Stock-Based Compensation

Under the Equity Incentive Plan, amended and restated February 15, 2017 and approved by the stockholders of the Company on May 10, 2017 (the “EIP”), the Company may grant stock options (both incentive and nonqualified), stock appreciation rights, restricted stock and performance awards to key employees associated with the Company’s Class A stock. For shares granted prior to May 10, 2017, the EIP provides that the maximum number of shares available for grants is 15% of the outstanding Class A Stock, adjusted for EIP activity over the preceding five years. For shares granted after May 10, 2017, the amended EIP provides that the maximum number of shares available for grants is 4.7 million. The Company has no plans to issue additional shares under the provision that was in effect prior to May 10, 2017. Under the provision that was in effect for shares granted after May 10, 2017, shares available for future grants at year-end 2018 were 4.0 million. The Company issues shares out of treasury stock to satisfy stock-based awards. The Company presently has no intent to repurchase additional shares for the purpose of satisfying stock-based awards.

The Company recognized stock-based compensation cost of $8.1 million in 2018, $9.1 million in 2017 and $10.2 million in 2016, as well as related tax benefits of $4.4 million in 2018, $4.2 million in 2017 and $3.9 million in 2016.

Restricted Stock

Restricted stock, which typically vests over four years, is issued to certain key employees and is subject to forfeiture until the end of an established restriction period. The Company utilizes the market price of its Class A stock on the date of grant as the fair value of restricted stock and expenses the fair value on a straight-line basis over the vesting period.

A summary of the status of nonvested restricted stock under the EIP as of year-end 2018 and changes during this period is presented as follows below (in thousands of shares except per share data):



	Restricted Stock		Weighted Average Grant Date Fair Value
Nonvested at year-end 2017	440		$	18.76
Granted	157		28.79
Vested	(187	)	17.67
Forfeited	(54	)	20.78
Nonvested at year-end 2018	356		$	23.44

As of year-end 2018, unrecognized compensation cost related to unvested restricted stock totaled $6.1 million. The weighted average period over which this cost is expected to be recognized is approximately 1.8 years. The weighted average grant date fair value per share of restricted stock granted during 2018, 2017 and 2016 was $28.79, $21.97 and $17.08, respectively. The total fair value of restricted stock, which vested during 2018, 2017 and 2016, was $4.9 million, $5.8 million and $6.4 million, respectively.

Performance Shares

During 2018, 2017, and 2016, the Company granted performance awards associated with the Company’s Class A stock to certain senior officers. The payment of performance shares, which will be satisfied with the issuance of shares out of treasury stock, is contingent upon the achievement of specific gross profit and operating earnings performance goals over a stated period of time.

2018 Grant

For the 2018 performance share grant (“2018 grant”), the total target number of performance shares granted is 222,000, of which 177,000 shares are eligible to earn up to the maximum number of performance shares of 355,000, which assumes 200% of the target shares originally granted. Target shares of 118,000 may be earned upon achievement of two financial goals (“financial measure performance shares”) and target shares of 59,000 may be earned based on the Company’s total shareholder return (“TSR”) relative to the S&P SmallCap 600 Index (“TSR performance shares”). These financial measure performance and TSR performance shares have a three-year performance period through December 31, 2020 and if earned, will cliff-vest after the approval by the Compensation Committee, which will be no later than March 15, 2021, if not forfeited by the recipient. No dividends are paid on financial measure and TSR performance shares. The 2018 grant also included 45,000 single financial measure performance shares, which have one performance measure with a one-year performance period. These single financial measure performance shares vest over four years and earn dividends, which are not paid until the awards vest.

The financial measure performance shares have a weighted average grant date fair value of $28.40. For each of the two financial measures, there are annual goals set in February of each year, with the total award payout based on a cumulative average of the 2018, 2019, and 2020 goals. Accordingly, the Company remeasures the fair value of the 2018 financial measure performance shares each reporting period until the 2020 goals are set, after which the fair value will be fixed for the remaining performance period. As of year-end 2018, the current fair value for financial measure performance shares is $19.41. The total nonvested shares at maximum level (200%) related to financial measure performance awards at year-end 2018 is 219,000.

The TSR performance shares have an estimated fair value of $31.38, which was computed using a Monte Carlo simulation model incorporating assumptions for inputs of expected stock price volatility, dividend yield and risk-free rate. The total nonvested shares at maximum level (200%) related to TSR performance awards at year-end 2018 is 109,000.

