(12) Stock‑Based Compensation

As of December 31, 2016, the Company maintains one stock incentive plan, the Second Amended and Restated 2004 Stock Incentive Plan (the “2004 Stock Incentive Plan”). At December 31, 2016, 1,402,580 shares of Class A common stock were authorized for future grants of new equity awards under this plan. Under this plan, key employees have been granted nonqualified stock options to purchase the Company’s Class A common stock. Options typically become exercisable over a four-year period at the rate of 25% per year and expire ten years after the grant date. However, most options granted in 2014 become exercisable over a three-year period at a rate of one-third per year. Options granted under the plan may have exercise prices of not less than 100% of the fair market value of the Class A common stock on the date of grant. The Company’s current practice has been to grant all options at fair market value on the grant date. Beginning in 2015, the Company stopped granting stock options as part of its annual equity awards to employees and the Company did not issue any stock options for 2016 or 2015.

The Company grants shares of restricted stock and deferred shares to key employees and stock awards to non‑employee members of the Company’s Board of Directors under the 2004 Stock Incentive Plan. Stock awards to non‑employee members of the Company’s Board of Directors vest immediately. Employees’ restricted stock awards and deferred shares typically vest over a three‑year period at the rate of one‑third per year, except that most restricted stock awards and deferred shares granted in 2014 vest over a two-year period at the rate of 50% per year.

The Company also grants performance stock units to key employees under the 2004 Stock Incentive Plan. Performance stock units cliff vest at the end of a performance period set by the Compensation Committee of the Board of Directors at the time of grant. Upon vesting, the number of shares of the Company’s Class A common stock awarded to each performance stock unit recipient will be determined based on the Company’s performance relative to certain performance goals set at the time the performance stock units were granted. The recipient of a performance stock unit award may earn from zero shares to twice the number of target shares awarded to such recipient. The performance stock units are amortized to expense over the vesting period, and based on the Company’s performance relative to the performance goals, may be adjusted. Changes to the estimated shares expected to vest will result in adjustments to the related share-based compensation expense that will be recorded in the period of change. If the performance goals are not met, no awards are earned and previously recognized compensation expense is reversed. The Company granted performance stock units in 2014, 2015 and 2016. The performance goals for the performance stock units are based on the compound annual growth rate of the Company’s revenue over the three-year performance period and the Company’s return on invested capital (“ROIC”) for the third year of the performance period.

The Company also has a Management Stock Purchase Plan that allows for the granting of restricted stock units (RSUs) to key employees. On an annual basis, key employees may elect to receive a portion of their annual incentive compensation in RSUs instead of cash. Each RSU provides the key employee with the right to purchase a share of Class A common stock at 67% of the fair market value on the date of grant. Beginning with annual incentive compensation for 2016 and RSUs granted in 2017, the purchase price for RSUs will be increased to 80% of the fair market value of the Company’s Class A common stock. RSUs vest either annually over a three-year period from the grant date or upon the third anniversary of the grant date and receipt of the shares underlying RSUs is deferred for a minimum of three years or such greater number of years as is chosen by the employee. An aggregate of 2,000,000 shares of Class A common stock may be issued under the Management Stock Purchase Plan. At December 31, 2016, 803,562 shares of Class A common stock were authorized for future grants under the Company’s Management Stock Purchase Plan.

2004 Stock Incentive Plan

At December 31, 2016, total unrecognized compensation cost related to the unvested stock options was approximately $0.6 million with a total weighted average remaining term of 0.6 years. For 2016, 2015 and 2014, the Company recognized compensation cost of $1.1 million, $1.9 million and $2.6 million, respectively.

