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Stockholders' Equity (Deficit) Stockholders' Equity (Deficit) | 12 Months Ended
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Dec. 31, 2018
Equity [Abstract] |
Stockholders' (Deficit) Equity | Stockholders’ Equity (Deficit) Repurchase of Common Stock In July 2015, our Board of Directors authorized a repurchase program of up to $1.5 billion of the Company’s common stock, reflecting its commitment to return value to shareholders. That repurchase program had no expiration date and replaced the previously authorized program, which was terminated. In March 2017, our Board of Directors authorized an increase to the existing share repurchase program by up to an additional $1.5 billion of the Company’s common stock. Additionally, on May 2, 2018, the Board of Directors increased the share repurchase program authorization to $1.0 billion. This new program has no expiration date and replaces the previous authorizations. Refer to Part II, Item 5., "Issuer Purchases of Equity Securities" for further information During the year ended December 31, 2018, we repurchased 14,898,454 shares for a total of approximately $651.4 million with an average share price of $43.72. During the year ended December 31, 2017, we repurchased 27,320,816 shares, for approximately $1.2 billion with an average share price of $45.44. These repurchases were made under privately negotiated, accelerated share repurchase programs or open market transactions pursuant to the share repurchase program previously approved by our Board of Directors. During the year ended December 31, 2018, share purchases under open market transactions were 13,678,818 shares, for approximately $571.4 million with an average share price of $41.77. In November 2017, the Company entered into an accelerated share repurchase agreement with a third-party financial institution to repurchase $400.0 million of the Company’s common stock. Through December 31, 2017, the Company had received a total of 7,089,056 shares under this agreement. At the conclusion of the program in February 2018, the Company received a total of 8,308,692 shares with an average price of $48.14. Dividends The following table shows our total cash dividends paid in the years ended December 31:
(In millions, except per share amounts) |  | Total Cash Dividends Paid |  | Total Cash Dividends Paid Per Common Share
2016 |  | $ | 121.6 |  |  | $ | 0.61 |
2017 |  | 119.7 |  |  | 0.64 |
2018 |  | 102.9 |  |  | 0.64 |
Total |  | $ | 344.2 |  |  |  |
On February 14, 2019, our Board of Directors declared a quarterly cash dividend of $0.16 per common share payable on March 22, 2019 to stockholders of record at the close of business on March 8, 2019. The estimated amount of this dividend payment is $24.9 million based on 156 million shares of our common stock issued and outstanding as of February 9, 2019. The dividend payments discussed above are recorded as reductions to cash and cash equivalents and retained earnings on our Consolidated Balance Sheets. Our credit facility and our notes contain covenants that restrict our ability to declare or pay dividends and repurchase stock. However, we do not believe these covenants are likely to materially limit the future payment of quarterly cash dividends on our common stock. From time to time, we may consider other means of returning value to our stockholders based on our consolidated financial condition and results of operations. There is no guarantee that our Board of Directors will declare any further dividends. Common Stock The following is a summary of changes during the years ended December 31, in shares of our common stock and common stock in treasury:
|  | 2018 |  | 2017 |  | 2016
Changes in common stock: |  |  |  |  |  |
Number of shares, beginning of year |  | 230,080,944 |  |  | 227,638,738 |  |  | 225,625,636 |
Restricted stock shares issued for new awards under the Omnibus Incentive Plan and 2005 Contingent Stock Plan(1) |  | 569,960 |  |  | 480,283 |  |  | 481,834 |
Restricted stock shares, forfeited(1) |  | (86,518 | ) |  | (184,235 | ) |  | (89,699 | )
Shares issued for vested restricted stock units |  | 151,280 |  |  | 607,231 |  |  | 179,826 |
Shares issued as part of acquisition(2) |  | 20,000 |  |  | — |  |  | — |
Shares issued for 2012 President and Chief Operating Officer (COO) Four-Year Award |  | — |  |  | — |  |  | 325,000 |
