Shared-based Compensation

3 Months Ended

Mar. 31, 2015

Share-Based Compensation [Abstract]

Shared-based Compensation

9. Shared-based Compensation

Stock Options:

The Company has issued non-qualified and incentive stock options to employees and nonemployee directors. The fair value of these options are estimated on the date of grant using the Black-Scholes option pricing model, which requires estimates of the expected term of the option, the expected volatility of the price of the Company’s common stock, dividend yield and the risk-free interest rate. Options outstanding as of March 31, 2015 vest over a period of three years with an expiration term of ten years. The exercise price of these options ranges from $24.26 to $31.55. The expected volatility is based on the historical volatility of the Company’s common stock over the period of time equivalent to the expected term for each award. Due to the Company’s lack of option exercise history, the expected term is calculated using the simplified method defined as the midpoint between the vesting period and the contractual term of each award. The risk free interest rate is based on the U.S. Treasury yield curve in effect on the date of grant which most closely corresponds to the expected term of the option. The Company historically has not issued dividends and therefore does not utilize a dividend yield in the calculation. The weighted average input assumptions used and resulting fair values were as follows:

	2015			2014
Expected life (in years)		6			6
Risk-free interest rate		1.72	%		1.61	%
Expected volatility		52.69	%		63.15	%
Dividend yield		-			-

The following table summarizes the stock option activity:

	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (Yrs)		Aggregate Intrinsic Value
Outstanding at December 31, 2014		67,375	$	26.05
Granted		53,500		31.55
Exercised		-		-
Forfeited		-		-
Expired		-		-
Outstanding at March 31, 2015		120,875	$	28.49		9.20		264,084
Exerciseable at March 31, 2015		36,281	$	26.29		8.68		137,633

The weighted-average grant date fair value of options granted was $16.00. The unrecognized compensation expense calculated under the fair value method for shares expected to vest as of March 31, 2015 was approximately $1.3 million and is expected to be recognized over a weighted average period of 2.5 years.

Restricted Stock:

The Company has issued restricted stock to employees and nonemployee directors generally with terms up to five years. The fair value is equal to the market price of the Company’s common stock on the date of grant. Expense for restricted stock is amortized ratably over the vesting period. The following table summarizes the restricted stock activity:

	Shares		Weighted-Average Grant Date Fair Value
Unvested at December 31, 2014		333,676	$	25.31
Granted		8,980		31.55
Vested		(75,703)		25.08
Forfeited		-		-
Unvested at March 31, 2015		266,953	$	25.59

The total costs of the options and restricted awards vested and charged against income during the three months ended March 31, 2015 and 2014 was $530,000 and $774,000, respectively. The Company accrued an additional $349,000 and $338,000 for performance awards for the three months ended March 31, 2015 and 2014, respectively. The cost of the 2015 awards will depend on the Company’s fiscal 2015 performance and will be finalized and approved at the first Board of Directors meeting in 2016. The cost recognized during the quarter is based on the performance that management expects the Company will achieve as of March 31, 2015. The total income tax benefit recognized in the consolidated statements of income for these restricted stock awards was approximately $210,000 and $243,000 for the three months ended March 31, 2015 and 2014, respectively. The total tax benefit recognized in additional paid-in capital upon vesting of restricted stock awards for the three months ended March 31, 2015 was $165,000. No tax benefit was recognized in additional paid-in capital upon vesting of the restricted stock awards in the three months ended March, 31 2014. There was approximately $5.4 million of total unrecognized compensation cost related to restricted stock awards as of March 31, 2015. The cost is expected to be recognized over a weighted-average period of approximately 2.7 years.