Stock-Based Compensation Plans

The Company has a stock incentive plan, the 2009 Stock Option and Incentive Plan (the "2009 Plan"). The 2009 Plan includes an authorization to issue shares of the Company's common stock, par value $0.01 per share. At December 31, 2014, the Company has 1,673,193 shares remaining available to issue under the 2009 Plan, exclusive of shares that may be issued to satisfy currently outstanding awards such as stock options or performance awards. In addition, any awards that were outstanding under the Company's1994 Stock Option and Incentive Plan (the "1994 Plan") on May 21, 2009, the date the Company adopted the 2009 Plan, that are subsequently forfeited, canceled, surrendered or terminated (other than by exercise) will become available for awards under the 2009 Plan. The 2009 Plan provides for various types of equity awards to associates, officers, non-employee directors and other key personnel of the Company and its subsidiaries. The types of awards that may be granted under the 2009 Plan include restricted and deferred stock, stock options that qualify as incentive stock options ("ISOs") under Section 422 of the Code, non-qualified stock options and stock appreciation rights. The 2009 Plan will expire on May 21, 2019.

Information with respect to stock options granted under the 2009 and 1994 Plans is as follows:



	2009 Plan shares		Weighted average exercise price per share		1994 Plan shares		Weighted average exercise price per share
Options Outstanding, December 31, 2011	247,403		$	98.42	1,112,959		$	94.10
Exercised	(43,265	)	85.09		(364,519	)	68.21
Granted	115,303		133.16		—		—
Forfeited	(11,887	)	115.15		(28,610	)	139.58
Options Outstanding, December 31, 2012	307,554		$	112.67	719,830		$	105.40
Exercised	(19,949	)	84.43		(24,292	)	79.42
Granted	215,230		129.03		—		—
Forfeited	(1,267	)	131.56		(4,012	)	127.56
Options Outstanding, December 31, 2013	501,568		$	120.77	691,526		$	106.19
Exercised	(157,454	)	116.40		(342,743	)	99.03
Granted	—		—		—		—
Forfeited	(4,052	)	131.05		(76,381	)	142.66
Options Outstanding, December 31, 2014	340,062		$	122.67	272,402		$	104.96
Options Exercisable:
December 31, 2012	74,618		$	97.46	719,830		$	105.40
December 31, 2013	184,167		$	107.18	691,526		$	106.19
December 31, 2014	185,227		$	116.71	272,402		$	104.96

The following summarizes the exercise prices and contractual lives of options outstanding as of December 31, 2014:



2009 Plan Number of Options	Range—Exercise Price			Weighted Average Remaining Contractual Term (in years)
32,821	$70.00	-	$79.99	5.1
51,808	110.00	-	119.99	6.1
63,961	120.00	-	129.99	8.2
189,973	130.00	-	139.99	7.6
1,499	140.00	-	149.99	7.5
340,062



1994 Plan Number of Options	Range—Exercise Price			Weighted Average Remaining Contractual Term (in years)
43,806	$40.00	-	$49.99	4.1
92	60.00	-	69.99	0.1
730	70.00	-	79.99	0.5
66,101	80.00	-	89.99	3.1
52,720	90.00	-	99.99	1.1
108,953	140.00	-	149.99	2.1
272,402

Options outstanding under the 2009 and 1994 Plans at December 31, 2014 had an intrinsic value of $13,849,000 and $15,915,000, respectively. Options exercisable under the 2009 and 1994 Plans at December 31, 2014 had an intrinsic value of $8,647,000 and $15,915,000, respectively. Options exercisable under the 2009 and 1994 Plans had a weighted average contractual life of 7.3 years and 2.5 years, respectively. The intrinsic value of options exercised during 2014, 2013 and 2012 was $20,028,000, $2,395,000 and $26,746,000, respectively.

The cost related to stock-based employee compensation for employee stock options included in the determination of net income is based on estimated forfeitures for the given year. Estimated forfeitures are adjusted to reflect actual forfeitures at the end of the vesting period. The following table summarizes the weighted average fair value of employee stock options for 2013 and 2012 and the associated assumptions used to calculate the value. There were no stock options granted in 2014.



	2013			2012
Weighted average fair value per share	$	26.78		$	29.11
Life of options (in years)	5.0			5.0
Dividend yield	3.7		%	3.5		%
Volatility	34.00		%	35.00		%
Risk-free interest rate	0.91		%	0.87		%

During 2013, the Company adopted a revised compensation framework under which share-based compensation will be granted, composed of annual awards and multiyear long term incentive performance awards. Annual awards will include restricted stock awards for which one third of the award will vest annually over a three year period following the measurement period. Under the multiyear long term incentive component of the revised framework, the Company will grant a target number of restricted stock units, with the ultimate award determined by the total shareholder return of the Company's common stock and/or operating performance metrics, measured in each case over a measurement period of up to three years. The share-based compensation earned will be in the form of restricted stock, or upon election of the recipient, up to 25% in the form of stock options, for which one third of the award will vest annually over a three year period following the measurement period.

