Stock Plans

The 2016 Management Equity Incentive Plan provides for various forms of stock-based compensation for eligible key employees through May 2026. Management stock-based compensation includes stock options, restricted stock, restricted stock units and performance stock units. The 2017 Non-Employee Directors’ Equity Incentive Plan provides for grants of stock options and restricted stock to non-employee directors through May 2027. Stock options are granted at market prices and expire after ten years. Stock options are exercisable beginning three years after the grant date. Restricted stock and restricted stock units are granted without payment to the Company and generally vest three years after the grant date. Restricted stock and restricted stock units are valued at the market value of the stock on the grant date. Performance stock units with a market condition are valued at an estimated fair value using the Monte Carlo model. The final number of shares to be issued for performance stock units may range from zero to 200% of the target award based on achieving the specified performance targets over the performance period. In general, unvested stock options, restricted stock and performance stock units are forfeited if the participant’s employment with the Company terminates for any reason other than retirement, death or disability. We issue Treasury shares for stock option exercises and grants of restricted stock and performance stock. Please refer to Note 6 for further information regarding stock compensation share issuance. As of December 31, 2018, there were 1,054,730 and 114,878 shares, respectively, reserved for future grants under the management and non-employee directors’ equity incentive plans.

Stock-based compensation expense was as follows:



(In thousands)	2018		2017		2016
Restricted stock	$	6,221	$	4,691	$	3,456
Stock options	217		380		2,459
Performance stock	5,801		6,687		3,296
Total compensation expense before income taxes	12,239		11,758		9,211
Income tax benefit	2,974		4,440		3,375
Total compensation expense, net of income tax benefit	$	9,265	$	7,318	$	5,836

We did not capitalize any stock-based compensation expense, and all expense is recorded in selling, general and administrative expense in 2018, 2017, and 2016.

Stock option expense is based on the fair value of stock option grants estimated on the grant dates using the Black-Scholes option pricing model and the following weighted average assumptions for options granted in 2016. There were no stock options granted in 2018 and 2017.



	2016
Fair value per option	$	11.69
Risk-free interest rate	1.6		%
Expected dividend yield	2.8		%
Expected volatility	34		%
Expected life (years)	7.0

The risk-free interest rate is based on the U.S. Treasury Constant Maturity rates as of the grant date converted into an implied spot rate yield curve. Expected dividend yield is based on the most recent annualized dividend divided by the one year average closing share price. Expected volatility is based on the ten year historical volatility using daily stock prices. Expected life is based on historical stock option exercise data.

A summary of option activity follows:



	Shares		Weighted Average Exercise Price		Exercisable at Year-end
Outstanding January 1, 2016	1,694,675		$	36.69
Granted	235,233		44.50
Exercised	(341,063	)	37.34
Forfeited	(12,753	)	46.11
Outstanding December 31, 2016	1,576,092		37.63		1,098,615
Exercised	(620,646	)	29.75
Outstanding December 31, 2017	955,446		42.75		614,414
Exercised	(215,724	)	39.25
Forfeited	(4,721	)	44.50
Outstanding December 31, 2018	735,001		$	43.79	638,673

For various exercise price ranges, characteristics of outstanding and exercisable stock options at December 31, 2018 were as follows:



	Stock Options Outstanding
Range of Exercise Prices	Shares	Weighted-Average
Range of Exercise Prices	Shares	Exercise Price		Remaining Life
$17.83 – $33.00	39,485	$	25.01	0.90
$33.01 – $45.00	359,713	40.39		4.32
$45.01 – $51.69	335,803	49.64		4.65
$17.83 – $51.69	735,001	$	43.79	4.28



	Stock Options Exercisable
Range of Exercise Prices	Shares	Weighted-Average
Range of Exercise Prices	Shares	Exercise Price		Remaining Life
$17.83 – $33.00	39,485	$	25.01	0.90
$33.01 – $45.00	263,385	38.89		3.27
$45.01 – $51.69	335,803	49.64		4.65
$17.83 – $51.69	638,673	$	43.68	3.85

Cash received from the exercise of stock options was $8.6 million, $18.5 million and $12.5 million for the years ended December 31, 2018, 2017 and 2016, respectively. The tax benefit we realized from these exercises was $2.5 million, $7.4 million and $0.6 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Stock options become exercisable when they are vested. The aggregate intrinsic value of stock options exercisable at December 31, 2018 was $60.2 million. The aggregate intrinsic value of all stock options outstanding at December 31, 2018 was $69.3 million.

A summary of restricted stock and unit activity follows:



	Shares		Weighted Average Grant Date Fair Value
Unvested January 1, 2016	217,709		$	49.70
Granted	107,465		50.65
Vested	(76,568	)	49.12
Forfeited	(14,014	)	48.23
Unvested at December 31, 2016	234,592		49.76
Granted	72,878		75.27
Vested	(76,834	)	52.74
Forfeited	(3,475	)	50.46
Unvested at December 31, 2017	227,161		57.50
Granted	75,430		87.36
Vested	(92,401	)	58.10
Forfeited	(4,741	)	59.61
Unvested at December 31, 2018	205,449		$	68.97

A summary of performance stock unit activity follows:



	Shares		Weighted Average Grant Date Fair Value
Unvested at January 1, 2016	171,644		$	50.24
Granted	65,355		44.28
Vested	(31,093	)	58.54
Performance adjustments	(15,682	)	58.54
Forfeited	(3,603	)	44.47
Unvested at December 31, 2016	186,621		46.18
Granted	98,886		72.73
Vested	(72,504	)	57.19
Performance adjustments	29,183		57.27
Forfeited	—		—
Unvested at December 31, 2017	242,186		55.06
Granted	62,775		84.79
Vested	(41,660	)	40.23
Performance adjustments	(35,756	)	45.21
Forfeited	(8,659	)	44.53
Unvested at December 31, 2018	218,886		$	68.43

The 2018 performance adjustments above relate to adjustments made relative to awards that did not meet the performance targets when vested during 2018 including the final number of shares issued for the 2015 Management Performance Units, which were 93.6% of the target award based on Total Shareholder Return during the three year performance period, and vested in the first quarter of 2018.

During the years ended December 31, 2018, 2017 and 2016, the total intrinsic value of stock options exercised (the difference between the market price on the date of exercise and the option price paid to exercise the option) was $12.2 million, $29.3 million and $6.4 million, respectively. The fair values of restricted stock vested during the years ended December 31, 2018, 2017 and 2016 were $5.4 million, $4.1 million and $3.7 million, respectively. The fair value of performance stock units vested during the years ended December 31, 2018, 2017 and 2016 was $1.7 million, $4.1 million and $1.8 million, respectively.

On December 31, 2018, there was $8.1 million of unrecognized stock-based compensation expense. The weighted average period over which this expense is expected to be recognized was approximately 1.7 years.