Shares issued for 2014 Special Performance Stock Units (PSU) Awards |  | 658,783 |  |  | 749,653 |  |  | — |
Shares issued for 2015 Three-Year PSU Awards |  | 129,139 |  |  | — |  |  | — |
Shares issued for 2014 Three-Year PSU Awards |  | — |  |  | 636,723 |  |  | — |
Shares issued for 2013 Three-Year PSU Awards |  | — |  |  | — |  |  | 1,074,017 |
Shares issued for Stock Leverage Opportunity Awards (SLO) |  | 109,841 |  |  | 136,783 |  |  | 20,587 |
Shares granted and issued under the Omnibus Incentive Plan and Directors Stock Plan to Directors |  | 10,841 |  |  | 15,768 |  |  | 21,537 |
Other activity(3) |  | (25,233 | ) |  | — |  |  | — |
Number of shares issued, end of year(1) |  | 231,619,037 |  |  | 230,080,944 |  |  | 227,638,738 |
Changes in common stock in treasury: |  |  |  |  |  |  |  |  |
Number of shares held, beginning of year |  | 61,485,423 |  |  | 34,156,355 |  |  | 29,612,337 |
Repurchase of common stock(4) |  | 14,826,924 |  |  | 27,320,816 |  |  | 4,680,313 |
Profit sharing contribution paid in stock |  | (538,524 | ) |  | (502,519 | ) |  | (830,613 | )
Restricted stock shares, forfeited |  | — |  |  | — |  |  | (1,813 | )
Shares withheld for taxes |  | 190,844 |  |  | 510,771 |  |  | 696,131 |
Number of shares held, end of year(4) |  | 75,964,667 |  |  | 61,485,423 |  |  | 34,156,355 |
Number of common stock outstanding, end of year |  | 155,654,370 |  |  | 168,595,521 |  |  | 193,482,383 |
(1) | As of December 31, 2018, there were 1,478 restricted stock shares issued for new awards under the Omnibus Incentive Plan and (5,024) restricted stock shares forfeited that were not yet reflected by our Recordkeeper. The table above and our Consolidated Balance Sheets reflects the number of shares issued per our Recordkeeper.
(2) | In connection with the acquisition of B+ Equipment in the third quarter of 2015, the Company issued 20,000 shares of restricted common stock on September 26, 2018 to certain former equity holders of B+ Equipment. These shares were issued in offshore transactions with no direct selling efforts in the United States and without registration under the Securities Act of 1933, as amended, in reliance upon the issuer safe harbor provided by Regulation S.
(3) | Other activity in 2018 primarily relates to prior period adjustment related to years not contained within the table.
(4) | As of December 31, 2018, there were 71,530 shares of common stock that had been repurchased by the Company but not yet reflected by the Recordkeeper. The table above and our Consolidated Balance Sheets reflects the number of shares held in treasury per our Recordkeeper.
Share-Based Compensation In 2014, the Board of Directors adopted, and its stockholders approved, the 2014 Omnibus Incentive Plan (“Omnibus Incentive Plan”). Under the Omnibus Incentive Plan, the maximum number of shares of Common Stock authorized was 4,250,000, plus total shares available to be issued as of May 22, 2014 under the 2002 Directors Stock Plan and the 2005 Contingent Stock Plan (collectively, the “Predecessor Plans”). The Omnibus Incentive Plan replaced the Predecessor Plans and no further awards were granted under the Predecessor Plans. The Omnibus Incentive Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, performance share units known as PSU awards, other stock awards and cash awards to officers, non-employee directors, key employees, consultants and advisors. In 2018, the Board of Directors adopted, and its shareholders approved an amendment and restatement to the 2014 Omnibus Incentive Plan. The amended plan adds 2,199,114 shares of common stock to the share pool previously available under the Omnibus Incentive Plan. Prior to the Omnibus Incentive Plan, the 2005 Contingent Stock Plan represented our sole long-term equity compensation program for officers and employees. The 2005 Contingent Stock Plan provided for awards of equity-based compensation, including restricted stock, restricted stock units, PSU awards and cash awards measured by share price, to our executive officers and other key employees, as well as U.S.-based key consultants. Prior to the Omnibus Incentive Plan, the 2002 Directors Stock Plan provided for annual grants of shares to non-employee directors, and interim grants of shares to eligible directors elected at times other than at an annual meeting, as all or part of the annual or interim retainer fees for non-employee directors. During 2002, we adopted a plan that permitted non-employee directors to elect to defer all or part of their annual retainer until the non-employee director retires from the Board of Directors. The non-employee director could elect to defer the portion of the annual retainer payable in shares of stock, as well as the portion, if any, payable in cash. Cash dividends on deferred shares are reinvested into additional deferred units in each non-employee director’s account. A summary of the changes in common shares available for awards under the Omnibus Incentive Plan and Predecessor Plans follows:
