Equity Incentive Awards

We follow Codification Topic "Stock Compensation" ("FASB ASC 718") in accounting for our share-based payments. This guidance requires measurement of the cost of employee services received in exchange for stock compensation based on the grant-date fair value of the employee stock awards. This cost is recognized as compensation expense ratably over the employee's requisite service period. Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized when incurred. We use the Black-Scholes-Merton formula to estimate the value of stock options granted to employees, consultants and directors.

Our 2014 Equity Incentive Plan (the "2014 Plan") was adopted by our Board of Directors on March 11, 2014 and approved by our stockholders on May 13, 2014. Pursuant to the 2014 Plan, our officers, directors, employees and consultants may be awarded (i) shares of common stock ("Restricted Stock Grants"), (ii) options to acquire shares of common stock ("Options"), including non-qualified stock options and incentive stock options within the meaning of Section 422 of the Internal Revenue Code, and (iii) other forms of equity awards subject to conditions and restrictions determined by the Compensation, Nominating, and Corporate Governance Committee of our Board of Directors (the "Compensation Committee"). The Compensation Committee will determine the vesting schedule, if any, of each Restricted Stock Grant or Option and the term of each Option, which term shall not exceed ten years from the date of grant. Shares that do not vest are forfeited. Dividends paid on restricted stock are not returnable, even if the underlying stock does not entirely vest. A maximum of 3,750,000 shares of common stock are available for grant under the 2014 Plan. As of December 31, 2016, 3,264,054 shares remained available for grant.

Grants under the 2014 Plan are made by the Compensation Committee, which determines the individuals eligible to receive awards, the types of awards, and the terms, conditions and restrictions applicable to any award, except grants to directors which are made by the Board of Directors.

Grants Issued

On February 1, 2017, we awarded Restricted Stock Grants for 75,000 shares of common stock at a fair market value of approximately $5.4 million to certain members of our senior management for their service in 2017. These Restricted Stock Grants will vest on December, 31 2017.

On November 8, 2016, we awarded a Restricted Stock Grant for 228 shares of common stock at a fair market value of approximately $16,680 to a new member of our Board of Directors for services as Director rendered for the remainder of 2016. One-third of the shares of restricted common stock covered by this award will vest on each of May 8, 2017, November 8, 2017, and May 8, 2018.

On May 10, 2016, we awarded Restricted Stock Grants for 14,705 shares of common stock at a fair market value of approximately $1.1 million and awarded Options to purchase 7,550 shares of common stock with an exercise price of $74.53 per share to certain members of our Board of Directors. The shares of common stock covered by these awards are subject to multiple tranches that vest between November 10, 2016 and as late as May 10, 2019.

On February 1, 2016, we awarded Restricted Stock Grants for 73,000 shares of common stock at a fair market value of approximately $4.9 million to certain members of our senior management for their service in 2016. These Restricted Stock Grants vested on December 31, 2016.

On February 1, 2016, we awarded Restricted Stock Grants for 45,784 shares of common stock at a fair market value of approximately $3.1 million to certain members of the Board of Directors for services as Chairman of the Board, Chairman of the Compensation Committee and Lead Director, Chairman of the Executive Committee and Chairman of the Audit Committee in 2016. One-third of the shares of restricted common stock covered by these awards vested on each of December 31, 2016 and one third will vest on each of December 31, 2017, and December 31, 2018.

During the year ended December 31, 2015, we awarded Restricted Stock Grants for 158,014 shares of common stock at a fair market value of approximately $8.6 million to certain members of our senior management and Board of Directors for services rendered during 2015. Senior management Restricted Stock Grants vested on December 31, 2015, while Board of Director Restricted Stock Grants are subject to multiple tranches that vest between November 12, 2015 and December 31, 2017.

During the year ended December 31, 2014, we awarded Restricted Stock Grants for 186,666 shares of common stock at a fair market value of $8.0 million to certain members of our senior management and Board of Directors for services rendered during 2014. Senior management Restricted Stock Grants vested on December 31, 2014, while Board of Director Restricted Stock Grants were subject to multiple tranches that vested between September 13, 2013 and December 31, 2016.

The fair market value of our restricted stock grants is recorded as compensation expense and paid in capital over the vesting period.

Stock-based compensation expense, reported in "General and administrative" on the Consolidated Statements of Income and Comprehensive Income, for the years ended December 31, 2016, 2015 and 2014 was approximately $9.2 million, $8.6 million, and $7.6 million, respectively.

A summary of our restricted stock activity, and related information for the years ended December 31, 2016, 2015, and 2014 follows:



	Number of Shares		Weighted Average Grant Date Fair Value
Balance at December 31, 2013	99,788		$	37.17
Shares granted	186,666		42.61
Shares vested	(184,229	)	40.49
Balance at December 31, 2014	102,225		41.09
Shares granted	158,014		54.68
Shares vested	(174,739	)	49.17
Balance at December 31, 2015	85,500		49.72
Shares granted	133,726		68.21
Shares vested	(153,619	)	59.85
Balance at December 31, 2016	65,607		63.68

Compensation expense to be recognized subsequent to December 31, 2016 for Restricted Stock Grants issued prior to 2016 that have not yet vested was approximately $3.7 million, which is expected to be recognized over a weighted average term of 1.6 years.

Stock Options

The fair value of each grant is estimated on the grant date using the Black-Scholes-Merton model. The following table includes the assumptions that were made and the estimated fair values:



	2016
Dividend Yield	2.3		%
Risk-free interest rate	1.3		%
Expected Life	6 years
Expected Volatility	19.8		%
Estimated Grant Date Fair Value of Options	$	80,751

For the year ended December 31, 2016, 7,550 options were granted to our board members. No options were issued during the years ended December 31, 2015 and 2014. No options were forfeited or expired during the years ended December 31, 2016, 2015, and 2014.

A summary of our stock option activity, and related information for the years ended December 31, 2016, 2015 and 2014 follows:



	Shares Subject To Options		Weighted Average Exercise Price Per Share		Weighted Average Outstanding Contractual Life (in years)
Balance at December 31, 2014	1,085,600		$	21.95	2.1
Options exercised	(220,000	)	17.35
Balance at December 31, 2015	865,600		23.12		1.6
Options issued	7,550		74.53
Options exercised	(440,000	)	25.66
Balance at December 31, 2016	433,150		21.44		1.7
Exercisable at December 31, 2016	427,836		20.79		1.6

The intrinsic value of outstanding and exercisable stock options represents the excess of the closing stock price as of the end of the year, over the exercise price multiplied by the applicable number of shares that may be acquired upon exercise of stock options. No options were exercised for the year ending December 31, 2014, and the intrinsic value of exercised options for the year ending December 31, 2016 and 2015 was $18.3 million and $8.6 million, respectively. For the years ending December 31, 2016, 2015 and 2014, the intrinsic value of outstanding and exercisable options was $22.0 million, $37.7 million and $32.1 million, respectively.