NOTE 15. STOCK-BASED COMPENSATION PLANS

The Company's stock-based compensation plans provide for the issuance of incentive and nonqualified stock options, restricted stock and units, stock appreciation rights and performance-based awards. The Compensation Committee of CMC's Board of Directors (the "Compensation Committee") approves all awards that are granted under the Company's stock-based compensation plans. Stock-based compensation expense for the years ended August 31, 2018, 2017 and 2016 of $23.9 million, $30.3 million and $26.4 million, respectively, was mainly included in selling, general and administrative expenses on the Company's consolidated statements of earnings. As of August 31, 2018, total unrecognized compensation cost related to unvested stock-based compensation arrangements was $17.4 million, which is expected to be recognized over a weighted-average period of three years.

The following table summarizes the total awards granted:

As of August 31, 2018, the Company had 10,862,031 shares available for future grants.

Restricted Stock Units

Restricted stock units issued under the Company's stock-based compensation plans provide that units awarded may not be sold, transferred, pledged or assigned until service-based restrictions lapse. The restricted stock units granted to U.S. employees generally vest and are converted to shares of the Company's common stock in three equal installments on each of the first three anniversaries of the date of grant. The restricted stock units granted to non-U.S. employees generally vest and are settled in cash in three equal installments on each of the first three anniversaries of the date of grant. Generally, upon termination of employment, restricted stock units that have not vested are forfeited. Upon death, disability or qualifying retirement, a pro-rata portion of the unvested restricted stock awarded will vest and become payable.

The estimated fair value of the stock-settled restricted stock units is based on the closing price of the Company's common stock on the date of grant, discounted for the expected dividend yield through the vesting period. Compensation cost related to the stock-settled restricted stock units is recognized ratably over the service period and is included in equity on the Company's consolidated balance sheets. During the first quarter of fiscal 2017, certain restricted stock units and performance stock units (the "modified stock units") that were previously accounted for under the equity method were modified to allow optionality related to the net share settlement feature, which resulted in accounting for these awards under the liability method. During the first quarter of fiscal 2018, the modified stock units were further modified, causing such units to revert back to equity method accounting. The liability related to the cash-settled restricted stock units and modified stock units was included in accrued expenses and other payables on the Company's consolidated balance sheets. The Company recorded mark-to-market expense on liability-treated awards of $0.9 million and $2.8 million for the years ended August 31, 2018 and 2017, respectively, as a result of the modification and the impact of the change in stock value on liability-treated awards. The fair value of the cash-settled restricted stock units as well as the modified stock units is remeasured each reporting period and is recognized ratably over the service period.

Performance Stock Units

Performance stock units issued under the Company's stock-based compensation plans provide that units awarded may not be sold, transferred, pledged or assigned until service-based restrictions lapse and any performance objectives have been attained as established by the Compensation Committee. Recipients of these awards generally must be actively employed by and providing services to the Company on the last day of the performance period in order to receive an award payout. Upon death, disability or qualifying retirement, a pro-rata portion of the performance stock units will vest and become payable at the end of the performance period.

Compensation cost for performance stock units is accrued based on the probable outcome of specified performance conditions, net of estimated forfeitures. The Company accrues compensation cost if it is probable that the performance conditions will be met. The Company reassesses the probability of meeting the specified performance conditions at the end of each reporting period and adjusts compensation cost, as necessary, based on the probability of achieving the performance conditions. If the performance conditions are not met at the end of the performance period, the Company reverses the related compensation cost.

Performance targets established by the Compensation Committee for performance stock units awarded in fiscal years 2018, 2017 and 2016 were weighted 75% based on the Company's cumulative EBITDA targets and positive return on invested capital for the fiscal year in which the awards were granted and the succeeding two fiscal years, as approved by CMC's Board of Directors in the respective year's business plan, and 25% based on a three year relative total stockholder return metric. Performance stock units awarded to U.S. participants will be settled in shares of the Company's common stock. Award payouts range from a threshold of 50% to a maximum of 200% for each portion of the target awards. The performance stock units awarded in fiscal years 2018 and 2017 associated with the cumulative EBITDA targets have been classified as liability awards since the final EBITDA target will not be set until the third year of the performance period. Consequently, these awards were included in accrued expenses and other payables on the Company's consolidated balance sheets. The fair value of these performance stock units is remeasured each reporting period and is recognized ratably over the service period. The performance stock units associated with the total stockholder return metric were valued at fair value on the date of grant using the Monte Carlo pricing model and were included in equity on the Company's consolidated balance sheets.