|  | 2018 |  | 2017 |  | 2016
Number of shares available, beginning of year |  | 3,668,954 |  |  | 5,385,870 |  |  | 7,694,739 |
Newly Registered Shares under Omnibus Incentive Plan |  | 2,199,114 |  |  | — |  |  | — |
Restricted stock shares issued for new awards under the Omnibus Incentive Plan and 2005 Contingent Stock Plan(1) |  | (571,438 | ) |  | (480,283 | ) |  | (481,834 | )
Restricted stock shares forfeited(1) |  | 91,542 |  |  | 184,235 |  |  | 87,886 |
Restricted stock units awarded |  | (219,923 | ) |  | (351,946 | ) |  | (428,595 | )
Restricted stock units forfeited |  | 64,122 |  |  | 288,801 |  |  | 29,774 |
Shares issued for 2012 President and COO Four-Year Award |  | — |  |  | — |  |  | (325,000 | )
Shares issued for 2014 Special PSU Awards |  | (658,783 | ) |  | (749,653 | ) |  | — |
Shares issued for 2015 Three-Year PSU Awards |  | (129,139 | ) |  | — |  |  | — |
Shares issued for 2014 Three-Year PSU Awards |  | — |  |  | (636,723 | ) |  | — |
Shares issued for 2013 Three-Year PSU Awards |  | — |  |  | — |  |  | (1,074,017 | )
Restricted stock units awarded for SLO Awards |  | (23,478 | ) |  | (44,254 | ) |  | (81,614 | )
SLO units forfeited |  | 817 |  |  | 3,639 |  |  | — |
Director shares granted and issued |  | (10,560 | ) |  | (15,491 | ) |  | (18,022 | )
Director units granted and deferred(2) |  | (16,505 | ) |  | (17,008 | ) |  | (17,447 | )
Shares withheld for taxes(3) |  | 94,624 |  |  | 101,767 |  |  | — |
Number of shares available, end of year(4) |  | 4,489,347 |  |  | 3,668,954 |  |  | 5,385,870 |
(1) | As of December 31, 2018, there were 1,478 restricted stock shares issued for new awards under the Omnibus Incentive Plan and (5,024) restricted stock shares forfeited that were not yet reflected by our Recordkeeper. The table above (shares available under the Omnibus Incentive Plan) reflects this activity as occurred creating a reconciling difference between shares issued and number of shares available under the Omnibus Plan.
(2) | Director units granted and deferred include the impact of share-settled dividends earned and deferred on deferred shares.
(3) | The Omnibus Incentive Plan and 2005 Contingent Stock Plan permit withholding of taxes and other charges that may be required by law to be paid attributable to awards by withholding a portion of the shares attributable to such awards.
(4) | The above table excludes approximately 1.0 million contingently issuable shares under the PSU awards and SLO awards, which represents the maximum number of shares that could be issued under those plans as of December 31, 2018.
We record share-based incentive compensation expense in selling, general and administrative expenses and cost of sales on our Consolidated Statements of Operations for both equity-classified awards and liability-classified awards. We record corresponding credit to additional paid-in capital within stockholders’ equity for equity-classified awards, and to either current or non-current liability for liability-classified awards based on the fair value of the share-based incentive compensation awards at the date of grant. Total expense for the liability-classified awards continues to be remeasured to fair value at the end of each reporting period. We recognize an expense or credit reflecting the straight-line recognition, net of estimated forfeitures, of the expected cost of the program. The number of PSUs earned may equal, exceed or be less than the targeted number of shares depending on whether the performance criteria are met, surpassed or not met. The following table summarizes the Company’s pre-tax share-based incentive compensation expense and related income tax benefit for the years ended December 31, 2018, 2017 and 2016 related to the Company’s PSU awards, SLO awards and restricted stock awards.
