Share-Based Compensation

A summary of stock-based compensation expense for the six months ended June 30, 2016 and 2015 is as follows:



	For the Six Months Ended June 30,
	2016		2015
Stock options	$	1,605,000	$	1,406,000
Restricted stock	273,000		122,000
Employee Stock Purchase Plan	213,000		205,000
Total pre-tax stock-based compensation expense charged against income ⁽¹⁾	$	2,091,000	$	1,733,000


⁽¹⁾	Stock-based compensation expense is recorded in selling, general and administrative expense in our consolidated statements of comprehensive income.

At June 30, 2016, the unrecognized compensation cost related to unvested stock options and awards was $10,389,000. The weighted average period over which these awards will vest is approximately 3.2 years.

Other information pertaining to activity of our stock awards is as follows:



	For the Six Months Ended June 30,
	2016		2015
Total grant-date fair value of stock options and awards granted	$	5,202,000	$	4,027,000
Total fair value of stock options and awards vested during period	$	3,092,000	$	2,719,000

2012 Equity Incentive Plan

The Company’s 2012 Equity Incentive Plan (the “Plan”) provides that current or prospective officers, employees, non-employee directors and advisors can receive share-based awards such as stock options, restricted stock and other stock awards. The Plan seeks to promote the highest level of performance by providing an economic interest in the long-term success of the Company.

As of June 30, 2016, 3,972,000 shares of common stock were reserved for issuance under the Plan, including 1,245,000 shares available for future grant. No stock award will have a term in excess of ten years. All awards granted under the Plan become vested and exercisable ratably over a five year period on each yearly anniversary of the grant date.

The Nominating, Compensation and Stock Option Committee of the Board of Directors is responsible for determining the terms of the grants in accordance with the Plan.

Stock Options

A summary of our stock options outstanding under the Plan as of December 31, 2015 and changes during the six months ended June 30, 2016 is as follows:



	Stock Options Outstanding
	Number of Shares		Weighted Average Exercise Price
December 31, 2015	2,461,000		$	22.16
Granted	569,000		$	34.14
Cancelled	(66,000	)	$	29.31
Exercised	(238,000	)	$	20.25
June 30, 2016	2,726,000		$	24.65

The weighted average grant-date fair value of stock options granted during the six months ended June 30, 2016 and 2015 was $7.46 and $6.64 per common share, respectively.

The following table summarizes other information about our stock options at June 30, 2016:



	Stock Options
Range of exercise prices	$10.39 - $34.14
Outstanding:
Weighted average remaining contractual life (years)	6.7
Aggregate intrinsic value	$	45,605,000
Exercisable:
Number of shares	1,230,000
Weighted average remaining contractual life (years)	4.9
Aggregate intrinsic value	$	28,105,000
Exercised:
Aggregate intrinsic value	$	3,874,000

The fair value of stock option awards granted in 2016 and 2015 was estimated on the date of grant using the Black-Scholes option valuation model using the following assumptions:



	For the Six Months Ended June 30,
	2016	2015
Risk-free interest rate	2.0%	1.9%
Weighted average expected life (years)	5.8	5.8
Expected volatility	26.0%	27.2%
Dividend yield	2.0%	2.2%

Restricted Stock

During the six months ended June 30, 2016, the Company granted 44,000 shares of restricted stock with a weighted average grant date fair value of $34.14 per share. Fair value is determined based on the market price of the shares on the date of grant. During the six months ended June 30, 2015, the Company granted 25,000 shares of restricted stock with a weighted average grant date fair value of $30.30 per share.

A summary of our outstanding stock-based compensation as of December 31, 2015 and changes during the six months ended June 30, 2016 is as follows:



	Shares		Weighted Average Grant Date Fair Value
December 31, 2015	40,000		$	29.10
Granted	44,000		$	34.14
Vested	(9,000	)	$	28.76
June 30, 2016	75,000		$	32.10

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (“ESPP”) for all eligible employees. The ESPP currently extends through 2016. All full-time and certain part-time employees who have completed two years of continuous service with us are eligible to participate. Annual offerings commence and terminate on the respective year’s first and last calendar day.

Under the ESPP, the Company is authorized to issue up to 4,050,000 shares of our common stock to our employees. Pursuant to such authorization, there are 2,362,000 shares available for future grant at June 30, 2016.

The stock-based compensation expense associated the options granted under our ESPP was estimated on the date of grant using the Black-Scholes option valuation model using the following assumptions:



	Six months ended June 30,
	2016	2015
Risk-free interest rate	0.58%	0.18%
Weighted average expected life (years)	1.0	1.0
Expected volatility	19.7%	19.2%
Dividend yield	2.0%	2.2%