The following is a summary of stock option activity and related information:


	Year Ended December 31,
	2016					2015			2014
		Weighted		Weighted			Weighted			Weighted
		Average		Average			Average			Average
		Exercise		Intrinsic			Exercise			Exercise
	Options	Price		Value		Options	Price		Options	Price
	(Options in thousands)
Outstanding at beginning of year	362	$	48.46			495	$	47.34	1,029	$	41.66
Granted	—		—			—		—	114		57.58
Cancelled/Forfeitures	(43)		52.93			(69)		51.66	(306)		44.19
Exercised	(189)		43.31			(64)		36.29	(342)		36.48
Outstanding at end of year	130	$	54.46	$	10.74	362	$	48.46	495	$	47.34
Exercisable at end of year	82	$	53.38	$	11.82	192	$	45.10	128	$	40.04

As of December 31, 2016, the aggregate intrinsic value of exercisable options was approximately $1.0 million, representing the total pre‑tax intrinsic value, based on the Company’s closing Class A common stock price of $65.20 as of December 31, 2016, which would have been received by the option holders had all option holders exercised their options as of that date. The total intrinsic value of options exercised for 2016, 2015 and 2014 was approximately $3.5 million, $1.2 million and $8.2 million, respectively.

Upon exercise of options, the Company issues shares of Class A common stock.

The following table summarizes information about options outstanding at December 31, 2016:


	Options Outstanding				Options Exercisable
		Weighted Average	Weighted Average			Weighted Average
	Number	Remaining Contractual	Exercise		Number	Exercise
Range of Exercise Prices	Outstanding	Life (years)	Price		Exercisable	Price
	(Options in thousands)
$29.05-$37.41	11,300	5.30	$	35.01	11,300	$	35.01
$54.76–$54.76	57,769	6.46		54.76	34,020		54.76
$57.47–$60.10	61,414	7.22		57.76	36,736		57.75
	130,483	6.72	$	54.46	82,056	$	53.38

The fair value of each option granted under the 2004 Stock Incentive Plan is estimated on the date of grant, using the Black‑Scholes‑Merton Model, based on the following weighted average assumptions:

The risk‑free interest rate is based upon the U.S. Treasury yield curve at the time of grant for the respective expected life of the option. The expected life (estimated period of time outstanding) of options and volatility were calculated using historical data. The expected dividend yield of stock is the Company’s best estimate of the expected future dividend yield.

The above assumptions were used to determine the weighted average grant‑date fair value of stock options of $20.04 for the year ended December 31, 2014. There were no stock options granted in 2015 or 2016.

The following is a summary of unvested restricted stock and deferred shares activity and related information:


	Year Ended December 31,
	2016			2015			2014
		Weighted			Weighted			Weighted
		Average			Average			Average
		Grant Date			Grant Date			Grant Date
	Shares	Fair Value		Shares	Fair Value		Shares	Fair Value
	(Shares in thousands)
Unvested at beginning of year	244	$	52.61	214	$	53.74	260	$	45.58
Granted	140		56.33	180		50.87	151		56.79
Cancelled/Forfeitures	(132)		54.43	(28)		53.99	(95)		46.83
Vested	(42)		53.10	(122)		51.72	(102)		44.87
Unvested at end of year	210	$	53.79	244	$	52.61	214	$	53.74

The total fair value of shares vested during 2016, 2015 and 2014 was $7.9 million, $6.6 million and $5.9 million, respectively. At December 31, 2016, total unrecognized compensation cost related to unvested restricted stock and deferred shares was approximately $7.9 million with a total weighted average remaining term of 1.72 years. For 2016, 2015 and 2014, the Company recognized compensation costs of $7.6 million, $6.7 million and $4.8 million, respectively.

The aggregate intrinsic value of restricted stock and deferred shares granted and outstanding approximated $13.7 million representing the total pre‑tax intrinsic value based on the Company’s closing Class A common stock price of $65.20 as of December 31, 2016.

The following is a summary of unvested performance share award activity and related information:


	Year Ended December 31,
	2016			2015
		Weighted			Weighted
		Average			Average
		Grant Date			Grant Date
	Shares	Fair Value		Shares	Fair Value
	(Shares in thousands)
Unvested at beginning of year	201	$	57.98	107		56.97
Granted	107		55.27	106	$	58.94
Cancelled/Forfeitures	(41)		57.56	(12)		57.51
Unvested at end of year	267	$	56.96	201	$	57.98

At December 31, 2016, total unrecognized compensation cost related to unvested performance shares was approximately $6.3 million with a total weighted average remaining term of 1.53 years. For 2016 and 2015, the Company recognized compensation costs of $4.0 million and $1.7 million, respectively.