(In millions) |  | 2018 |  | 2017 |  | 2016
2018 Three-year PSU Awards |  | $ | 2.7 |  |  | $ | — |  |  | $ | — |
2017 Three-year PSU Awards(1) |  | 3.7 |  |  | 9.8 |  |  | — |
2017 COO and Chief Executive Officer-Designate 2017 New Hire Equity Awards |  | 0.2 |  |  | 0.1 |  |  | — |
2016 Three-year PSU Awards(1) |  | (3.0 | ) |  | 2.0 |  |  | 6.3 |
2016 President & CEO Inducement Award |  | — |  |  | 0.5 |  |  | 0.5 |
2015 Three-year PSU Awards |  | — |  |  | (0.8 | ) |  | 3.5 |
2014 Special PSU Awards(2) |  | — |  |  | 3.2 |  |  | 8.8 |
2014 Three-year PSU Awards |  | — |  |  | — |  |  | 4.9 |
2012 President & COO Four-year Incentive Compensation |  | — |  |  | — |  |  | 0.2 |
SLO Awards |  | 1.6 |  |  | 1.1 |  |  | 2.5 |
Other long-term share-based incentive compensation programs(3)(4) |  | 24.7 |  |  | 32.6 |  |  | 36.2 |
Total share-based incentive compensation expense(5) |  | $ | 29.9 |  |  | $ | 48.5 |  |  | $ | 62.9 |
Associated tax benefits recognized |  | $ | 4.9 |  |  | $ | 11.8 |  |  | $ | 19.7 |
(1) | On May 18, 2017, The Organization and Compensation Committee of our Board of Directors (“O&C Committee”) approved a change in the vesting policy regarding the existing 2017 Three-year PSU Awards and 2016 Three-year PSU Awards for Ilham Kadri. The approved change resulted in a pro-rata share of vesting calculated on the close date of the sale of Diversey. Dr. Kadri’s awards were still subject to the performance metrics stipulated in the plan documents, and will be paid out in accordance with the original planned timing.
(2) | The amount does not include expense related to the 2014 Special PSU awards that were settled in cash of $1.0 million in the year ended December 31, 2017.
(3) | The amount includes the expenses associated with the restricted stock awards consisting of restricted stock shares, restricted stock units and cash-settled restricted stock unit awards.
(4) | On August 4, 2017, the Equity Award Committee approved a change in the vesting condition regarding the existing long-term share based compensation programs transferring to Diversey as part of the sale of Diversey. The approved change resulted in a pro-rata share of vesting calculated on the close date of the sale of Diversey. In December 2018, the Equity Award Committee approved a change in the vesting condition for certain individuals who would be leaving the Company under a phase of our Reinvent SEE Restructuring program. For both modifications, we recorded the cumulative expense of the higher fair value of the impacted awards at modification approval.
(5) | The amounts do not include the expense related to our U.S. profit sharing contributions made in the form of our common stock as these contributions are not considered share-based incentive compensation.
Restricted Stock, Restricted Stock Units and Cash-Settled Restricted Stock Unit Awards Restricted stock, restricted stock units and cash-settled restricted stock unit awards (cash payment in an amount equal to the value of the shares on the vesting date) provide for a vesting period. Awards vest earlier in the event of the participant’s death or disability. If a participant terminates employment prior to vesting, then the award of restricted stock, restricted stock units or cash-settled restricted stock unit awards is forfeited, except for certain circumstances following a change in control. The O&C Committee may waive the forfeiture of all or a portion of an award. During the vesting period, holders of unvested shares of restricted stock (but not holders of unvested shares of restricted stock units or cash-settled restricted stock unit awards) are entitled to receive dividends on the same basis as dividends are paid to other stockholders and are entitled to vote the unvested shares. The following table summarizes activity for unvested restricted stock and restricted stock units for 2018:
|  | Restricted stock shares |  | Restricted stock units
|  | Shares |  | Weighted-Average per Share Fair Value on Grant Date |  | Aggregate Intrinsic Value (in millions) |  | Shares |  | Weighted-Average per Share Fair Value on Grant Date |  | Aggregate Intrinsic Value (in millions)
Non-vested at December 31, 2017 |  | 1,045,416 |  |  | $ | 45.21 |  |  |  |  |  | 557,422 |  |  | $ | 45.34 |  |  |  |
Granted |  | 571,438 |  |  | 44.24 |  |  |  |  |  | 219,923 |  |  | 44.60 |  |  |  |
Vested |  | (296,754 | ) |  | 45.34 |  |  | $ | 13.1 |  |  | (151,280 | ) |  | 45.28 |  |  | $ | 6.7 |
Forfeited or expired |  | (91,542 | ) |  | 45.46 |  |  |  |  | (64,122 | ) |  | 45.16 |  |  |
