Note 5. Stockholders' Equity

Dividends

On January 16, 2019, our board of directors declared a quarterly dividend of $0.43 per share of common stock to be paid in cash on February 27, 2019 to shareholders of record at the close of business on January 31, 2019. We paid aggregate annual dividends per share of $1.54, $1.28, and $1.20 in 2018, 2017, and 2016, respectively.

Stock Options

Effective January 2, 2019, the compensation committee of our board of directors granted to our employees options to purchase a total of 643,957 shares of our common stock at an exercise strike price of $52.00 per share. The closing stock price on the effective date of the grant was $51.41 per share. On the same date, certain of our non-employee directors elected to forgo all or a portion of the 2019 annual cash retainer in exchange for options to acquire a total of 14,505 shares of our common stock at an exercise price of $52.00 per share.

The following tables summarize the details of options granted under our stock option plans that were still outstanding as of December 31, 2018, and the assumptions used to value those grants. All such grants were effective at the close of business on the date of grant.



	Options Granted	Option Exercise (Strike) Price		Closing Stock Price on Date of Grant		December 31, 2018
Date of Grant	Options Granted	Option Exercise (Strike) Price		Closing Stock Price on Date of Grant		Options Outstanding	Options Exercisable
January 2, 2018	543,968	$	55.00	$	54.54	524,256	21,185
January 3, 2017	764,789	$	47.00	$	46.95	679,700	—
April 19, 2016	845,440	$	46.00	$	45.74	683,889	194,672
April 21, 2015	893,220	$	42.00	$	41.26	622,301	185,528
April 22, 2014	955,000	$	56.00	$	50.53	511,250	332,250
April 16, 2013	205,000	$	54.00	$	49.25	88,123	54,380
April 17, 2012	1,235,000	$	54.00	$	49.01	812,063	700,813
April 19, 2011	410,000	$	35.00	$	31.78	49,650	37,150
April 20, 2010	530,000	$	30.00	$	27.13	28,400	28,400
Total	6,382,417					3,999,632	1,554,378



Date of Grant	Risk-free Interest Rate		Expected Life of Option in Years	Expected Dividend Yield		Expected Stock Volatility		Estimated Fair Value of Stock Option
January 2, 2018	2.2	%	5.00	2.3	%	23.45	%	$	10.03
January 3, 2017	1.9	%	5.00	2.6	%	24.49	%	$	8.40
April 19, 2016	1.3	%	5.00	2.6	%	26.34	%	$	8.18
April 21, 2015	1.3	%	5.00	2.7	%	26.84	%	$	7.35
April 22, 2014	1.8	%	5.00	2.0	%	28.55	%	$	9.57
April 16, 2013	0.7	%	5.00	1.6	%	37.42	%	$	12.66
April 17, 2012	0.9	%	5.00	1.4	%	39.25	%	$	13.69
April 19, 2011	2.1	%	5.00	1.6	%	39.33	%	$	11.20
April 20, 2010	2.6	%	5.00	1.5	%	39.10	%	$	8.14

All of the options in the tables above vest and become exercisable over a period of up to eight years. Generally, each option will terminate approximately nine years after the grant date.

The fair value of each share-based option is estimated on the date of grant using a Black-Scholes valuation method that uses the assumptions listed above. The risk-free interest rate is based on the U.S. Treasury rate over the expected life of the option at the time of grant. The expected life is the average length of time over which we expect the employee groups will exercise their options, which is based on historical experience with similar grants. The dividend yield is estimated over the expected life of the option based on our current dividend payout, historical dividends paid, and expected future cash dividends. Expected stock volatilities are based on the movement of our stock price over the most recent historical period equivalent to the expected life of the option.

A summary of activities under our stock option plans consisted of the following:



	Options Outstanding		Exercise Price⁽¹⁾		Remaining Life⁽²⁾
Outstanding as of January 1, 2018	3,948,908		$	48.28	5.89
Granted	543,968		$	55.00	9.00
Exercised	(310,383	)	$	43.31
Cancelled/forfeited	(182,861	)	$	48.86
Outstanding as of December 31, 2018	3,999,632		$	49.53	5.61
Exercisable as of December 31, 2018	1,554,378		$	51.06	3.69



	Options Outstanding		Exercise Price⁽¹⁾		Remaining Life⁽²⁾
Outstanding as of January 1, 2017	3,757,947		$	46.81	5.85
Granted	764,789		$	47.00	9.00
Exercised	(329,612	)	$	28.59
Cancelled/forfeited	(244,216	)	$	48.22
Outstanding as of December 31, 2017	3,948,908		$	48.28	5.89
Exercisable as of December 31, 2017	1,280,499		$	50.07	3.78

⁽¹⁾Weighted average exercise price.

⁽²⁾Weighted average remaining contractual life in years.

The total intrinsic value of stock options exercised during the years ended December 31, 2018, 2017, and 2016 was $4.2, $6.9, and $23.2, respectively. The intrinsic value represents the difference between the exercise price and fair value of the underlying shares at the date of exercise.

At December 31, 2018, there was $13.7 of total unrecognized stock-based compensation expense related to outstanding unvested stock options granted under the employee stock option plan. This expense is expected to be recognized over a weighted average period of 3.89 years. Any future change in estimated forfeitures will impact this amount. The total grant date fair value of stock options vested under our employee stock option plan during 2018, 2017, and 2016 was $5.3, $4.2, and $7.1, respectively.

Total stock-based compensation expense related to our employee stock option plan was $5.1, $5.2, and $4.1 for 2018, 2017, and 2016, respectively.

Earnings Per Share

The following tables present a reconciliation of the denominators used in the computation of basic and diluted earnings per share and a summary of the options to purchase shares of common stock which were excluded from the diluted earnings calculation because they were anti-dilutive:



Reconciliation	2018	2017	2016
Basic weighted average shares outstanding	286,966,917	288,208,435	288,949,525
Weighted shares assumed upon exercise of stock options	195,847	134,298	207,998
Diluted weighted average shares outstanding	287,162,764	288,342,733	289,157,523



Summary of Anti-dilutive Options Excluded	2018		2017	2016
Options to purchase shares of common stock	1,579,757		3,524,401	3,095,343
Weighted average exercise prices of options	$	55.02	49.85	50.09

Any dilutive impact summarized above related to periods when the average market price of our stock exceeded the exercise price of the potentially dilutive stock options then outstanding.