Share-Based Compensation

9 Months Ended

Sep. 30, 2015

The Company provides compensation benefits by granting stock options and employee stock purchase rights to its employees and restricted shares to its directors. On May 21, 2015, the shareholders approved the 2015 Stock Option Plan, which made available 3,000,000 shares of the Company's common stock for purchase upon exercise of options granted. The Company has historically granted the majority of its options during the second quarter of each fiscal year. For the nine months ended September 30, 2015 and 2014, 2,955,750 and 2,289,600 options were granted, respectively. The grant of employee stock purchase rights and the issuance of shares under the employee stock purchase plan are made in the third quarter of each fiscal year and 699,438 and 671,775 were issued in the nine-month periods ended September 30, 2015 and 2014, respectively. In the second quarter of 2015 and 2014, respectively, 33,848 and 30,702 fully vested shares were granted to independent directors.

The Company recognizes stock compensation expense based on an estimate of the fair value of awards granted to employees and directors under the Company’s stock option, director restricted stock and employee stock purchase rights plans. The expense, adjusted for expected forfeitures, is recognized on a straight-line basis over the stock awards' vesting period. The forfeiture assumption used to calculate compensation expense is primarily based on historical pre-vesting employee forfeiture patterns.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:




	Nine months ended September 30,
	2015			2014
Dividend yield	1.60		%	1.50 - 1.51%
Volatility - stock option plans	29 - 34%			36		%
Volatility - stock purchase rights plans	20		%	20		%
Risk free interest rates	0.30 - 2.04%			0.11 - 2.27%
Expected life (years) - stock option plans	6.41 - 7.47			6.52 - 7.43
Expected life (years) - stock purchase rights plans	1			1
Weighted average fair value of stock options granted during the period	$	13.44		$	14.08
Weighted average fair value of stock purchase rights granted during the period	$	10.45		$	9.60

Total stock compensation expense and the total related tax benefit recognized are as follows:



	Three months ended				Nine months ended
	September 30,				September 30,
	2015		2014		2015		2014
Stock compensation expense	$	10,919	$	10,049	$	32,489	$	32,220
Recognized tax benefit	$	1,571	$	988	$	4,305	$	3,115