Non-vested at December 31, 2018 |  | 1,228,558 |  |  | $ | 44.98 |  |  |  |  |  | 561,943 |  |  | $ | 45.08 |  |  |  |
A summary of the Company’s fair values of its vested restricted stock shares and restricted stock units are shown in the following table:
(In millions) |  | 2018 |  | 2017 |  | 2016
Fair value of restricted stock shares vested |  | $ | 13.5 |  |  | $ | 19.5 |  |  | $ | 10.0 |
Fair value of restricted stock units vested |  | $ | 6.9 |  |  | $ | 22.4 |  |  | $ | 5.2 |
A summary of the Company’s unrecognized compensation cost and weighted average periods over which the compensation cost is expected to be recognized for its non-vested restricted stock shares and restricted stock units are shown in the following table:
(In millions) |  | Unrecognized Compensation Costs |  | Weighted Average to be recognized (in years)
Restricted Stock shares |  | $ | 25.2 |  |  | 1.3
Restricted Stock units |  | $ | 10.9 |  |  | 1.3
The non-vested cash awards excluded from table above had $0.9 million unrecognized compensation costs and weighted-average remaining contractual life of approximately 1.2 years. We have recognized a liability of $1.4 million in other non-current liabilities on our Consolidated Balance Sheets. PSU Awards Three-year PSU awards for 2016, 2017 and 2018 During the first 90 days of each year, the O&C Committee of our Board of Directors approves PSU awards for our executive officers and other selected key executives, which include for each officer or executive a target number of shares of common stock and performance goals and measures that will determine the percentage of the target award that is earned following the end of the three-year performance period. Following the end of the performance period, in addition to shares, participants will also receive a cash payment in the amount of the dividends (without interest) that would have been paid during the performance period on the number of shares that they have earned. Each PSU is subject to forfeiture if the recipient terminates employment with the Company prior to the end of the three-year award performance period for any reason other than death, disability or retirement. In the event of death, disability or retirement, a participant will receive a prorated payment based on such participant’s number of full months of service during the award performance period, further adjusted based on the achievement of the performance goals during the award performance period. All of these PSUs are classified as equity in the Consolidated Balance Sheets. The O&C Committee established principal performance goals, which are (i) total shareholder return for three-year performance period weighted at 50% for the 2016 awards and 34% for 2017 and 2018 awards; (ii) consolidated Adjusted EBITDA margin measured in the final year of the award weighted at 50% for the 2016 and 33% for 2017 and 2018 awards; and (iii) three-year compound annual growth rate of net trade sales weighted at 33% for the 2017 and 2018 awards. The total number of shares to be issued for these awards can range from zero to 200% of the target number of shares. PSUs – Adjusted EBITDA The PSUs granted based on Adjusted EBITDA are contingently awarded and will be payable in shares of the Company’s common stock based on the Company’s Adjusted EBITDA during the three years of the performance period compared a target set at the time of the grant by the O&C Committee. The fair value of the PSUs based on Adjusted EBITDA is based on grant date fair value which is equivalent to the closing price of one share of the Company’s common stock on the date of grant. The number of PSUs based on Adjusted EBITDA varies based on the probable outcome of the performance condition. The Company reassesses at each reporting date whether achievement of the performance condition is probable and accrues compensation expense if and when achievement of the performance condition is probable. The number of PSUs granted based on Adjusted EBITDA and the grant date fair value are shown in the following table:
|  | 2018 |  | 2017 |  | 2016
Number of units granted |  | 57,378 |  |  | 99,522 |  |  | 165,391 |
Weighted average fair value on grant date(1) |  | $ | 41.72 |  |  | $ | 45.21 |  |  | $ | 43.09 |
(1) | On May 18, 2017, the O&C Committee approved a change in the vesting policy regarding the existing 2017 Three-year PSU Awards and 2016 Three-year PSU Awards for Ilham Kadri. The modified vesting terms resulted in award modification accounting treatment. The Weighted average fair value on grant date reflects the impact of the fair value on date of modification for these awards.
