Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

The Company has Stock Incentive Plans (the "Plans") pursuant to which the Company’s Board of Directors may grant stock options or restricted stock to employees.

The table below summarizes the expense related to share-based payments recognized in the three and nine months ended September 30 (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Stock options	$	7,038	$	11,154	$	26,901	$	33,205
Restricted stock	8,235		9,548		19,219		21,002
Stock-based compensation	$	15,273	$	20,702	$	46,120	$	54,207

The tax benefits recorded on stock based compensation were $36.8 million and $31.2 million for the nine months ended September 30, 2019 and 2018, respectively.

The following table summarizes the Company’s total unrecognized compensation cost related to stock-based compensation as of September 30, 2019 (cost in thousands):

Stock Options

Stock options are granted with an exercise price estimated to be equal to the fair market value on the date of grant as authorized by the Company’s Board of Directors. Options granted have vesting provisions ranging from one to five years and vesting of the options is generally based on the passage of time or performance. Stock option grants are subject to forfeiture if employment terminates prior to vesting.

The following summarizes the changes in the number of shares of common stock under option for the nine months ended September 30, 2019 (shares/options and aggregate intrinsic value in thousands):



	Shares		Weighted Average Exercise Price		Options Exercisable at End of Period	Weighted Average Exercise Price of Exercisable Options		Weighted Average Fair Value of Options Granted During the Period		Aggregate Intrinsic Value
Outstanding at December 31, 2018	7,616		$	117.58	5,174	$	98.39			$	518,954
Granted	431		244.35					$	57.82
Exercised	(1,031	)	115.58							176,468
Forfeited	(168	)	170.15
Outstanding at September 30, 2019	6,848		$	124.56	4,787	$	101.81			$	1,110,870
Expected to vest as of September 30, 2019	2,061		$	177.42

The aggregate intrinsic value of stock options exercisable at September 30, 2019 was $885.5 million. The weighted average remaining contractual term of options exercisable at September 30, 2019 was 4.8 years.

The fair value of stock option awards granted was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions for grants or modifications during the nine months ended September 30, 2019 and 2018:



	September 30,
	2019		2018
Risk-free interest rate	2.40	%	2.57	%
Dividend yield	—		—
Expected volatility	26.41	%	26.93	%
Expected life (in years)	3.7		3.8

Restricted Stock

Awards of restricted stock and restricted stock units are independent of stock option grants and are subject to forfeiture if employment terminates prior to vesting. The vesting of shares granted is generally based on the passage of time, performance or market conditions, or a combination of these. Shares vesting based on the passage of time have vesting provisions of one to four years.

The following table summarizes the changes in the number of shares of restricted stock and restricted stock units for the nine months ended September 30, 2019 (shares in thousands):



	Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2018	174		$	190.73
Granted	199		247.68
Vested	(120	)	202.59
Canceled or forfeited	(43	)	220.58
Outstanding at September 30, 2019	210		$	242.46

Unrecognized
Compensation
Cost

Weighted Average
Period of Expense
Recognition
(in Years)

Stock options

Restricted stock