4. Stock-Based Compensation Plans

Employee Stock Purchase Plan

On April 6, 2017, the Board of Directors approved the 2017 Employee Stock Purchase Plan (“2017 ESPP”), which was approved by shareholders at the 2017 Annual Shareholder meeting. The 2017 ESPP provides employees with an opportunity to purchase shares of common stock in the Company. The 1999 Employee Stock Purchase Plan terminated upon the August 1, 2017 effective date of the 2017 ESPP. Under the Company’s 2017 ESPP a total of 3,000,000 shares of the Company’s common stock have been reserved for issuance to eligible employees. Participating employees are permitted to designate up to the lesser of $25,000 or 10% of their annual base compensation, for the purchase of common stock under the ESPP. Purchases under the ESPP are made one calendar month after the end of each fiscal quarter. The price for shares of common stock purchased under the ESPP is 85% of the stock’s fair market value on the last business day of the three-month participation period. Shares issued under the ESPP during the nine months ended September 30, 2018 and 2017, totaled 112,549 and 121,765, respectively.

Stock-Based Payments

A summary of stock options issued pursuant to the Company’s stock incentive plans is as follows:


	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value of In-the- Money Options
Outstanding as of December 31, 2017		6,162,717		$	16.83
Granted		170,455			23.36
Exercised		(1,262,994	)		14.57
Forfeited		(81,881	)		18.62

Outstanding as of September 30, 2018		4,988,297		$	17.60		6.30	$	52,585,398

Exercisable as of September 30, 2018		3,533,425		$	16.84		5.64	$	39,930,860

The weighted-average grant date fair value of stock options granted during the nine months ended September 30, 2018 and 2017 was $7.03 and $6.24, respectively. The Company issued treasury shares for the exercise of stock options during the nine months ended September 30, 2018 and 2017. The total intrinsic value of stock options exercised during the nine months ended September 30, 2018 and 2017 was $13.6 million and $6.6 million, respectively.

The fair value of options that do not vest based on the achievement of certain market conditions granted during the nine months ended September 30, 2018 and 2017 were estimated on the date of grant using the Black-Scholes option-pricing model, a pricing model acceptable under U.S. GAAP, with the following weighted-average assumptions:


	Nine Months Ended			Nine Months Ended
	September 30, 2018			September 30, 2017
Expected life (years)		5.6			5.6
Interest rate		2.7	%		1.9	%
Volatility		26.4	%		29.4	%
Dividend yield		—			—

Expected volatilities are based on the Company’s historical common stock volatility derived from historical stock price data for historical periods commensurate with the options’ expected life. The expected life is the average number of years that the Company estimated that the options will be outstanding, based primarily on historical employee option exercise behavior. The risk-free interest rate is based on the implied yield currently available on United States Treasury zero coupon issues with a term equal to the expected term at the date of grant of the options. The expected dividend yield is zero as the Company has historically not paid dividends and does not anticipate dividends to be paid in the future.

Long-term Incentive Program Performance Share Awards

A summary of nonvested long-term incentive program performance share awards (“LTIP performance shares”) outstanding as of September 30, 2018, and changes during the period are as follows:


Nonvested LTIP Performance Shares	Number of Shares at Expected Attainment			Weighted- Average Grant Date Fair Value
Nonvested as of December 31, 2017		1,125,035		$	18.94
Forfeited		(89,582	)		19.24

Nonvested as of September 30, 2018		1,035,453		$	18.92

Restricted Share Awards

A summary of nonvested restricted share awards (“RSAs”) as of September 30, 2018, and changes during the period are as follows:


Nonvested Restricted Share Awards	Number of Restricted Share Awards			Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2017		503,237		$	20.63
Vested		(231,473	)		21.20
Forfeited		(47,411	)		19.88

Nonvested as of September 30, 2018		224,353		$	20.18

During the nine months ended September 30, 2018, a total of 231,473 RSA shares vested. The Company withheld 41,973 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