PSUs – Total Shareholder Return (TSR) The PSUs granted based on TSR are contingently awarded and will be payable in shares of the Company’s common stock subject to the condition that the number of PSUs, if any, earned by the employees upon the expiration of a three-year award performance period is dependent on the Company’s TSR ranking relative to a peer group of companies. The fair value of the PSUs based on TSR was estimated on the grant date using a Monte Carlo Simulation. Other assumptions include the expected volatility of all companies included in the TSR, the historical share price returns analysis of all companies included in the TSR and assumes dividends are reinvested. The expected volatility was based on the historical volatility for a period of time that approximates the duration between the valuation date and the end of the performance period. The risk-free interest rate is based on the Zero-Coupon Treasury STRIP yield curve matching the term from the valuation date to the end of the performance period. Compensation expense for the PSUs based on TSR (which is considered a market condition) is a fixed amount determined at the grant date fair value and is recognized 100% over the three-year award performance period regardless of whether PSUs are awarded at the end of the award performance period. The number of PSUs granted based on TSR and the assumptions used to calculate the grant date fair value of the PSUs based on TSR are shown in the following table:
|  | 2018 |  | 2017 |  | 2016
Number of units granted |  | 56,829 |  |  | 100,958 |  |  | 124,755 |
Weighted average fair value on grant date(1) |  | $ | 43.40 |  |  | $ | 44.24 |  |  | $ | 54.94 |
Expected Price volatility(1) |  | 22.00 | % |  | 25.31 | % |  | 26.69 | %
Risk-free interest rate(1) |  | 2.00 | % |  | 1.56 | % |  | 0.98 | %
(1) | On May 18, 2017, the O&C Committee approved a change in the vesting policy regarding the existing 2017 three-year PSU Awards and 2016 three-year PSU Awards for Ilham Kadri. The modified vesting terms resulted in award modification accounting treatment. The Weighted average fair value on grant date reflects the impact of the fair value on date of modification for these awards.
PSUs - Net Trade Sales Compound Annual Growth Rate The PSUs granted based on Net Trade Sales Compound Annual Growth Rate (CAGR) are contingently awarded and will be payable in shares of the Company’s common stock based on the Company’s Net Trade Sales growth over a three-year award performance period compared to a target set at the time of the grant by the O&C Committee. The fair value of the PSUs based on Net Trade Sales Growth is based on grant date fair value which is equivalent to the closing price of one share of the Company’s common stock on the date of grant. The number of PSUs based on Net Trade Sales Growth varies based on the probable outcome of the performance condition. The Company reassesses at each reporting date whether achievement of the performance condition is probable and accrues compensation expense if and when achievement of the performance condition is probable. The number of PSUs granted based on Net Trade Sales Growth and the grant date fair value are shown in the following table:
|  | 2018 |  | 2017
Number of units granted |  | 57,378 |  |  | 99,522 |
Weighted average fair value on grant date(1) |  | $ | 41.72 |  |  | $ | 45.21 |
(1) | On May 18, 2017, the O&C Committee approved a change in the vesting policy regarding the existing 2017 three-year PSU Awards and 2016 three-year PSU Awards for Ilham Kadri. The modified vesting terms resulted in award modification accounting treatment. The Weighted average fair value on grant date reflects the impact of the fair value on date of modification for these awards.
The following table includes additional information related to estimated earned payout based on the probable outcome of the performance condition and market condition as of December 31, 2018:
|  | Estimated Payout %
|  | Net Trade Sales Growth |  | Adjusted EBITDA |  | TSR |  | Combined
2018 Three-year PSU Awards |  | 100 | % |  | 100 | % |  | 100 | % |  | 100 | %
2017 Three-year PSU Awards |  | 200 | % |  | 77 | % |  | 100 | % |  | 125 | %
2016 Three-year PSU Awards |  | NA |  |  | — | % |  | — | % |  | — | %
The following table summarizes activity for outstanding Three-year PSU awards (excluding 2014 Special PSU Award) for 2018:
|  | Shares |  | Aggregate Intrinsic Value (in millions)(2)
Outstanding at December 31, 2017 |  | 662,931 |  |  |  |
Granted(1) |  | 171,585 |  |  |  |
Converted |  | (176,169 | ) |  | $ | 7.5 |
Forfeited or expired |  | (14,491 | ) |  |
Outstanding at December 31, 2018 |  | 643,856 |  |  |  |
Fully vested at December 31, 2018 |  | 426,649 |  |  | $ | 14.9 |
(1) | This represents the target number of performance units granted. Actual number of PSUs earned, if any, is dependent upon performance and may range from 0% to 200% percent of the target.
(2) | The aggregate intrinsic value is based on the actual number of PSUs earned and vested at December 31, 2017 which were issued in February 2018.
