Share-Based Compensation

Share-based compensation expense was recorded net of estimated forfeitures for 2015, 2014 and 2013, such that expense was recorded only for those share-based awards that are expected to vest. In 2015, 2014 and 2013, we recorded share-based compensation and related benefits as follows:



	Year ended December 31,
(Dollars in thousands)	2015			2014			2013
Share-based compensation expense	$	32,239		$	29,545		$	25,413
Income tax benefit related to share-based compensation expense	(11,395		)	(9,923		)	(7,989		)
Capitalized compensation costs	2,226			2,048			2,809

Equity Incentive Plan

On May 11, 2006, our stockholders approved the 2006 Equity Incentive Plan (the “2006 Incentive Plan”). Our previous 1997 Equity Incentive Plan expired in December 2006. The 2006 Incentive Plan provides for the grant of various types of incentive awards, of which the following have been granted: (i) stock options; (ii) restricted stock awards; (iii) restricted stock units; and (iv) other cash or stock settled equity awards.

Subject to the provisions of Section 16 of the 2006 Incentive Plan, the maximum aggregate number of shares that may be awarded and sold thereunder is 9,528,505.

Restricted stock awards and restricted stock units will be counted against the available-for-issuance limits of the 2006 Incentive Plan as two shares for every one share awarded. Further, if shares acquired under any such award are forfeited or otherwise canceled and would otherwise return to the 2006 Incentive Plan, two times the number of such forfeited or repurchased shares will return to the 2006 Incentive Plan and will again become available for issuance.

Eligible participants in the 2006 Incentive Plan include directors, employees, and consultants. Options granted under the 2006 Incentive Plan expire seven years after the grant date. Options generally vest annually over four years, from the grant date based on continued employment or other service. Restricted stock awards and units also generally vest annually over four years and require continued employment or other service through the vesting period. Performance-based restricted stock units generally vest upon meeting certain performance-based objectives and, typically the passage of time and require continued employment or other service through the vesting period. The vesting period for restricted stock units cannot be less than three years unless they are subject to certain performance-based objectives, in which case the vesting period cannot be less than 12 months.

Employee Stock Purchase Plan

We maintain the 1999 ESPP under which participating employees may annually contribute up to 10 percent of their gross compensation (not to exceed $25,000) to purchase shares of our common stock at 85 percent of its fair market value at either the beginning or end of each six-month offering period, whichever price is less. To be eligible to participate in the ESPP, an employee must, among other requirements, be employed by the Company on both the date of offering and date of purchase, and be employed customarily for at least 20 hours per week and at least five months per calendar year. We issued 140,471 shares and received $13.9 million in cash under the ESPP in 2015. At December 31, 2015, a total of 425,728 shares of our common stock were still available for future issuance under the ESPP.

Unrecognized Compensation Expense

As of December 31, 2015, unrecognized share-based compensation expense was as follows:



(Dollars in thousands)	Unrecognized Expense		Average Expected Recognition Period - in Years
Stock options	$	11,194	2.30
Restricted stock units	37,903		2.53
Total unrecognized share-based compensation expense	$	49,097

Valuation Assumptions

The fair values of share-based awards for employee stock options and employee stock purchases made under our ESPP were estimated using the Black-Scholes option pricing model. The fair values of restricted stock units were based on our closing stock price on the date of grant. The following weighted average assumptions and fair values were used for our employee stock options and restricted stock units:



Equity Incentive Plan Awards	2015			2014			2013
Weighted average expected term of options - in years	4.7			4.6			4.7
Weighted average expected volatility of the Company's underlying common stock	31.3		%	35.9		%	44.6		%
Risk-free interest rate	1.49			1.72			0.70
Expected dividend yield	—			—			—
Weighted average grant date fair value - stock options	$	37.86		$	35.65		$	27.28
Weighted average grant date fair value - restricted stock units	129.23			107.76			71.57

The following weighted average assumptions and fair values were used for our ESPP:



ESPP	2015			2014			2013
Expected term in years	0.5			0.5			0.5
Weighted average expected volatility of the Company's underlying common stock	25.9		%	23.7		%	22.3		%
Risk-free interest rate	0.12			0.08			0.11
Expected dividend yield	—			—			—
Weighted average fair value	$	29.27		$	24.00		$	15.35

The expected term is based on the implied term of the stock options using factors based on historical exercise behavior. The expected volatilities are based on a blended rate consisting of our historic volatility and our expected volatility over a five-year term which is an indicator of expected volatility and future stock price trends. For 2015, 2014 and 2013, expected volatilities for the ESPP were equal to the historical volatility for the previous six-month periods. The expected risk-free interest rates were based on the yields of U.S. Treasury securities, as reported by the Federal Reserve Bank of New York, with maturities equal to the expected terms of the employee stock options.

Share-Based Payment Award Activity

The table below provides stock option information related to the 2006 Equity Incentive Plan for the year ended December 31, 2015:



	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life - in Years	Aggregate Intrinsic Value of In-The-Money Options
Outstanding at December 31, 2014	1,394,888		$	66.03
Granted	123,561		129.20
Exercised	(357,441	)	51.52
Forfeited	(22,260	)	84.17
Expired	(1,520	)	48.76
Outstanding at December 31, 2015	1,137,228		77.12		3.81	$	48,803,591
Vested and expected to vest at December 31, 2015	1,107,168		76.33		3.77	48,309,612
Exercisable at December 31, 2015	613,873		60.86		2.80	35,630,862

The aggregate intrinsic value of outstanding options shown in the table above represents the pre-tax intrinsic value based on our closing stock price of $118.90 as of December 31, 2015. The following table summarizes information regarding stock options outstanding and exercisable as of December 31, 2015:



	Outstanding Options				Exercisable Options
Range of Exercise Prices	Shares	Weighted Average Remaining Contractual Life - in Years	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
$19.48-49.47	170,043	1.09	$	38.70	169,806	$	38.68
49.48-60.51	160,003	2.40	59.52		155,136	59.60
60.52-64.40	210,364	3.33	64.32		135,521	64.31
64.41-67.77	2,654	3.25	64.43		1,675	64.43
67.78-79.77	237,835	4.33	71.11		98,120	71.11
79.78-107.93	26,764	5.40	101.18		6,805	99.07
107.94-108.59	197,920	5.33	107.98		44,859	107.98
108.60-127.44	16,685	6.18	119.00		1,951	117.01
127.45-129.81	114,960	6.33	129.81		—	—
	1,137,228	3.81	77.12		613,873	60.86

We expect to satisfy the exercise of stock options by issuing shares registered under the 2006 Incentive Plan. All future awards of stock options and restricted stock units will be issued from the 2006 Incentive Plan. At December 31, 2015, 2,664,121 shares were available for future issuance.

The table below provides information for restricted stock units under the 2006 Equity Incentive Plan for the year ended December 31, 2015:



	Shares		Weighted Average Grant Date Fair Value
Nonvested at December 31, 2014	614,666		$	79.92
Granted	241,548		129.23
Vested	(264,884	)	73.35
Forfeited	(19,292	)	88.51
Nonvested at December 31, 2015	572,038		103.50

The following table summarizes information regarding stock option and restricted stock activity during 2015, 2014 and 2013:



	Year ended December 31,
(Dollars in thousands)	2015		2014		2013
Total intrinsic value of stock options exercised	$	27,430	$	21,288	$	25,520
Total grant date fair value of stock options vested	21,052		20,291		18,168
Total intrinsic value of restricted stock vested	34,009		25,453		14,176
Total grant date fair value of restricted stock vested	19,428		14,935		10,940