25.

Share-based payments

The Company has established equity compensation plans under which it administers restricted stock, stock options, and certain other equity-based awards to attract, retain, and motivate executive officers, certain key employees, and non-employee directors to compensate them for their contributions to the growth and profitability of the Company. Shares delivered under this award program may be sourced from treasury stock, or authorized unissued shares.

The Company’s equity compensation plans are accounted for under IFRS 2 Share-Based Payment (“IFRS 2”). IFRS 2 requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award or at fair value of the award at each reporting date, depending on the type of award granted. The resulting cost is recognized over the period during which an employee is required to provide service in exchange for the award, which is usually the vesting period.

The total compensation cost recognized for non-vested stock and options awards amounts to $7.4 million, $7.5 million, and $4.0 million in 2017, 2016, and 2015, respectively, and was recorded as a component of “Wages, salaries, benefits and other employees’ expenses” within operating expenses.

Non-vested Stock

The Company approved a non-vested stock bonus award for certain executive officers of the Company.

A summary of the terms and conditions, properly approved by the Compensation Committee of our Board of Directors, relating to the grants of the non-vested stock award under the equity compensation plan is as follows:


Grant date	Number of instruments		Vesting conditions	Contractual life
February, 2013		19,786	15% first three anniversaries	5 years
			25% fourth and 30% fifth anniversary
February, 2015		13,709	One-third every anniversary	3 years
April, 2015		4,915	15% first three anniversaries	5 years
			25% fourth anniversary 30% fifth anniversary
June, 2015		10,920	One-third every anniversary	3 years
June, 2015		4,912	Third anniversary	3 years
June, 2015		6,750	15% first three anniversaries	5 years
			25% fourth anniversary 30% fifth anniversary
December, 2015		429	Third anniversary	3 years
February, 2016		19,012	One-third every anniversary	3 years
February, 2016		147,000	15% first three anniversaries	5 years
			25% fourth anniversary 30% fifth anniversary
February, 2016		63,000	Fifth anniversary	5 years
May, 2016		7,899	15% first three anniversaries	5 years
			25% fourth anniversary 30% fifth anniversary
May, 2016		4,739	One-third every anniversary	3 years
June, 2016		25,280	One-third every anniversary	3 years
June, 2016		7,925	Third anniversary	3 years
September, 2016		6,668	Third anniversary	3 years
September, 2016		5,005	One-third every anniversary	3 years
February, 2017		22,012	One-third every anniversary	3 years
June, 2017		11,980	One-third every anniversary	3 years
June, 2017		2,237	Third anniversary	3 years

Non-vested stock awards were measured at their fair value on the grant date. For the 2017 grants, the fair value of these non-vested stock awards amounts to $107.29 per share (2016: $59.94, $63.3 and $59.94).

A summary of the non-vested stock award activity under the plan as of December 31, 2017 and 2016 with changes during these years is as follows (in number of shares):


	2017			2016			2015
Non-vested as of January 1		333,183			139,962			199,786
Granted		36,229			291,872			36,291
Vested		(62,224	)		(94,208	)		(94,704	)
Forfeited		(3,035	)		(4,443	)		(1,411	)

Non-vested as of December 31		304,153			333,183			139,962

The Company uses the accelerated attribution method to recognize the compensation cost for awards with graded vesting periods. The Company estimates that the remaining compensation cost, not yet recognized for the non-vested stock awards, amounts to $9.3 million (2016: $13.1 million), with a weighted average remaining contractual life of 2.1 years (2016: 2.8 years). Additionally, the Company estimates that the 2018 compensation cost related to these plans amounts to $4.9 million.

Stock options

In March 2007, Copa Holdings granted 35,657 equity stock options to certain named executive officers, which vested over three (3) years in yearly installments equal to one-third of the awarded stock on each of the three anniversaries of the grant date. The exercise price of the options amounts to $53.1, which was the market price of the Company’s stock at the grant date. The stock options have a contractual term of 10 years.

The weighted-average fair value of the stock options at the grant date amounts to $22.3 and was estimated using the Black-Scholes option-pricing model assuming an expected dividend yield of 0.58%, expected volatility of approximately 37.80% based on historical volatility, weighted average risk-free interest rate of 4.59%, and an expected term of 6 years calculated under the simplified method.

A summary of the options award activity under the plan as of December 31, 2017 and 2016 and changes during the year is as follows (in number of shares):


	2017			2016			2015
Outstanding as of January 1		19,894			20,940			20,940
Exercised		(11,061	)		(1,046	)		—
Forfeited		(8,833	)		—			—

Outstanding as of December 31		—			19,894			20,940

The Company uses the accelerated method to recognize the compensation cost for stock options. There is no additional compensation cost to be recognized for stock options. This option award expired on March 2017.

The Company plans to make additional equity-based awards under the plan from time to time, including additional non-vested stock and stock option awards. The Company anticipates that future employee non-vested stock and stock option awards granted pursuant to the plan will generally vest over a three to five year period and the stock options will carry a ten-year term.