The following table summarizes activity for non-vested Three-year PSU awards for 2018:
|  | Shares |  | Weighted-Average per Share Fair Value on Grant Date
Non-vested at December 31, 2017 |  | 118,956 |  |  | $ | 48.40 |
Granted |  | 171,585 |  |  | 42.29 |
Vested |  | (61,091 | ) |  | 47.50 |
Forfeited or expired |  | (12,243 | ) |  | 45.67 |
Non-vested at December 31, 2018 |  | 217,207 |  |  | $ | 42.94 |
A summary of the Company’s fair value for its vested three-year PSU awards is shown in the following table:
(In millions) |  | 2018 |  | 2017 |  | 2016
Fair value of three-year PSU awards vested |  | $ | 14.9 |  |  | $ | 24.0 |  |  | $ | 14.3 |
A summary of the Company’s unrecognized compensation cost for three-year PSU awards at the current estimated earned payout based on the probable outcome of the performance condition and weighted average periods over which the compensation cost is expected to be recognized as shown in the following table:
(In millions) |  | Unrecognized Compensation Costs |  | Weighted Average to be recognized (in years)
2018 Three-year PSU Awards |  | $ | 4.4 |  |  | 2
2017 Three-year PSU Awards |  | 0.9 |  |  | 1
2016 Three-year PSU Awards |  | — |  |  | 0
Chief Operating Officer (COO) and Chief Executive Officer-Designate 2017 New Hire Equity Awards On September 5, 2017, the Board elected Edward L. Doheny II, Chief Operating Officer and CEO-Designate and elected him as a Director of the Company effective September 18, 2017. Mr. Doheny worked on transitioning with Jerome Peribere until December 31, 2017 and then assumed the role and title of President and Chief Executive Officer effective as of January 1, 2018. Additionally, on September 5, 2017, the Company entered into an offer letter agreement, effective September 18, 2017, with Mr. Doheny. The Letter Agreement provides that Mr. Doheny will be granted on his start date two new-hire equity awards, one that is time-vesting and the other that is performance-vesting (the “New Hire Awards”). The time-vesting New Hire Award, for 30,000 shares, requires Mr. Doheny to remain in service with the Company through December 31, 2020. The grant date fair value for this award was $42.89 per share. The performance-vesting New Hire Award, for 70,000 shares, in addition to the time-vesting requirement noted above, requires that either (i) the Company’s cumulative total stockholder return for 2018-2020 be in the top 33% of its peers (using the same peers and methodology under the Company’s performance stock unit (PSU) awards) and the Company’s stock price as of December 31, 2020 equals at least $60.00 per share, or (ii) the Company’s stock price as of December 31, 2020 equals at least $75.00 per share. The Letter Agreement provides that the stock price as of December 31, 2020 for this purpose will be determined using a 30-day arithmetic mean of closing prices. Since the award includes a market condition, compensation expense will be recognized regardless of whether the market condition is satisfied provided that the requisite service has been provided. The grant date fair value for this award was determined using a Monte Carlo Simulation model that incorporates predictive modeling techniques using Geometric Brownian Motion and Crystal Ball’s random number generation. Other assumptions include the expected volatility of all companies included in the total shareholder return, valuation modeling of vesting payoff determination featuring both performance goals as noted above, the historical share price returns analysis of all companies included in the total shareholder return and assumes dividends are reinvested. The expected volatility was based on the historical volatility of peer companies for a period of time that approximates the duration between the beginning and the end of the performance period. The risk-free interest rate is based on the Zero-Coupon Treasury STRIP yield curve matching the term from the valuation date to the end of the performance period Compensation expense for the performance-vesting Inducement Award is a fixed amount determined at the grant date fair value and is recognized 100% from the time of the award to the end of the performance period regardless of whether shares are awarded at the end of the award performance period. The assumptions used to calculate the grant date fair value of the performance-vesting New Hire Award are shown in the following table:
|  | 2017 Performance-vesting New Hire Award
Fair value on grant date |  | $ | 10.63 |
Expected price volatility |  | 25.0 | %
Risk-free interest rate |  | 1.6 | %
The awards are described in further detail in Mr. Doheny’s Offer Letter filed with the SEC as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 7, 2017. President and Chief Executive Officer (CEO) 2016 Inducement Awards On January 15, 2016, Mr. Peribere entered into a letter agreement (the “Amendment Letter”) amending the terms of his employment letter with the Company dated August 28, 2012 to extend the term of Mr. Peribere’s employment and make certain compensation adjustments. The Amendment Letter also provides Mr. Peribere with two additional awards of restricted stock units under the Company’s 2014 Omnibus Incentive Plan (the “Inducement Awards”), one is time-vesting and the other is performance-vesting. The time-vesting Inducement Award, for 75,000 shares, requires Mr. Peribere to remain in service with the Company through December 31, 2017. The grant date fair value for this award was $39.95 per share. As of December 31, 2017, the requirements of the performance-vesting Inducement Awards were not met; as such, no shares vested for this Inducement Award. 