NOTE H — CAPITAL STOCK

Cash dividends

Dividends were declared in 2017 and 2016 as follows:


Dividend per share	Date declared	Date of record	Payment date
$0.0425	March 3, 2016	May 2, 2016	May 16, 2016
$0.0425	June 9, 2016	August 1, 2016	August 15, 2016
$0.0425	August 4, 2016	November 1, 2016	November 15, 2016
$0.0425	November 3, 2016	February 1, 2017	February 15, 2017
$0.0425	March 8, 2017	May 1, 2017	May 15, 2017
$0.0425	June 22, 2017	August 1, 2017	August 15, 2017
$0.0425	August 4, 2017	November 1, 2017	November 15, 2017
$0.0425	November 7, 2017	February 1, 2018	February 15, 2018

On March 8, 2018, the Board of Directors declared a quarterly dividend of $0.0425 per share payable on May 15, 2018 to shareholders of record on May 1, 2018.

Stock repurchase program

On April 30, 2013, Lifetime’s Board of Directors authorized the repurchase of up to $10.0 million of the Company’s common stock. The repurchase authorization permits the Company to effect repurchases from time to time through open market purchases and privately negotiated transactions. No shares were repurchased during the years ended December 31, 2017, 2016 and 2015.

Preferred stock

The Company is authorized to issue 100 shares of Series A Preferred Stock and 2,000,000 shares of Series B Preferred Stock, none of which has been issued or is outstanding at December 31, 2017.

Long-term incentive plan

The Company’s Amended and Restated 2000 Long-Term Incentive Plan (the “Plan”) provides for the granting of awards of up to 5,287,500 shares of common stock. These shares of the Company’s common stock are available for grants to directors, officers, employees, consultants and service providers and affiliates in the form of stock options or other equity-based awards. The Plan authorizes the Board of Directors of the Company, or a duly appointed committee thereof, to issue incentive stock options, non-qualified options, restricted stock, performance based awards and other stock-based awards. Options that have been granted under the Plan expire over a range of five to ten years from the date of grant and vest over a range of up to four years from the date of grant. Shares of restricted stock that have been granted under the Plan vest over a range of up to four years from the date of grant. Performance based awards that have been granted under the Plan vest after three years based upon the attainment of specified performance goals. In June 2017, the shareholders of the Company approved an amendment to the Company’s Plan to revise the terms and conditions of Plan to increase the shares available for grant under the plan by 437,500 shares and include and clarify several features that promote good governance. As of December 31, 2017, there were 619,369 shares available for the grant of awards.

Stock options

A summary of the Company’s stock option activity and related information for the three years ended December 31, 2017, is as follows:


	Options			Weighted- average exercise price		Weighted- average remaining contractual life (years)		Aggregate intrinsic value
Options outstanding at December 31, 2014		2,326,627		$	14.19
Grants		89,600			13.99
Exercises		(110,375	)		8.84
Cancellations		(37,750	)		15.57
Expirations		(25,900	)		26.60

Options outstanding at December 31, 2015		2,242,202			14.28
Grants		66,850			15.44
Exercises		(272,325	)		9.01
Cancellations		(30,750	)		15.39
Expirations		(230,577	)		27.16

Options outstanding at December 31, 2016		1,775,400			13.44
Grants		125,750			17.38
Exercises		(300,000	)		11.34
Cancellations		(45,700	)		16.40
Expirations		(99,250	)		20.40

Options outstanding at December 31, 2017		1,456,200			13.64		4.6	$	5,019,000

Options exercisable at December 31, 2017		1,250,673		$	13.05		4.0	$	4,923,000

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that would have been received by the option holders had all option holders exercised their in-the-money stock options on December 31, 2017. The intrinsic value is calculated for each in-the-money stock option as the difference between the closing price of the Company’s common stock on December 31, 2017 and the exercise price.

The total intrinsic values of those stock options that were exercised in the years ended December 31, 2017, 2016 and 2015 were $2,071,000, $1,848,000 and $639,000, respectively. The intrinsic value of a stock option that is exercised is calculated at the date of exercise.

