Stock Compensation

The Company’s 2008 Incentive Stock Plan (the “2008 Plan”) authorizes the Compensation Committee of the Board of Directors to issue up to 3,000,000 shares of various types of stock based awards including stock options, restricted stock and stock appreciation rights to key employees and directors. In general, options granted and outstanding vest over a three year period and expire ten years from the date of grant.

The following tables summarize stock option activity in the past three years:

Options granted in 2014, 2013 and 2012:



Year	Options	Exercise Price
2014	209,500	$	20.93
2013	323,400	$	14.77
2012	323,950	$	12.96

Options exercised in 2014, 2013 and 2012:



Year	Options	Exercise Price
2014	228,064	$9.97 to $17.02
2013	503,321	$8.00 to $18.62
2012	288,794	$8.00 to $12.55

In addition, options totaling 43,252, 164,528 and 113,913 expired or were forfeited during the years ended December 31, 2014, 2013 and 2012, respectively.

Options outstanding and exercisable at December 31, 2014, 2013 and 2012 were as follows:



Year	Outstanding	Range of Exercise Prices	Exercisable	Weighted Average Exercise Price
2014	1,512,756	$9.00 to $20.93	1,066,219	$	11.58
2013	1,574,572	$9.00 to $18.62	1,057,694	$	11.48
2012	1,919,021	$8.00 to $18.62	1,355,112	$	11.63

Stock compensation expense reduced income before taxes approximately $3,115, $2,557 and $2,708 for the years ended December 31, 2014, 2013, and 2012, respectively. These expenses are included in selling, general and administrative expenses in the accompanying Consolidated Statements of Operations. Total unrecognized compensation cost related to non-vested share based compensation arrangements at December 31, 2014 was approximately $3,981 which will be recognized over the next three years, as such compensation is earned.

The fair value of options granted is estimated using an option pricing model based on assumptions set forth in the following table. The Company uses historical data to estimate employee exercise and departure behavior. The risk free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant and through the expected term. The dividend yield is based on the Company’s historical dividend yield. The expected volatility is derived from historical volatility of the Company’s shares and those of similar companies measured against the market as a whole. In 2014, 2013 and 2012, the Company used the binomial lattice option pricing model based on assumptions set forth in the following table.



	2014			2013			2012
Risk free interest rate	2.80		%	1.86		%	2.00		%
Expected dividend yield	2.50		%	2.40		%	2.20		%
Expected life of award (years)	7.0			7.0			5.4
Expected volatility	50.00		%	50.00		%	50.00		%
Fair value per option share	$	7.05		$	5.39		$	4.93

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



	Shares		Average Exercise Price		Weighted Average Life	Aggregate Intrinsic Value
Outstanding at December 31, 2013	1,574,572		$	12.14
Options Granted	209,500		20.93
Options Exercised	(228,064	)	12.20
Canceled or Forfeited	(43,252	)	15.74
Outstanding at December 31, 2014	1,512,756		13.24		5.08 years	$	6,590
Exercisable at December 31, 2014	1,066,219		$	11.58	4.47 years	$	6,420

The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. The intrinsic value of stock options exercised in 2014, 2013 and 2012 was $1,744, $2,588 and $1,502, respectively.

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



	Shares		Average Grant-Date Fair Value
Unvested shares at December 31, 2013	275,525
Granted	104,100		$	20.93
Vested	(123,829	)	11.75
Forfeited	(19,600	)	17.34
Unvested shares at December 31, 2014	236,196		$	16.78

Restricted stock units are rights to receive shares of common stock, subject to forfeiture and other restrictions, which vest over a two or three year period. Restricted shares are considered to be non-vested 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. Restricted stock awards are valued based on the market price of the underlying shares on the grant date. Compensation expense is recognized on a straight-line basis over the requisite service period. At December 31, 2014, restricted stock awards had vesting periods up through March 2017.