STOCKHOLDERS’ EQUITY

Stock-Based Compensation Plans

During the three months ended March 31, 2019, we had two stock benefits plans under which restricted stock, stock options and performance awards have been granted or remain outstanding: the Second Amended and Restated 2006 Long-Term Incentive Plan (the “Amended and Restated 2006 Plan”) and the 2017 Omnibus Incentive Plan (the “2017 Plan”). The Amended and Restated 2006 Plan was terminated upon the approval of the 2017 Plan at the annual shareholders meeting on May 17, 2017, however, the termination of the Amended and Restated 2006 Plan does not affect the awards previously issued and outstanding under the Amended and Restated 2006 Plan.

All stock-based plans are administered by the Compensation Committee appointed by our Board of Directors (the “Board”). The 2017 Plan provides for grants of options as non-qualified options or incentive stock options, restricted stock and performance awards. The 2017 Plan expires on May 17, 2027.

The status of each of the plans at March 31, 2019 is as follows (shares in thousands):



	Shares Reserved		Shares Available to Issue	Options Outstanding	Performance Awards Outstanding ⁽²⁾
Amended and Restated 2006 Plan	—		—	964	—
2017 Plan	2,455	⁽¹⁾	1,642	182	497
Total	2,455		1,642	1,146	497




(1)	Amount includes approximately 900,000 shares granted from the Amended and Restated 2006 Plan that were returned to the Company due to cancellations, to pay taxes on restricted stock vestings and to pay option price and taxes on option exercises.
(2)	Performance Awards are reserved at 200% of shares granted which is equal to the maximum payout in shares.

Restricted Stock

During the three months ended March 31, 2019, we issued restricted stock to certain key employees totaling 25,550 shares that vest over a three-year period and had an aggregate grant date market value of approximately $0.5 million at a weighted average stock price of $19.94. We recorded stock-based compensation expense, which is included in General, administrative and other expenses, for restricted stock awards of $245,000 and $217,000, during the three months ended March 31, 2018 and 2019, respectively.

As of March 31, 2019, we had approximately $2.0 million of total unrecognized compensation costs related to unvested restricted stock awards, which are expected to be recognized over a weighted average period of approximately 2.2 years.

Stock Options

During the three months ended March 31, 2019, we did not grant any stock options.

We recorded stock-based compensation expense, which is included in General, administrative and other expenses, for stock options of approximately $480,000 and $204,000, during the three months ended March 31, 2018 and 2019, respectively.

Performance Awards

During the three months ended March 31, 2019, we granted 248,500 performance awards to our leadership team and certain key employees, payable in shares. These awards will vest (if at all) on December 31, 2023, provided that certain criteria surrounding our common stock price within the fourth quarter of 2023 is achieved. The fair value of these performance awards was approximately $1.1 million.

The fair value of the performance awards are estimated on the date of grant using a Monte-Carlo simulation pricing model with the following assumptions:



	February 20, 2019
Performance period	February 20, 2019 - December 31, 2023
Simulation period (years)	4.86
Share price at grant date	$19.92
Expected volatility	25.7	%
Risk-free interest rate	2.47	%

We recorded stock-based compensation expense, which is included in General, administrative and other expenses, for performance awards of $276,000 and $19,000 during the three months ended March 31, 2018 and 2019, respectively.

Employee Stock Purchase Plan

During the three months ended March 31, 2019, employees purchased a total of 20,796 shares of common stock through our ESPP at a weighted average price of $13.18 per share. We recorded stock-based compensation expense, which is included in General, administrative and other expenses, for the ESPP totaling approximately $97,000 and $105,000 for the three months ended March 31, 2018 and 2019, respectively.

The fair value of the right (option) to purchase shares under the ESPP is estimated at the date of purchase with the four quarterly purchase dates using the following assumptions:



	2019
Dividend yield	0.01	%
Expected volatility	36.13	%
Risk-free interest rate	2.42%, 2.51%, 2.56%, 2.60%
Expected life (years)	0.25, 0.50, 0.75, 1.00

Expected volatilities are based on the historical volatility during the previous twelve months of the underlying common stock. The risk-free rate for the quarterly purchase periods is based on the U.S. Treasury yields in effect at the time of the purchase. The expected life of the ESPP grants represents the calendar quarters from the beginning of the year to the purchase date (end of each quarter).

Good to Great Incentive Program

During the three months ended March 31, 2019, we issued 14,844 shares of our common stock to certain employees, which were valued at approximately $294,000 at a grant date stock price of $19.92. During the three months ended March 31, 2018, we issued 5,712 shares of our common stock to certain employees, which were valued at approximately $145,000 at a grant date stock price of $25.43.

Director Compensation

Our Director Compensation Policy provides for the following: (i) each independent director is entitled to an annual retainer of $75,000, payable in quarterly installments of $18,750 each at the end of the quarter; and (ii) the Lead Director and chairman of our Audit Committee are entitled to an additional annual retainer of $10,000, payable in quarterly installments of $2,500 each at the end of each quarter, and the chairman of our Corporate Governance and Compensation Committees are entitled to an additional annual retainer of $5,000, payable in quarterly installments of $1,250 each at the end of each quarter. A director may elect to receive their annual retainer in unrestricted shares of our common stock by providing written notice as set forth in the Director Compensation Policy. The number of shares of such common stock shall be determined by dividing the cash amount of the retainer by the closing price of our common stock on the date of grant, which shall be the last business day of each quarter. Such common stock shall vest immediately upon grant. Any written notice to receive the retainer in common stock shall remain effective until notice otherwise is made in writing.

Pursuant to the Director Compensation Policy described above, for the three months ended March 31, 2019, we issued 2,012 shares of our common stock to two directors, which were valued at approximately $39,000 at a weighted average stock price of $19.25.

We recorded stock-based compensation expense, which is included in General, administrative and other expenses, related to annual retainers and common stock awards of approximately $84,000 and $114,000 for the three months ended March 31, 2018 and 2019, respectively.

Share Repurchase

At March 31, 2019, we had approximately $8.3 million available for repurchases under our share repurchase program. During the three months ended March 31, 2019, we did not purchase any shares of common stock pursuant to our share repurchase program.

Cash Dividends

For the three months ended March 31, 2018 and 2019, our Board declared the following dividends payable on the dates below (in millions, except per share amounts):



2018	Per Share		Dollar Value
March 1st	$	0.075	$	1.2


2019	Per Share		Dollar Value
March 1st	$	0.075	$	1.4

Accumulated other comprehensive income

Our components of accumulated other comprehensive income are as follows (in millions):



	Accumulated Other Comprehensive Income
Balance at December 31, 2018	$	—
Decrease in net unrealized gains associated with available-for-sale securities of the trusts	(5.3		)
Reclassification of net unrealized gain activity attributable to the Deferred preneed funeral and cemetery receipts held in trust and Care trusts’ corpus	5.3
Balance at March 31, 2019	$	—