We have equity-based compensation plans that authorize the issuance of equity-based awards for shares of Class A and Class B common stock to directors, officers and key employees. Equity-based compensation grants are designed to reward long-term contributions to Moog and provide incentives for recipients to remain with Moog.

On February 15, 2017, shareholders approved the Employee Stock Purchase Plan ("ESPP"). The ESPP allows for qualified employees (as defined in the plan) to purchase our common stock at a discounted price. The maximum discounted purchase price of a share of our common stock is 85% of the fair market value at the lower of the beginning or the end of the semi-annual offering period. During 2018, we issued 53,587 shares of Class B common stock at a weighted average price per share of $65.55.

The 2014 Long Term Incentive Plan ("2014 Plan") authorizes the issuance of a total of 2,000,000 shares of either Class A or Class B common stock. The 2014 Plan is intended to provide a flexible framework that permits the development and implementation of a variety of equity-based programs that base awards on key performance metrics as well as align our long term incentive compensation with our peers and shareholder interests.

During 2018, we granted awards in the form of stock appreciations rights (SARs), performance-based restricted stock units (PSUs) and restricted stock awards (RSAs). The compensation cost for employee and non-employee director equity-based compensation programs for all current and prior year awards granted are as follows:



	2018		2017		2016
Stock appreciation rights	$	2,617	$	3,045	$	2,482
Performance-based restricted stock units	1,650		978		755
Restricted stock awards	480		480		—
Employee stock purchase plan	1,057		74		—
Stock options	—		5		34
Total compensation cost before income taxes	$	5,804	$	4,582	$	3,271
Income tax benefit	$	1,136	$	1,567	$	1,184

In 2017, we adopted ASU no. 2016-09, “Improvements to Employee Share-Based Payment Accounting” and, as a result we derive a tax deduction measured by the excess of the market value over the grant price on the date equity-based awards are exercised.

The fair value of SARs granted was estimated on the date of grant using the Black-Scholes option-pricing model. The following table provides the range of assumptions used to value awards and the weighted-average fair value of the awards granted.



	2018			2017			2016
Expected volatility	25% - 26%			27% - 29%			24% - 29%
Risk-free rate	2.1%			1.7% - 1.8%			1.4% - 1.8%
Expected dividends	—		%	—		%	—		%
Expected term	5-6 years			5-6 years			4-6 years
Weighted-average fair value of awards granted	$	23.03		$	21.20		$	18.24

To determine expected volatility, we generally use historical volatility based on daily closing prices of our Class A and Class B common stock over periods that correlate with the expected terms of the awards granted. The risk-free rate is based on the United States Treasury yield curve at the time of grant for the appropriate expected term of the awards granted. Expected dividends are based on our history and expectation of dividend payouts. The expected term of equity-based awards is based on vesting schedules, expected exercise patterns and contractual terms.

The number of shares received upon the exercise of a SAR is equal in value to the difference between the fair market value of the common stock on the exercise date and the exercise price of the SAR. The term of a SAR may not exceed ten years from the grant date. The exercise price of SARs and options, determined by a committee of the Board of Directors, may not be less than the fair value of the common stock on the grant date.

SARs and options are as follows:



Stock Appreciation Rights	Number of Awards		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding at September 30, 2017	1,168,292		$	53.93
Granted in 2018	120,622		82.31
Exercised in 2018	(215,480	)	51.18
Forfeited in 2018	(10,665	)	69.14
Outstanding at September 29, 2018	1,062,769		$	57.56	5.5 years	$	29,180
Exercisable at September 29, 2018	797,467		$	51.67	4.6 years	$	27,019



Stock Options
Outstanding at September 30, 2017	24,682		$	42.45
Exercised in 2018	(24,682	)	42.45
Outstanding at September 29, 2018	—		$	—	0.0 years	$	—
Exercisable at September 29, 2018	—		$	—	0.0 years	$	—

The aggregate intrinsic value in the preceding tables represents the total pre-tax intrinsic value, based on our closing price of Class A common stock of $85.97 and Class B common stock of $83.25 as of September 29, 2018. That value would have been effectively received by the SAR holders had all SARs been exercised as of that date.

The intrinsic value of awards exercised and fair value of awards vested are as follows:



	2018		2017		2016
Stock Appreciation Rights
Intrinsic value of SARs exercised	$	7,268	$	13,363	$	865
Total fair value of SARs vested	$	3,282	$	4,044	$	5,876
Stock Options
Intrinsic value of options exercised	$	932	$	2,835	$	4,100
Total fair value of options vested	$	51	$	66	$	947

As of September 29, 2018, total unvested compensation expense associated with SARs amounted to $2,898 and will be recognized over a weighted-average period of two years.

PSU awards consist of shares of our stock which are payable upon the determination that we achieve certain established performance targets and can range from 0% to 200% of the targeted payout based on the actual results. PSU's granted in 2018 have a performance period of three years. The fair value of each PSU granted is equal to the fair market value of our common stock on the date of grant. PSUs granted generally have a three year period cliff vesting schedule; however, according to the grant agreements, if certain conditions are met, the employee (or beneficiary) will receive a prorated amount of the award based on active employment during the service period.

PSUs are as follows:



Performance-Based Restricted Stock Units	Number of Awards		Weighted- Average Grant Date Fair Value
Nonvested at September 30, 2017	72,750		$	68.39
Granted in 2018	33,778		82.31
Vested in 2018	(32,317	)	64.95
Forfeited in 2018	(6,225	)	69.11
Nonvested at September 29, 2018	67,986		$	76.88

As of September 29, 2018, total unvested compensation expense associated with nonvested PSUs amounted to $2,771 and will be recognized over a weighted-average period of two years.

The number of Class A and B common stock to be issued for PSU awards granted in 2016 that vested based on the achievement of performance targets in 2018, will be approximately 13,600 shares.