15. Stock-based compensation

In March 2012, the Company’s shareholders approved the 2011 Equity Incentive Plan which superseded the Company’s 1997 Equity Incentive Plan. Under these plans, the Company is authorized to grant stock options, restricted stock units (“RSUs”) and other forms of equity awards to officers, employees and directors of the Company. At September 30, 2012, 1,647,669 million shares remained available for grants under the Company’s stock plans. The Company typically issues new shares in satisfying its obligations under its stock plans.

In recent years, the Company has granted equity awards to officers, employees and directors in the form of RSUs. Generally, RSUs issued before 2009 vest ratably over six years. RSUs issued since then vest ratably over five years. The fair value of the RSUs, based on the Company’s stock price at the grant date, is expensed in equal installments over the vesting period. For the fiscal years ended September 30, 2012, 2011 and 2010, compensation expense recognized related to RSUs was $12.1 million, $9.4 million and $7.1 million, respectively. Employees who are granted RSUs also receive dividend-equivalent payments in the form of additional RSUs. However, until the shares are issued, they have no voting rights and employees may not buy or sell these RSUs. In the event that an award is forfeited, the dividend-equivalent payments received by the holder with respect to that award are also forfeited.

A summary of the Company’s RSU activity for the year ended September 30, 2012, is as follows:

The weighted-average grant-date fair value of RSUs granted in the years ended September 30, 2011 and 2010 was $31.80 and $23.58, respectively. The total fair value of RSUs vesting during the year was $25.0 million, $14.5 million and $9.9 million in the years ended September 30, 2012, 2011 and 2010, respectively. As of September 30, 2012, the total remaining unrecognized compensation cost related to unvested RSUs was $28.1 million. This charge is expected to be realized over 4 years, with a weighted average life of 1.6 years.

The Company previously granted stock options to certain employees. These were granted at exercise prices equal to the fair market value of the Company’s common stock at the date of grant and generally vest ratably over a period of four years. Options issued prior to fiscal 2005 expire ten years after date of grant; those issued since expire after six years. The Company has transitioned towards providing RSUs rather than options and, accordingly, no options have been granted since 2008. Compensation expenses related to stock options was less than $100,000 in the year ended September 30, 2012 and no future charges relating to stock options are anticipated. For the fiscal years ended September 30, 2011 and 2010, compensation expense related to stock options was $0.1 million and $0.8 million, respectively.

A summary of the Company’s stock option activity for the year ended September 30, 2012, is as follows:

The intrinsic value of outstanding and exercisable stock options at September 30, 2012, was $15.6 million with a weighted average remaining life of 2.5 years.

The following table summarizes information pertaining to the stock options vested and exercised for the years presented (in thousands):

The total income tax benefit recognized in the income statement for share-based compensation arrangements was $4.3 million, $3.7 million and $3.1 million for the fiscal years ended September 30, 2012, 2011 and 2010, respectively.

Employees are permitted to forfeit a certain number of shares to cover their personal tax liability. Amounts paid to cover this liability by the Company were $4.5 million, $3.5 million and $3.2 million in the years ended September 30, 2012, 2011 and 2010.

Cash flows resulting from the tax benefits generated from tax deductions in excess of the compensation costs recognized for those options and RSUs (excess tax benefits) are classified as financing cash flows.