Performance-Based Restricted Share Awards

A summary of nonvested Performance-Based Restricted Share Awards (“PBRSAs”) as of September 30, 2018, and changes during the period are as follows:


Nonvested Performance-Based Restricted Share Awards	Number of Performance-Based Restricted Share Awards			Weighted-Average Grant Date Fair Value
Nonvested as of December 31, 2017		173,636		$	24.41
Vested		(173,636	)		24.41

Nonvested as of September 30, 2018		—		$	—

During the nine months ended September 30, 2018, a total of 173,636 PBRSA shares vested. The Company withheld 64,699 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

Total Shareholder Return Awards

During the nine months ended September 30, 2018 and 2017, the Company granted total shareholder return (“TSR”) awards, pursuant to the 2016 Equity and Performance Incentive Plan. TSRs are performance shares that are earned, if at all, based upon the Company’s total shareholder return as compared to a group of peer companies over a three-year performance period. The award payout can range from 0% to 200%. In order to determine the grant date fair value of the TSRs, a Monte Carlo simulation model is used. The Company recognizes compensation expense for TSRs over a three-year performance period based on the grant date fair value.

The grant date fair value of the TSRs was estimated using the following weighted-average assumptions:


	Nine Months Ended			Nine Months Ended
	September 30, 2018			September 30, 2017
Expected life (years)		2.9			2.9
Interest rate		2.4	%		1.5	%
Volatility		28.0	%		26.5	%
Dividend Yield		—			—

A summary of nonvested TSRs outstanding as of September 30, 2018, and changes during the period are as follows:


Nonvested Total Shareholder Return Awards	Number of Shares at Expected Attainment			Weighted- Average Grant Date Fair Value
Nonvested as of December 31, 2017		143,649		$	24.37
Granted		541,214			31.31
Forfeited		(33,970	)		29.90

Nonvested as of September 30, 2018		650,893		$	29.85

Restricted Share Units

During the nine months ended September 30, 2018, the Company granted restricted share units (“RSUs”) awards, pursuant to the 2016 Equity and Performance Incentive Plan. The awards generally have requisite service periods of three years and vest in increments of 33% on the anniversary of the grant dates. Under each arrangement, stock is issued without direct cost to the employee on the vesting date. The Company estimates the fair value of the RSUs based upon the market price of the Company’s stock at the date of grant. The Company recognizes compensation expense for RSUs on a straight-line basis over the requisite service period.

A summary of nonvested RSUs as of September 30, 2018, and changes during the period are as follows:


Nonvested Restricted Share Units	Number of Restricted Share Units			Weighted- Average Grant Date Fair Value
Nonvested as of December 31, 2017		—		$	—
Granted		714,123			23.81
Vested		(10,000	)		25.72
Forfeited		(38,739	)		23.36

Nonvested as of September 30, 2018		665,384		$	23.81

During the nine months ended September 30, 2018, a total of 10,000 RSU shares vested.

As of September 30, 2018, there were unrecognized compensation costs of $14.3 million related to the TSRs, $12.6 million related to RSUs, $5.8 million related to the LTIP performance shares, $3.7 million related to nonvested stock options, and $3.2 million related to the nonvested RSAs, which the Company expects to recognize over weighted-average periods of 2.3 years, 2.3 years, 1.3 years, 0.9 years, and 1.4 years, respectively.

The Company recorded stock-based compensation expenses recognized under ASC 718, Compensation – Stock Compensation, for the three months ended September 30, 2018 and 2017, related to stock options, LTIP performance shares, RSAs, PBRSAs, TSR shares, RSUs, and the ESPP of $6.5 million and $8.1 million, respectively, with corresponding tax benefits of $1.5 million and $2.7 million, respectively. The Company recorded stock-based compensation, for the nine months ended September 30, 2018 and 2017, of $20.6 million and $22.7 million, respectively, with corresponding tax benefits of $3.6 million and $7.7 million, respectively.