STOCK PLANS

On April 23, 2015, the shareholders of the Company approved the 2015 Equity and Incentive Compensation Plan ("Employee Plan"), which replaced the 2006 Equity and Performance Incentive Plan, as amended ("EPI Plan"). The Employee Plan provides for the granting of options, appreciation rights, restricted shares, restricted stock units and performance-based awards up to an additional 5,400,000 of the Company's common shares. In addition, on April 23, 2015, the shareholders of the Company approved the 2015 Stock Plan for Non-Employee Directors ("2015 Director Plan"), which replaced the 2006 Stock Plan for Non-Employee Directors ("2006 Director Plan"). The 2015 Director Plan provides for the granting of options, restricted shares and restricted stock units up to an additional 300,000 of the Company's common shares. At December 31, 2015, there were 5,600,763 common shares available for future grant under all plans.

Stock Options

The following table summarizes stock option activity for the years ended December 31, 2015, 2014 and 2013, under all Plans:



	Year Ended December 31,
	2015				2014				2013
	Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price
Balance at beginning of year	2,087,193		$	37.80	2,452,648		$	36.52	3,060,944		$	30.98
Options granted	323,130		69.14		5,121		69.61		273,105		70.88
Options exercised	(197,582	)	30.35		(329,986	)	27.63		(774,783	)	26.20
Options canceled	(18,092	)	66.51		(40,590	)	47.21		(106,618	)	40.54
Balance at end of year	2,194,649		42.85		2,087,193		37.80		2,452,648		36.52
Exercisable at end of year	1,807,427		37.15		1,818,218		33.89		1,837,014		29.93

Options granted under both the Employee Plan and its predecessor plans may be outstanding for a maximum of 10 years from the date of grant. The majority of options granted vest ratably over a period of three years from the grant date. The exercise prices of all options were equal to the quoted market price of the Company's common shares at the date of grant. The Company issued shares of common stock from treasury upon all exercises of stock options in 2015, 2014 and 2013. In 2015, 16,970 options were issued under the Employee Plan, 306,160 options were issued under the EPI Plan and all options issued in 2014 and 2013 were under the EPI Plan.

The Company uses the Black-Scholes option pricing model for estimating fair values of options. In estimating the fair value of options granted, the expected option life is based on the Company's historical experience. The expected volatility is based on historical volatility. The weighted average assumptions for each of the three years ended December 31, 2015 were as follows:



	Year Ended December 31,
	2015			2014			2013
Expected volatility	30.73		%	32.21		%	32.97		%
Dividend yield	1.48		%	1.41		%	1.40		%
Risk-free interest rate	1.32		%	1.61		%	1.52		%
Expected option life (years)	4.5			4.4			4.4
Weighted average fair value per option granted during the year	$	16.35		$	17.52		$	18.14

The following table summarizes non-vested stock options for the year ended December 31, 2015:



	Year Ended December 31, 2015
	Number of Options		Weighted Average Fair Value at Grant Date
Balance at beginning of year	268,975		$	17.48
Granted	323,130		16.35
Vested	(189,681	)	17.26
Forfeited	(15,202	)	17.15
Balance at end of year	387,222		16.66

The aggregate intrinsic value of options outstanding and exercisable which would have been received by the optionees had all awards been exercised at December 31, 2015 was $30,121 and $30,121, respectively. The total intrinsic value of awards exercised during 2015, 2014 and 2013 was $6,879, $14,647 and $26,288, respectively. The total fair value of options that vested during 2015, 2014 and 2013 was $3,273, $5,104 and $5,131, respectively.

The following table summarizes information about awards outstanding as of December 31, 2015:



	Outstanding				Exercisable
Exercise Price Range	Number of Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Life (years)	Number of Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Life (years)
Under $29.99	491,072	$	24.56	3.5	491,072	$	24.56	3.5
$30.00 - $39.99	825,161	33.18		4.4	825,161	33.18		4.4
Over $40.00	878,416	62.15		8.0	491,194	56.40		7.3
	2,194,649			5.7	1,807,427			5.0

Restricted Share Awards ("RSAs")

The following table summarizes restricted share award activity for the years ended December 31, 2015, 2014 and 2013, under all Plans:



	Year Ended December 31,
	2015				2014				2013
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Balance at beginning of year	49,490		$	60.14	115,316		$	39.55	336,808		$	28.49
Shares granted	20,476		53.94		14,927		66.32		14,464		70.88
Shares vested	(20,745	)	49.37		(80,753	)	31.88		(224,021	)	25.68
Shares forfeited	(4,592	)	64.61		—		—		(11,935	)	25.76
Balance at end of year	44,629		61.84		49,490		60.14		115,316		39.55

RSAs are valued at the quoted market price on the grant date. The majority of RSAs vest over a period of three to five years. The Company issued common shares from treasury upon the granting of RSAs in 2015, 2014 and 2013. Restricted shares issued in 2015 were under the 2015 Director Plan and all restricted shares issued in 2014 and 2013 were under the the 2006 Director Plan. The remaining weighted average vesting period of all non-vested RSAs is 2.1 years as of December 31, 2015.

Restricted Stock Units ("RSUs")

The following table summarizes restricted stock unit activity for the years ended December 31, 2015, 2014 and 2013, under all Plans:



	Year Ended December 31,
	2015				2014				2013
	Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value
Balance at beginning of year	241,496		$	49.34	283,944		$	47.38	288,669		$	40.83
Units granted	67,800		68.82		2,861		70.71		69,925		67.17
Units vested	(76,996	)	37.21		(40,035	)	36.59		(33,698	)	39.20
Units forfeited	(10,768	)	57.98		(5,274	)	52.19		(40,952	)	41.70
Balance at end of year	221,532		59.10		241,496		49.34		283,944		47.38

RSUs are valued at the quoted market price on the grant date. The majority of RSUs vest over a period of three to five years. The Company will issue shares of common stock from treasury upon the vesting of RSUs and any earned dividend equivalents. Conversion of 18,022 RSUs to common shares in 2015 were deferred as part of the 2005 Deferred Compensation Plan for Executives (the "2005 Plan"). As of December 31, 2015, 66,024 RSUs, including related dividend equivalents, have been deferred under the 2005 Plan. These units are reflected within dilutive shares in the calculation of earnings per share. In 2015, 4,915 RSUs were issued under the Employee Plan, 62,885 RSUs were issued under the EPI plan and all RSUs issued in 2014 and 2013 were under the the EPI Plan. The remaining weighted average vesting period of all non-vested RSUs is 3.2 years as of December 31, 2015.

Stock-Based Compensation Expense

Expense is recognized for all awards of stock-based compensation by allocating the aggregate grant date fair value over the vesting period. No expense is recognized for any stock options, restricted or deferred shares or restricted stock units ultimately forfeited because recipients fail to meet vesting requirements. Total stock-based compensation expense recognized in the Consolidated Statements of Income for 2015, 2014 and 2013 was $7,932, $8,416 and $9,734, respectively. The related tax benefit for 2015, 2014 and 2013 was $3,037, $3,222 and $3,727, respectively. As of December 31, 2015, total unrecognized stock-based compensation expense related to non-vested stock options, restricted shares and restricted stock units was $15,371, which is expected to be recognized over a weighted average period of approximately 2.9 years.

Lincoln Stock Purchase Plan

The 1995 Lincoln Stock Purchase Plan provides employees the ability to purchase open market shares on a commission-free basis up to a limit of ten thousand dollars annually. Under this plan, 800,000 shares have been authorized to be purchased. Shares purchased were 16,012 in 2015, 5,511 in 2014 and 4,653 in 2013.