The aggregate intrinsic value of performance shares granted and outstanding approximated $17.4 million representing the total pre-tax intrinsic value based on the Company’s closing Class A common stock price of $65.20 as of December 31, 2016.

Management Stock Purchase Plan

Total unrecognized compensation cost related to unvested RSUs was approximately $1.5 million at December 31, 2016 with a total weighted average remaining term of 1.8 years. For 2016, 2015 and 2014 the Company recognized compensation cost of $0.7 million, $0.6 million and $0.5 million, respectively. Dividends declared for RSUs, that are paid to individuals, that remain unpaid at December 31, 2016 total approximately $0.1 million.

A summary of the Company’s RSU activity and related information is shown in the following table:


	Year Ended December 31,
	2016				2015				2014
		Weighted		Weighted			Weighted			Weighted
		Average		Average			Average			Average
		Purchase		Intrinsic			Purchase			Purchase
	RSUs	Price		Value	RSUs		Price		RSUs	Price
	(RSU’s in thousands)
Outstanding at beginning of period	101	$	36.14			80	$	32.08	132	$	27.46
Granted	89		35.41			60		37.13	31		40.27
Cancelled/Forfeitures	(28)		32.25			(9)		36.92	(32)		31.58
Settled	(14)		36.91			(30)		27.10	(51)		25.41
Outstanding at end of period	148	$	36.37	13.53	$	101	$	36.14	80	$	32.08
Vested at end of period	28	$	37.78	16.32	$	25	$	33.35	31	$	27.96

As of December 31, 2016, the aggregate intrinsic values of outstanding and vested RSUs were approximately $4.3 million and $0.8 million, respectively, representing the total pre‑tax intrinsic value, based on the Company’s closing Class A common stock price of $65.20 as of December 31, 2016, which would have been received by the RSUs holders had all RSUs settled as of that date. The total intrinsic value of RSUs settled for 2016, 2015 and 2014 was approximately $1.5 million, $0.8 million and $1.7 million, respectively. Upon settlement of RSUs, the Company issues shares of Class A common stock.

The following table summarizes information about RSUs outstanding at December 31, 2016:


	RSUs Outstanding			RSUs Vested
		Weighted Average			Weighted Average
	Number	Purchase		Number	Purchase
Range of Purchase Prices	Outstanding	Price		Vested	Price
	(RSUs in thousands)
$26.51-$35.41	87		35.30	2		30.96
$37.13–$40.27	61		37.89	26		38.35
	148	$	36.37	28	$	37.78

The fair value of each share issued under the Management Stock Purchase Plan is estimated on the date of grant, using the Black‑Scholes‑Merton Model, based on the following weighted average assumptions:


	Year Ended
	December 31,
	2016		2015		2014
Expected life (years)	3.0		3.0		3.0
Expected stock price volatility	24.8	%	23.4	%	31.2	%
Expected dividend yield	1.3	%	1.2	%	0.9	%
Risk-free interest rate	0.9	%	1.1	%	0.7	%

The risk‑free interest rate is based upon the U.S. Treasury yield curve at the time of grant for the respective expected life of the RSUs. The expected life (estimated period of time outstanding) of RSUs and volatility were calculated using historical data. The expected dividend yield of stock is the Company’s best estimate of the expected future dividend yield.

The above assumptions were used to determine the weighted average grant‑date fair value of RSUs granted of $18.15, $19.04 and $22.57 during 2016, 2015 and 2014, respectively.

The Company distributed dividends of $0.71 per share for 2016, $0.66 per share for 2015, and $0.58 per share for 2014, respectively, on the Company’s Class A common stock and Class B common stock.

Year ended December 31, 2014

Expected life (years)

Expected stock price volatility

Expected dividend yield

Risk-free interest rate