COMMON STOCK

Stock-Based Compensation Plans

The following table provides a summary of the impact of our outstanding stock-based compensation plans on the results of operations for the periods presented:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(in thousands)

Stock-based compensation expense	$	4,232		$	3,040		$	13,111		$	9,991
Income tax benefit	(1,482		)	(1,161		)	(4,856		)	(3,816		)
Net stock-based compensation expense	$	2,750		$	1,879		$	8,255		$	6,175

Stock Appreciation Rights ("SARs")

The SARs vest ratably over a three-year period and may be exercised at any point after vesting through 10 years from the date of issuance. Pursuant to the terms of the awards, upon exercise, the executive officers will receive, in shares of common stock, the excess of the market price of the award on the date of exercise over the market price of the award on the date of issuance.

In January 2014, the Compensation Committee awarded 88,248 SARs to our executive officers. The fair value of each SAR award was estimated on the date of grant using a Black-Scholes pricing model using the following assumptions:



	Nine Months Ended September 30,
	2014			2013

Expected term of award	6 years			6 years
Risk-free interest rate	2.1		%	1.0		%
Expected volatility	65.6		%	65.5		%
Weighted-average grant date fair value per share	$	29.96		$	21.96

The expected life of the award was estimated using historical stock option exercise behavior data. The risk-free interest rate was based on the U.S. Treasury yields approximating the expected life of the award in effect at the time of grant. Expected volatilities were based on our historical volatility. We do not expect to pay or declare dividends in the foreseeable future.

The following table presents the changes in our SARs:



	Nine Months Ended September 30,
	2014						2013
	Number of SARs	Weighted-Average Exercise Price		Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)		Number of SARs	Weighted-Average Exercise Price		Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding beginning of year, January 1,	190,763	$	33.77				118,832	$	30.80
Awarded	88,248	49.57					87,078	37.18
Outstanding at September 30,	279,011	38.77		8.0	$	3,215	205,910	33.50		8.4	$	5,363
Vested and expected to vest at September 30,	270,589	38.56		8.0	3,173		198,163	33.41		8.4	5,178
Exercisable at September 30,	109,920	32.71		7.1	1,933		67,069	29.99		7.3	1,982

Total compensation cost related to SARs granted, net of estimated forfeitures, and not yet recognized in our condensed consolidated statement of operations as of September 30, 2014 was $3.0 million. The cost is expected to be recognized over a weighted-average period of 1.9 years.

Restricted Stock Awards

Time-Based Awards. The fair value of the time-based restricted shares is amortized ratably over the requisite service period, primarily three years. The time-based shares vest ratably on each annual anniversary following the grant date if the participant is continuously employed.

In January 2014, the Compensation Committee awarded a total of 104,467 time-based restricted shares to our executive officers that vest ratably over a three-year period ending on January 16, 2017.

The following table presents the changes in non-vested time-based awards to all employees, including executive officers, for the nine months ended September 30, 2014:



	Shares		Weighted-Average Grant-Date Fair Value

Non-vested at December 31, 2013	651,781		$	36.36
Granted	284,705		56.64
Vested	(269,725	)	34.13
Forfeited	(30,536	)	41.67
Non-vested at September 30, 2014	636,225		46.13

The following table presents the weighted-average grant date fair value per share and related information as of/for the periods presented:



	As of/for the Nine Months Ended September 30,
	2014		2013
	(in thousands, except per share data)

Total intrinsic value of time-based awards vested	$	15,840	$	12,562
Total intrinsic value of time-based awards non-vested	31,996		38,774
Market price per common share as of September 30,	50.29		59.54
Weighted-average grant date fair value per share	56.64		44.56

Total compensation cost related to non-vested time-based awards, net of estimated forfeitures, and not yet recognized in our condensed consolidated statements of operations as of September 30, 2014 was $20.8 million. This cost is expected to be recognized over a weighted-average period of 2.0 years.

Market-Based Awards. The fair value of the market-based restricted shares is amortized ratably over the requisite service period, primarily three years. The market-based shares vest if the participant is continuously employed throughout the performance period and the market-based performance measure is achieved, with a maximum vesting period of five years. All compensation cost related to the market-based awards will be recognized if the requisite service period is fulfilled, even if the market condition is not achieved.

In January 2014, the Compensation Committee awarded a total of 42,151 market-based restricted shares to our executive officers. In addition to continuous employment, the vesting of these shares is contingent on the Company's total shareholder return ("TSR"), which is essentially the Company’s stock price change including any dividends, as compared to the TSR of a set group of 15 peer companies. The shares are measured over a three-year period ending on December 31, 2016 and can result in a payout between 0% and 200% of the total shares awarded. The weighted-average grant date fair value per market-based share for these awards granted was computed using the Monte Carlo pricing model using the following assumptions:



	Nine Months Ended September 30,
	2014			2013

Expected term of award	3 years			3 years
Risk-free interest rate	0.8		%	0.4		%
Expected volatility	55.2		%	56.6		%
Weighted-average grant date fair value per share	$	56.87		$	49.04

The expected term of the awards was based on the requisite service period. The risk-free interest rate was based on the U.S. Treasury yields in effect at the time of grant and extrapolated to approximate the life of the award. The expected volatility was based on our historical volatility.

The following table presents the change in non-vested market-based awards during nine months ended September 30, 2014:



	Shares	Weighted-Average Grant-Date Fair Value per Share

Non-vested at December 31, 2013	72,111	$	43.75
Granted	42,151	56.87
Non-vested at September 30, 2014	114,262	48.59

The following table presents the weighted-average grant date fair value per share and related information as of/for the periods presented:



	As of/for the Nine Months Ended September 30,
	2014		2013
	(in thousands, except per share data)

Total intrinsic value of market-based awards non-vested	$	5,746	$	4,898
Market price per common share as of September 30,	50.29		59.54
Weighted-average grant date fair value per share	56.87		49.04

Total compensation cost related to non-vested market-based awards, net of estimated forfeitures, and not yet recognized in our condensed consolidated statement of operations as of September 30, 2014 was $2.7 million. This cost is expected to be recognized over a weighted-average period of 1.9 years.