The Company granted 131,980 restricted stock units net of forfeitures, with an estimated aggregate compensation cost of $15,522,000, as part of its stock-based compensation plan during the year ended December 31, 2014. The amount of restricted stock ultimately earned is based on the total shareholder return metrics related to the Company’s common stock for 58,206 restricted stock units and financial metrics related to operating performance and leverage metrics of the Company for 73,774 restricted stock units. For the portion of the grant for which the award is determined by the total shareholder return of the Company’s common stock, the Company used a Monte Carlo model to assess the compensation cost associated with the restricted stock units. The estimated compensation cost was derived using the following assumptions: baseline share value of $128.97; dividend yield of approximately 3.6%; estimated volatility figures ranging from 17.6% to 18.6% over the life of the plan for the Company using 50% historical volatility and 50% implied volatility; and risk free rates over the life of the plan ranging from 0.04% to 0.72%; resulting in an average estimated fair value per restricted stock unit of $103.20. For the portion of the grant for which the award is determined by financial metrics, the estimated compensation cost was based on the baseline share value of $128.97 and the Company's estimate of corporate achievement for the financial metrics.

During the year ended December 31, 2014, the Company also issued 115,163 shares of restricted stock, of which 16,209 shares related to the conversion of restricted stock units to restricted shares, and the remaining 98,954 shares were new grants with a fair value of $12,799,000. The compensation cost was based on the share price at the grant date.

At December 31, 2014 and 2013, the Company had 190,240 and 182,083, respectively, outstanding unvested restricted shares granted under restricted stock awards. Restricted stock vesting during the year ended December 31, 2014 totaled 99,036 shares, of which 5,073 shares related to the conversion of restricted stock units and 93,963 shares related to restricted stock awards, which had fair values at the grant date ranging from $74.20 to $163.39 per share. The total fair value of shares vested under restricted stock awards was $11,352,000, $14,832,000 and $36,337,000 for the years ended December 31, 2014, 2013 and 2012, respectively.

Total employee stock-based compensation cost recognized in income was $13,314,000, $17,775,000 and $9,961,000 for the years ended December 31, 2014, 2013 and 2012, respectively, and total capitalized stock-based compensation cost was $5,457,000, $8,379,000 and $5,140,000 for the years ended December 31, 2014, 2013 and 2012, respectively. At December 31, 2014, there was a total unrecognized compensation cost of $1,058,000 for unvested stock options and $19,559,000 for unvested restricted stock and restricted stock units, which does not include estimated forfeitures. The unrecognized compensation cost for unvested stock options and restricted stock and restricted stock units is expected to be recognized over a weighted average period of 1.1 and 3.6 years, respectively.

The Company estimates the forfeiture of stock options and recognizes compensation cost net of the estimated forfeitures. The estimated forfeitures included in compensation cost are adjusted to reflect actual forfeitures at the end of the vesting period. The forfeiture rate at December 31, 2014 was 1.4%. The application of estimated forfeitures did not materially impact compensation expense for the years ended December 31, 2014, 2013 and 2012.

Employee Stock Purchase Plan

In October 1996, the Company adopted the 1996 Non-Qualified Employee Stock Purchase Plan (as amended, the "ESPP"). Initially 1,000,000 shares of common stock were reserved for issuance under this plan. There are currently 714,827 shares remaining available for issuance under the ESPP. Full-time employees of the Company generally are eligible to participate in the ESPP if, as of the last day of the applicable election period, they have been employed by the Company for at least one month. All other employees of the Company are eligible to participate provided that, as of the applicable election period, they have been employed by the Company for 12 months. Under the ESPP, eligible employees are permitted to acquire shares of the Company's common stock through payroll deductions, subject to maximum purchase limitations. During 2013, the purchase period was a period of seven months beginning April 1 and ending October 30. The Company modified the ESPP beginning in 2014, establishing two purchase periods of approximately six months each. The first purchase period begins January 1 and ends June 10, and the second purchase period begins July 1 and ends December 10. The purchase price for common stock purchased under the plan is 85% of the lesser of the fair market value of the Company's common stock on the first day of the applicable purchase period or the last day of the applicable purchase period. The offering dates, purchase dates and duration of purchase periods may be changed, if the change is announced prior to the beginning of the affected date or purchase period. The Company issued 9,848, 9,260 and 6,260 shares and recognized compensation expense of $407,000, $174,000 and $127,000 under the ESPP for the years ended December 31, 2014, 2013 and 2012, respectively. The Company accounts for transactions under the ESPP using the fair value method prescribed by accounting guidance applicable to entities that use employee share purchase plans.