Stock Compensation Plans

The Company's 2014 Long-Term Incentive Compensation Plan, dated February 28, 2014 and subsequently approved by Shareholders on May 2, 2014 (the "2014 LT Plan") is authorized to issue up to 1,750,000 shares of common stock as options, share appreciation rights, restricted shares and units, performance shares and units and other stock or cash-based awards. Only director retainer shares were issued from this plan in 2014 and approximately 1,749,000 shares remain available for issuance at December 31, 2014.

The Company's 2005 Long-Term Performance Compensation Plan, dated May 6, 2005 (the “LT Plan”), issued awards prior to the approval of the 2014 LT Plan. After approval of the 2014 LT Plan, the 519,000 unused shares were canceled as will be any subsequent forfeitures from outstanding awards made under the LT Plan. Outstanding LT Plan awards continued to be subject to the terms and conditions of the LT Plan and the award agreements.

Stock-based compensation expense for all stock-based compensation awards are based on the grant-date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award. Total compensation expense recognized in the Consolidated Statement of Income for all stock compensation programs was $8.6 million, $4.3 million and $4.0 million in 2014, 2013 and 2012, respectively.

Stock Only Stock Appreciation Rights (“SOSARs”)

SOSARs granted to directors and management personnel under the LT Plan beginning in 2008 have a term of five years and have three year graded vesting. SOSARs granted under the LT Plan are structured as fixed grants with the exercise price equal to the market value of the underlying stock on the date of the grant. The related compensation expense is recognized on a straight-line basis over the service period.

Beginning in 2011, the Company replaced the SOSAR equity awards with full value Restricted Stock Awards (“RSAs”). No SOSAR equity awards have been granted since 2010.

A reconciliation of the number of SOSARs outstanding and exercisable under the Long-Term Performance Compensation Plan as of December 31, 2014, and changes during the period then ended is as follows:



	Shares (000's)		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (000's)
SOSARs outstanding at January 1, 2014	173		$	15.99
SOSARs exercised	(121	)	13.49
SOSARs cancelled / forfeited	—		—
SOSARs outstanding at December 31, 2014	52		$	21.83	0.16	$	1,615
Vested and expected to vest at December 31, 2014	52		$	21.83	0.16	$	1,615
SOSARs exercisable at December 31, 2014	52		$	21.83	0.16	$	1,615



	Year ended December 31,
(in thousands)	2014		2013		2012
Total intrinsic value of SOSARs exercised	$	5,193	$	4,678	$	1,937
Total fair value of shares vested	$	—	$	576	$	818
Weighted average fair value of options granted	$	—	$	—	$	—

As of December 31, 2014, there was no unrecognized compensation cost related to SOSARs granted under the LT Plan.

Restricted Stock Awards

The LT Plan permits awards of restricted stock. These shares carry voting and dividend rights; however, sale of the shares is restricted prior to vesting. Restricted shares granted prior to 2013 vest over a period of 3 years. Restricted shares granted in 2013 vest over a period of 2.25 years. Shares granted in 2014 vest over a period of 3 years, with one-third vesting each January 1 of the following first, second, and third years. Total restricted stock expense is equal to the market value of the Company's common shares on the date of the award and is recognized over the service period. In 2014, there were 59,288 shares issued to members of management and directors.

A summary of the status of the Company's nonvested restricted shares as of December 31, 2014, and changes during the period then ended, is presented below:



	Shares (000)'s		Weighted-Average Grant-Date Fair Value
Nonvested restricted shares at January 1, 2014	188		$	35.74
Granted	59		54.84
Vested	(67	)	33.99
Forfeited	(5	)	42.34
Nonvested restricted shares at December 31, 2014	175		$	42.69



	Year ended December 31,
	2014	2013	2012
Total fair value of shares vested (000's)	$1,585	$1,121	$590
Weighted average fair value of restricted shares granted	$54.84	$47.65	$28.99

As of December 31, 2014, there was $1.4 million of total unrecognized compensation cost related to nonvested restricted shares granted under the LT Plan. That cost is expected to be recognized over the next 2.0 years.

Performance Share Units (“PSUs”)

The LT Plan also allows for the award of PSUs. Each PSU gives the participant the right to receive common shares dependent on the achievement of specified performance results over a specified performance period. For PSUs granted in 2014 and years prior to 2013, the performance period is 3 years. For PSUs granted in 2013, the performance period is 2.25 years. At the end of the performance period, the number of shares of stock issued will be determined by adjusting the award upward or downward from a target award. Fair value of PSUs issued is based on the market value of the Company's common shares on the date of the award. The related compensation expense is recognized over the performance period when achievement of the award is probable and is adjusted for changes in the number of shares expected to be issued if changes in performance are expected. In 2014, there were 96,232 PSUs issued to members of management. Currently, the Company is accounting for the awards granted in 2012, 2013 and 2014 at 71%, 50%, and 40%, respectively, of the maximum amount available for issuance.

PSUs Activity

A summary of the status of the Company's PSUs as of December 31, 2014, and changes during the period then ended, is presented below:



	Shares (000)'s		Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2014	350		$	35.27
Granted	96		54.84
Vested	(110	)	31.87
Forfeited	(7	)	45.14
Nonvested at December 31, 2014	329		$	41.92



	Year ended December 31,
	2014	2013	2012
Weighted average fair value of PSUs granted	$54.84	$47.32	$28.99

As of December 31, 2014, there was $2.4 million of total unrecognized compensation cost related to nonvested PSUs granted under the LT Plan. That cost is expected to be recognized over the next 2.0 years.

Employee Share Purchase Plan (the “ESP Plan”)

The Company's 2004 ESP Plan allows employees to purchase common shares through payroll withholdings. The Company has approximately 248,000 common shares remaining available for issuance to and purchase by employees under this plan. The ESP Plan also contains an option component. The purchase price per share under the ESP Plan is the lower of the market price at the beginning or end of the year. The Company records a liability for withholdings not yet applied towards the purchase of common stock.

The fair value of the option component of the ESP Plan is estimated at the date of grant under the Black-Scholes option pricing model with the following assumptions for the appropriate year. Expected volatility was estimated based on the historical volatility of the Company's common shares over the past year. The average expected life was based on the contractual term of the plan. The risk-free rate is based on the U.S. Treasury issues with a one year term. Forfeitures are estimated at the date of grant based on historical experience.



	2014		2013		2012
Risk free interest rate	0.13	%	0.16	%	0.11	%
Dividend yield	0.74	%	1.49	%	1.37	%
Volatility factor of the expected market price of the common shares	0.23		0.27		0.41
Expected life for the options (in years)	1.00		1.00		1.00