Performance stock units awarded to non-U.S. participants in fiscal years 2018, 2017 and 2016 will be settled in cash. The fair value of the performance stock units is remeasured each reporting period and is recognized ratably over the service period. The liability related to these awards was included in accrued expenses and other payables on the Company's consolidated balance sheets.

Information for restricted stock units and performance stock units, excluding those expected to settle in cash, is as follows:



	Number		Weighted Average Grant-Date Fair Value
Outstanding as of August 31, 2015	2,733,334		$	15.86
Granted	1,612,772		15.83
Vested	(1,471,436	)	14.47
Forfeited	(174,440	)	17.60
Outstanding as of August 31, 2016	2,700,230		16.49
Granted	1,462,442		16.17
Vested	(1,385,753	)	17.62
Forfeited	(323,339	)	16.58
Outstanding as of August 31, 2017	2,453,580		15.65
Granted	1,216,461		20.69
Vested	(1,685,898	)	18.00
Forfeited	(183,425	)	15.89
Outstanding as of August 31, 2018	1,800,718		$	16.82

The total fair value of shares vested during fiscal years 2018, 2017 and 2016 was $30.3 million, $24.4 million and $21.3 million, respectively.

The Company granted 322,695 and 914,545 equivalent shares of restricted stock units and performance stock units accounted for as liability awards during the years ended August 31, 2018 and 2017, respectively. As of August 31, 2018, the Company had 768,252 equivalent shares of awards outstanding and expects 732,232 equivalent shares to vest.

Stock Appreciation Rights

Stock appreciation rights are awarded to certain employees with an exercise price equal to the market value of the Company's common stock on the date of grant. No stock appreciation rights were granted during the years ended August 31, 2018, 2017, and 2016.

Combined activity for the Company's stock appreciation rights, excluding the cash component, was as follows:



	Number		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding as of August 31, 2015	842,217		$	13.04
Exercised	(418,378	)	12.10
Forfeited/Expired	(64,845	)	11.60
Outstanding as of August 31, 2016	358,994		$	14.39	1.7	$	405,864
Exercised	(235,687	)	14.72
Forfeited/Expired	(14,000	)	14.05
Outstanding as of August 31, 2017	109,307		$	13.72	1.3	$	564,826
Exercised	(51,961	)	15.03
Forfeited/Expired	(9,107	)	13.17
Outstanding as of August 31, 2018	48,239		$	12.42	0.5	$	442,962
Exercisable at August 31, 2018	48,239		$	12.42	0.5	$	442,962
Remaining unvested stock appreciation rights expected to vest	—		$	—

The total intrinsic value of stock appreciation rights exercised during fiscal years 2018, 2017 and 2016 was $0.5 million, $1.4 million and $2.2 million, respectively.

Information related to stock appreciation rights as of August 31, 2018 is summarized below:



			Stock Appreciation Rights Outstanding and Exercisable
Range of Exercise Prices			Number Outstanding and Exercisable	Weighted Average Remaining Contractual Life (In Years)	Weighted Average Exercise Price
$11.60	-	14.12	48,239	0.5	$	12.42

As of August 31, 2018, the Company had no equivalent shares of cash-settled stock appreciation rights outstanding.

Stock Purchase Plan

Almost all U.S. resident employees with one year of service at the beginning of each calendar year may participate in the Company's employee stock purchase plan. Each eligible employee may purchase up to 400 shares annually. The Board of Directors established a 15% purchase discount based on market prices on specified dates for the years ended August 31, 2018, 2017 and 2016. Yearly activity of the stock purchase plan was as follows:



	2018		2017		2016
Shares subscribed	289,040		173,420		212,370
Price per share	$	17.84	$	18.99	$	12.03
Shares purchased	123,930		166,220		156,860
Price per share	$	18.99	$	12.04	$	13.71
Shares available for future issuance	3,281,014

Restricted Stock
Awards/Units

Performance
Awards