2014 Special PSU Award During March 2014, the O&C Committee approved a special PSU award to the named executive officers and a broader group of other employees. The special PSU awards are earned principally based on achievement of specified levels of free cash flow, above targets established in the Company’s three-year strategic plan, over the three-year performance period of 2014-2016. In addition, no portion of an award is earned unless we achieve a minimum specified level of adjusted earnings per share for 2016, in order to balance the free cash flow goal with an appropriate focus on generating earnings. To further balance the incentives, the award earned based on free cash flow performance will be reduced by 25% if our relative TSR for the performance period is below the 50th percentile of an approved peer group of companies. Actual achievement of the award based on performance through 2016 was 200%, and the special PSUs earned were paid out in equal installments over two years. The first half was paid in 2017, and following the achievement of a 2017 performance requirement, the second half was paid in 2018. Based on the additional 2017 performance requirement, 658,783 shares were vested to individuals during the first quarter 2018. Stock Leverage Opportunity Awards Before the start of each performance year, certain key executives are eligible to elect to receive all or a portion of their annual cash bonus for that year, in increments of 25% of the annual bonus, as an award of restricted stock or restricted stock units under the Omnibus Incentive Plan in lieu of cash. The portion provided as an equity award may be given a premium to be determined by the O&C Committee each year and will be rounded up to the nearest whole share. The award will be granted following the end of the performance year and after determination by the O&C Committee of the amount of the annual bonus award for each executive officer and other selected key executives who has elected to take all or a portion of his or her annual bonus as an equity award, but no later than the March 15 following the end of the performance year. The equity award will be made in the form of an award of restricted stock units that will vest on the second anniversary of the grant date or earlier in the event of death, disability or retirement from employment with the Company, and the shares subject to the award will not be transferable by the recipient until the later of vesting or the second anniversary of the grant date. For the “principal portion” of the award that would have otherwise been paid in cash, the award vests upon any termination of employment, other than for cause. For the “premium portion” of the award, the award may early vest only in case of death, disability or retirement from the Company. Except as described above, if the recipient ceases to be employed by the Company prior to vesting, then the award is forfeited, except for certain circumstances following a change in control. SLO awards in the form of restricted stock units have no voting rights until shares are issued to them but do receive a cash payment in the amount of the dividends (without interest) on the shares they have earned at about the same time that shares are issued to them following vesting. The 2018 SLO awards comprise an estimated aggregate of 47,736 restricted stock units as of December 31, 2018. The final number of units issued will be determined based on Annual Incentive Plan payout. During 2018, 23,478 restricted units were issued for the 2017 annual incentive plan. We recorded $1.6 million, $1.1 million and $2.5 million in expense related to the SLO program in the years ended December 31, 2018, 2017 and 2016, respectively. We record compensation expense for these awards in selling, general and administrative expenses on the Consolidated Statements of Operations with a corresponding credit to additional paid-in capital within stockholders’ equity, based on the fair value of the awards at the end of each reporting period, which reflects the effects of stock price changes. The expense is recognized over a fifteen-month period. Other Common Stock Issuances We have historically issued shares of our common stock under our 2005 Contingent Stock Plan to selected U.S.-based consultants as compensation under consulting agreements primarily for research and development projects. We record the cost associated with these issuances on a straight-line basis based on each of the issuances’ vesting schedule. Current liability and unrecognized deferred compensation expense for these awards are not material as of December 31, 2018. In connection with the acquisition of B+ Equipment in the third quarter of 2015, the Company issued 20,000 shares of restricted common stock on September 26, 2018 to certain former equity holders of B+ Equipment. These shares were issued in offshore transactions with no direct selling efforts in the United States and without registration under the Securities Act of 1933, as amended, in reliance upon the issuer safe harbor provided by Regulation S. During 2017, we granted 30,506 performance share unit awards to key executives based on acquisition activity, of which 5,177 were forfeited during 2018. The performance metrics require the acquired business to reach certain performance based conditions over a set period of time. The fair value is determined on the grant date. The expense incurred for the year ended December 31, 2018 was $0.3 million.

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