Total unrecognized stock option compensation expense at December 31, 2017, before the effect of income taxes, was $1.0 million and is expected to be recognized over a weighted-average period of 2.1 years.

The Company values stock options using the Black-Scholes option valuation model. The Black-Scholes option valuation model, as well as other available models, was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. The Black-Scholes option valuation model requires the input of highly subjective assumptions including the expected stock price volatility and risk-free interest rate. Because the Company’s stock options have characteristics significantly different from those of traded options, changes in the subjective input assumptions can materially affect the fair value estimates of the Company’s stock options. The weighted-average per share grant date fair value of stock options granted during the years ended December 31, 2017, 2016, and 2015 was $6.37, $5.43 and $4.68, respectively.

The fair values for these stock options were estimated at the dates of grant using the following weighted-average assumptions:


	2017			2016			2015
Historical volatility		39	%		39	%		39	%
Expected term (years)		6.0			6.0			5.2
Risk-free interest rate		1.97	%		1.37	%		1.67	%
Expected dividend yield		0.98	%		1.10	%		1.18	%

Restricted Stock

A summary of the Company’s restricted stock activity and related information for the three years ended December 31, 2017 is as follows:


	Restricted Shares			Weighted- average grant date fair value
Non-vested restricted shares, December 31, 2014		26,511		$	15.86
Grants		100,073			14.78
Vested		(24,649	)		15.97
Cancellations		(500	)		14.84

Non-vested restricted shares, December 31, 2015		101,435			14.77
Grants		109,170			15.64
Vested		(46,306	)		14.79
Cancellations		(2,475	)		14.93

Non-vested restricted shares, December 31, 2016		161,824			15.35
Grants		133,352			18.32
Vested		(69,795	)		15.39
Cancellations		(6,064	)		16.07

Non-vested restricted shares, December 31, 2017		219,317		$	17.12

Total unrecognized compensation expense remaining	$	2,932,000
Weighted-average years expected to be recognized over		2.6

The total fair value of restricted stock that vested during the year ended December 31, 2017 was $1.3 million.

Performance shares

Each performance award represents the right to receive up to 150% of the target number of shares of common stock. The number of shares of common stock earned will be determined based on the attainment of specified performance goals at the end of the performance period, as determined by the Compensation Committee of the Board of Directors. The shares are subject to the terms and conditions of the Plan.

A summary of the Company’s performance-based award activity and related information for the three years ended December 31, 2017 is as follows:


	Performance- based awards ⁽¹⁾			Weighted- average grant date fair value
Non-vested performance-based awards, January 1, 2015		—		$	—
Grants		66,650			14.84
Cancellations		(500	)		14.84

Non-vested performance-based awards, December 31, 2015		66,150			14.84
Grants		82,000			15.69
Cancellations		(2,188	)		14.94

Non-vested performance-based awards, December 31, 2016		145,962			15.32
Grants		87,000			18.45
Cancellations		(4,070	)		16.52

Non-vested performance-based awards, December 31, 2017		228,892		$	16.49

Total unrecognized compensation expense remaining	$	1,727,000
Weighted-average years expected to be recognized over		1.7

⁽¹⁾	Represents the target number of shares to be issued for each performance-based award.

On March 7, 2018, the Compensation Committee of the Board of Directors determined the performance goals set forth in the performance-based awards granted in 2015 were attained and 58,888 shares vested.

The Company recognized total stock compensation expense of $3.4 million for the year ended December 31, 2017, of which $1.1 million represents stock option compensation expense and $2.3 million represents restricted stock and performance based compensation expense. The Company recognized total stock compensation expense of $2.9 million for the year ended December 31, 2016, of which $1.4 million represents stock option compensation expense, $1.5 million represents restricted stock, including restricted stock granted to directors and performance based compensation expense, and $32,000 represents stock awards. The Company recognized total stock compensation expense of $5.3 million for the year ended December 31, 2015, of which $2.2 million represents stock option compensation expense, $0.8 million represents restricted stock including restricted stock granted to directors and performance based compensation expense, and $2.2 million represents stock awards.