2017 Grant

For the 2017 performance share grant (“2017 grant”), the total target number of performance shares granted is 387,000, of which 304,000 shares are eligible to earn up to the maximum number of performance shares of 609,000, which assumes 200% of the target shares originally granted. Target shares of 203,000 may be earned upon the achievement of two financial goals (“financial measure performance shares”) and target shares of 101,000 may be earned based on the Company’s total shareholder return relative to the S&P SmallCap 600 Index (“TSR performance shares”). These financial measure performance and TSR performance shares have a three-year performance period through December 31, 2019, and if earned, will cliff-vest after the approval by the Compensation Committee, which will be no later than March 15, 2020, if not forfeited by the recipient. No dividends are paid on financial measure and TSR performance shares. The 2017 grant also included 83,000 single financial measure performance shares, which have one performance measure with a one-year performance period. These single financial measure performance shares vest over four years and earn dividends, which are not paid until the awards vest.

The financial measure performance shares have a weighted average grant date fair value of $21.07. For each of the two financial measures, there are annual goals set in February of each year, with the total award payout based on a cumulative average of the 2017, 2018 and 2019 goals. Accordingly, the Company remeasures the fair value of the 2017 financial measure performance shares each reporting period until the 2019 goals are set, after which the fair value will be fixed for the remaining performance period. As of year-end 2018, the current fair value for financial measure performance shares is $19.41. The total nonvested shares at maximum level (200%) related to financial measure performance awards at year-end 2018 is 254,000.

The TSR performance shares have an estimated fair value of $20.16, which was computed using a Monte Carlo simulation model incorporating assumptions for inputs of expected stock price volatility, dividend yield and risk-free interest rate. The total nonvested shares at maximum level (200%) related to TSR performance awards at year-end 2018 is 127,000.

2016 Grant

For the 2016 performance share grant (“2016 grant”), the total target number of performance shares granted is 332,000, and the maximum number of performance shares that may be earned is 663,000, which assumes 200% of the target shares originally granted. Target shares of 249,000 may be earned upon the achievement of three financial goals (“financial measure performance shares”) and target shares of 83,000 may be earned based on the Company’s total shareholder return relative to the S&P SmallCap 600 Index (“TSR performance shares”). These financial measure performance and TSR performance shares had a three-year performance period through December 31, 2018. No dividends were paid on financial measure or TSR performance shares.

The financial measure performance shares, which have a weighted average grant date fair value of $15.85. For each of the three financial measures, there are annual goals set in February of each year, with the total award payout based on a cumulative average of the 2016, 2017 and 2018 goals. During the first quarter of 2018, the final year of goals was set and the grant date fair value for the 2016 financial measure performance shares was set at $28.40, and remained fixed for the remaining performance period. Based upon the level of achievement of specific financial performance goals for the 2016 grant, participants had the ability to receive up to 200% of the target number of shares originally granted. On February 13, 2019, the Compensation Committee approved the actual performance achievement of the financial measure performance shares for the 2016 grant. Actual performance resulted in participants achieving approximately 70% of target. These shares will cliff-vest after the approval by the Compensation Committee, which will be no later than March 15, 2019, if not forfeited by the recipient. The total nonvested shares related to the financial measure performance awards at year-end 2018 is 117,000.

The TSR performance shares have an estimated fair value of $19.73, which was computed using a Monte Carlo simulation model incorporating assumptions for inputs of expected stock price volatility, dividend yield and risk-free interest rate. Based upon the level of achievement of the Company’s TSR relative to the S&P SmallCap 600 Index for the 2016 grant, participants had the ability to receive up to 200% of the target number of shares originally granted. On February 13, 2019, the Compensation Committee approved the actual achievement of the TSR performance shares for the 2016 grant. Actual performance resulted in participants achieving approximately 104% of target. These shares will cliff-vest after the approval by the Compensation Committee, which will be no later than March 15, 2019, if not forfeited by the recipient. The total nonvested shares related to the TSR performance awards at year-end 2018 is 57,000.

A summary of the status of all nonvested performance shares at target for 2018 is presented as follows below (in thousands of shares except per share data). The majority of the vested shares below is related to the 2015 performance share grant, which cliff-vested after approval from the Compensation Committee during the first quarter of 2018.



	Financial Measure Performance Shares				TSR Performance Shares
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Nonvested at year-end 2017	592		$	22.32	240		$	18.17
Granted	163		28.64		59		31.38
Vested	(229	)	16.62		(109	)	16.01
Forfeited	(45	)	26.18		(17	)	22.94
Nonvested at year-end 2018	481		$	23.58	173		$	23.56

As of year-end 2018, unrecognized compensation cost related to all unvested financial measure performance shares and TSR performance shares totaled $2.1 million and $1.6 million, respectively. The weighted average period over which the costs are expected to be recognized is approximately 1.7 years for both financial measure performance shares and TSR performance shares. The total fair value of financial measure performance shares and TSR performance shares, which vested during 2018, was $7.7 million and $6.3 million, respectively.