STOCK-BASED COMPENSATION

The Company has equity awards outstanding under three stock-based compensation plans; the 2015 Equity Incentive Plan (the "2015 Plan"), the 2006 Equity Compensation Plan, as amended and restated, (the “2006 Plan”) and the 2001 Stock Option Plan. These plans were primarily established to enhance the Company’s ability to attract, retain and motivate employees. The Company’s Board of Directors or, upon delegation, the Compensation Committee of the Board of Directors (“Compensation Committee”) has exclusive authority to select employees, advisors and others, including directors, to receive awards and to establish the terms and conditions of each award made pursuant to the Company’s stock-based compensation plans.

The 2015 Plan, approved by the Company’s shareholders in May 2015, was established to provide the Company with flexibility to select from various equity-based performance compensation methods, and to be able to address changing accounting and tax rules and corporate governance practices by optimally utilizing performance based compensation. The 2015 Plan did not increase the number of shares of common stock available for awards under the 2006 Plan.

The 2006 Plan, approved by the Company’s shareholders in May 2006 and May 2014, was established to consolidate into one plan the benefits available under the 2001 Stock Option Plan and all other then existing share-based award plans (collectively with the 2006 Plan, the “Previous Plans”). The Previous Plans continue with respect to awards made prior to June 2015. All shares of common stock available for future grant under the Previous Plans were transferred into the 2015 Plan. At December 31, 2015, there were 1,987,379 common shares available for future grant under the 2015 Plan. All stock based compensation awards granted subsequent to March 29, 2010 are for shares of Class A common stock. All awards granted prior to March 29, 2010 are for shares of Class B common stock.

Stock Options. All options granted have an exercise price equal to fair market value, which is currently defined as the closing sales price for the stock as quoted on the NASDAQ Stock Market for the last market trading day preceding the date that the Company’s Board of Directors awards the benefit. Options may be subject to vesting as determined by the Company's Board of Directors or Compensation Committee, and can be exercised for periods of up to ten years from the date of grant.

Compensation expense related to stock option awards of $481, $905 and $1,390 was included in benefits on the Company’s consolidated income statements for the years ended December 31, 2015, 2014 and 2013, respectively. Related income tax benefits recognized for the years ended December 31, 2015, 2014 and 2013 were $184, $346 and $531, respectively.

No stock option awards were granted in 2015 or 2014. The weighted average grant date fair value of options granted was $3.54 during 2013. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. Weighted-average assumptions used in the option pricing model for 2013 awards included an expected volatility rate of 30.61%, an expected dividend yield of 3.00%, a risk-free interest rate of 0.88% and an expected life of the options granted of 5.52 years.

Expected dividend yield is based on the Company’s annualized expected dividends per share divided by the average common stock price. Risk-free interest rate is based on the U.S. treasury constant maturity yield for treasury securities with maturities approximating the expected life of the options granted on the date of grant. The expected life of options is based on the Company’s historical exercise and post-vesting termination behaviors. Expected volatility is based on the historical volatility of the Company's common stock since the Company's initial public offering, which concluded on March 29, 2010.

The following table summarizes stock option activity under the Company’s active stock option plans for the year ended December 31, 2015:



	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contract Life
Outstanding options, beginning of year	1,748,032		$	17.01
Exercised	(350,438	)	16.77
Forfeited	(10,216	)	16.82
Outstanding options, end of year	1,387,378		$	17.06	3.68 years
Outstanding options exercisable, end of year	1,265,596		$	17.05	3.64 years

The total intrinsic value of fully-vested stock options outstanding as of December 31, 2015 was $15,218. The total intrinsic value of options exercised was $3,931, $7,363 and $7,108 during the years ended December 31, 2015, 2014 and 2013, respectively. The actual tax benefit realized for the tax deduction from option exercises totaled $1,504, $2,594 and $1,963 for the years ended December 31, 2015, 2014 and 2013, respectively. The Company received cash of $3,369, $6,299 and $9,271 from stock option exercises during the years ended December 31, 2015, 2014 and 2013, respectively. The Company redeemed common stock with aggregate values of $2,507, $6,829 and $8,721 tendered in payment for stock option exercises during the years ended December 31, 2015, 2014 and 2013, respectively.

Information with respect to the Company’s nonvested stock options as of and for the year ended December 31, 2015 follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Nonvested stock options, beginning of year	355,022		$	3.62
Vested	(225,961	)	3.73
Forfeited	(7,279	)	3.48
Nonvested stock options, end of year	121,782		$	3.48

As of December 31, 2015, there was $52 of unrecognized compensation cost related to nonvested stock options granted under the Company’s active stock option plans. That cost is expected to be recognized over a weighted-average period of 00.12 years. The total fair value of shares vested during 2015 was $843.

Restricted Stock Awards. Common stock issued under the Company’s restricted stock plan may not be sold or otherwise transferred until restrictions have lapsed or performance objectives have been obtained. During the vesting periods, participants have voting rights and receive dividends on all time restricted shares and vesting performance restricted shares. Upon termination of employment, common shares upon which restrictions have not lapsed must be returned to the Company.

All restricted share awards are classified as equity awards. The fair value of equity-classified restricted stock awards is amortized as compensation expense on a straight-line basis over the period restrictions lapse or performance goals are met. Compensation expense related to restricted stock awards of $2,887, $2,109 and $1,546 was included in benefits on the Company’s consolidated statements of income for the years ended December 31, 2015, 2014 and 2013, respectively. Related income tax benefits recognized for the years ended December 31, 2015, 2014 and 2013 were $1,104, $807 and $591, respectively.

The following table presents information regarding the Company’s restricted stock as of December 31, 2015:



	Number of Shares		Weighted-Average Measurement Date Fair Value
Restricted stock, beginning of year	248,399		$	21.16
Granted	169,577		26.27
Vested	(95,153	)	18.65
Forfeited	(16,583	)	24.07
Canceled	(2,601	)	17.22
Restricted stock, end of year	303,639		$	25.15

During 2015, the Company issued 169,577 restricted common shares. The 2015 restricted share awards included 78,378 performance restricted shares of which 26,126 vest in varying percentages upon achievement of defined return on asset performance goals, 26,126 vest in varying percentages upon achievement of defined return on equity performance goals and 26,126 vest in varying percentages upon achievement of defined total return to shareholder goals. Vesting of the performance restricted shares is also contingent on employment as of December 31, 2017. Additionally, 91,199 time-restricted shares were issued during 2015 that vest one-third on each annual anniversary of the grant date through September 24, 2018, contingent on continued employment through the vesting date.

As of December 31, 2015, there was $4,444 of unrecognized compensation cost related to nonvested restricted stock awards expected to be recognized over a period of 1.80 years.