was $2,874,000 of unrecognized compensation cost related to stock options expected to be recognized over a weighted-average period of 28 months.

Restricted Stock

The following table provides a summary of restricted stock activity for the year ended December 31, 2014:



	Shares		Weighted Average Grant-Date Fair Value
Unvested shares at January 1, 2014	2,159,267		$	16.41
Granted	605,160		$	18.74
Vested	(721,886	)	$	16.13
Forfeited	(32,081	)	$	17.44
Unvested shares at December 31, 2014	2,010,460		$	17.20

Restricted stock represents a grant of Class A common stock to key employees and nonemployee directors subject to restrictions on disposition, transferability and risk of forfeiture, while having the rights to vote the shares and receive dividends. Restricted shares subject to the restrictions mentioned above are considered to be nonvested shares under the accounting guidance for share-based payment and are not reflected as issued and outstanding shares until the restrictions lapse. At that time, the shares are released to the grantee and the Company records the issuance of the shares. At December 31, 2014, all unvested shares of restricted stock were excluded from issued and outstanding shares of Class A common stock in the accompanying consolidated financial statements.

The weighted average grant-date fair value of restricted stock granted during the year ended December 31, 2014, the 11 months ended December 31, 2013 and the year ended January 31, 2013 was $18.74, $17.60 and $14.75, respectively. The total fair value of shares that vested during the year ended December 31, 2014, the 11 months ended December 31, 2013 and the year ended January 31, 2013 was $11,647,000, $7,770,000 and $9,156,000, respectively. At December 31, 2014, there was $16,573,000 of unrecognized compensation cost related to restricted stock expected to be recognized over a weighted-average period of 29 months.

In connection with the vesting of restricted stock during the year ended December 31, 2014, the 11 months ended December 31, 2013 and the year ended January 31, 2013, the Company repurchased into treasury 215,632 shares, 179,907 shares and 129,568 shares, respectively, of Class A common stock to satisfy the employees’ related minimum statutory tax withholding requirements. These shares were placed in treasury with an aggregate cost basis of $4,009,000, $3,167,000 and $1,963,000, respectively.

Performance Shares

Performance shares may be granted to selected executives and the vesting of the shares is contingent upon meeting management objectives established by the Compensation Committee of the Board of Directors. The management objectives may be company-wide or business unit performance goals and may include market conditions and service requirements. The performance period may not be less than one year. Performance shares will generally be granted at target levels and the ultimate number of shares earned will depend upon the degree performance goals are met at the end of the performance period. The fair value of performance shares that do not have a market condition are based on the closing price of the underlying stock on the date of grant and recorded as stock-based compensation cost over the requisite service period. If the performance goals are not met or below target, then any related recognized compensation costs will be reversed. If the performance goals are exceeded, additional compensation costs will be recorded, as applicable, up to the maximum specified in the grant. The fair value of performance shares that have a market condition is based on a Monte Carlo simulation and is recorded as stock-based compensation cost over the requisite service period. The cost is recognized even if the market condition is not satisfied, provided the service requirement is met.

The weighted average grant-date fair value of performance shares granted during the year ended December 31, 2014, the 11 months ended December 31, 2013 and the year ended January 31, 2013 was $18.23, $17.78 and $20.74, respectively. All grants have performance goals that include a market condition and the fair values were computed using a Monte Carlo simulation. At December 31, 2014, there was $8,610,000 of unrecognized compensation costs related to performance shares expected to be recognized over a weighted-average period of 27 months.

The following table provides a summary of the performance share activity for the year ended December 31, 2014:



	Shares		Weighted Average Grant-Date Fair Value
Unvested shares at January 1, 2014	587,210		$	19.23
Granted	309,750		$	18.23
Vested	—		$	—
Forfeited	(25,634	)	$	19.04
Unvested shares at December 31, 2014	871,326		$	18.88

The range of performance shares that can be earned as of December 31, 2014 is as follows:



Performance Period	Range	Minimum Shares	Target Shares	Maximum Shares
February 1, 2012 to December 31, 2015	0% to 200%	—	278,084	556,168
February 1, 2013 to December 31, 2016	0% to 200%	—	291,561	583,122
January 1, 2014 to December 31, 2017	0% to 200%	—	301,681	603,362
		—	871,326	1,742,652