STOCK BASED PLANS

On November 9, 2010, HHC adopted The Howard Hughes Corporation Amended and Restated 2010 Incentive Plan (the “Incentive Plan”). Pursuant to the Incentive Plan, 3,698,050 shares of HHC common stock were reserved for issuance. New shares are issued on exercise of options. The Incentive Plan provides for grants of options, stock appreciation rights, restricted stock, other stock‑based awards and market‑based compensation. Directors, employees and consultants of HHC and its subsidiaries and affiliates are eligible for awards. The Incentive Plan is administered by the Compensation Committee of the Board of Directors (the “Committee”). Option grant amounts are awarded by the Committee.

Compensation costs for share‑based payment arrangements totaled $12.1 million, $8.4 million and $9.4 million, of which $2.4 million, $1.1 million and $2.6 million were capitalized for 2018, 2017, and 2016, respectively. As of December 31, 2018, there were a maximum of 2,199,894 shares available for future grant under the Company's various stock plans.

Stock Options

The following tables summarize stock option activity:



					Weighted Average
					Remaining	Aggregate
			Weighted Average		Contractual Term	Intrinsic
	Shares		Exercise Price		(In years)	Value
Stock options outstanding at January 1, 2016	1,086,040		$	77.11
Granted	162,100		109.42
Exercised	(3,000	)	60.33
Forfeited	(68,500	)	122.93
Expired	—		—
Stock options outstanding at December 31, 2016	1,176,640		$	78.87

Granted	58,000		$	119.85
Exercised	(395,482	)	58.81
Forfeited	(54,976	)	105.17
Expired	(1,000	)	57.77
Stock options outstanding at December 31, 2017	783,182		$	90.22

Granted	265,000		$	124.56
Exercised	(183,592	)	65.72
Forfeited	(46,592	)	121.34
Expired	—		—
Stock options outstanding at December 31, 2018	817,998		$	105.06	6.3	8,608,841

Stock options exercisable at December 31, 2018	268,298		$	67.82	3.0	8,524,841
Stock options vested and expected to vest at December 31, 2018	797,320		$	104.61	6.3	8,607,055

Information related to stock options outstanding as of December 31, 2018 is summarized below:



							Weighted Average
							Remaining
				Number	Weighted Average		Contractual Term	Number
Range of Exercise Prices				Outstanding	Exercise Price		(In years)	Exercisable
$	46.46	$	55.82	11,100	$	49.93	2.8	11,100
$	57.77	$	60.33	162,401	57.99		2.3	162,401
$	61.64	$	69.75	49,129	66.65		3.4	49,129
$	81.80	$	110.50	68,960	101.69		6.2	38,960
$	112.64	$	151.72	526,408	124.77		8.0	6,708
				817,998	$	105.06	6.3	268,298

The fair value on the grant date and the significant assumptions used in the Black‑Scholes option‑pricing model are as follows:



	As of December 31,
	2018			2017			2016
Grant date fair value	$	48.27		$	34.51		$	36.55
Expected life of options (in years)	8.4			8.4			7.4
Risk-free interest rate	2.7		%	2.2		%	1.8		%
Expected volatility	24.7		%	22.8		%	33.1		%
Expected annual dividend per share	—			—			—

The computation of the expected volatility assumption used in the Black‑Scholes calculations is based on the median asset volatility of comparable companies as of each of the grant dates.

Generally, options granted vest over requisite service periods or on a graduated scale based on total shareholder returns, expire ten years after the grant date and generally do not become exercisable until their restrictions on exercise lapse after the five-year anniversary of the grant date. For options that vest based on shareholder returns, the grant date fair values are calculated using a Monte-Carlo approach which simulates the Company's stock price on the corresponding vesting dates before applying the Black-Scholes model.

The balance of unamortized stock option expense as of December 31, 2018 is $15.3 million, which is expected to be recognized over a weighted‑average period of 5.1 years. Net of amounts capitalized relating to the Company's developments, $2.2 million, $1.6 million and $2.9 million of expense associated with stock options are included in General and administrative expense in the accompanying Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016, respectively.

Restricted Stock

Restricted stock awards issued under the Incentive Plan provide that shares awarded may not be sold or otherwise transferred until restrictions have lapsed as established by the Committee. In addition to the granting of restricted stock to certain members of management, the Company awards restricted stock to non‑employee directors as part of their annual retainer. The management awards vest over five years, and the restriction on the non‑employee director shares lapses on the date of the Company's annual meeting of shareholders, or June 1^stof the award year, whichever is earlier.

Generally, upon termination of employment or directorship, restricted stock units and restricted shares which have not vested are forfeited.

The following table summarizes restricted stock activity:



	Weighted Average
	Grant Date
	Shares		Fair Value
Restricted stock outstanding at January 1, 2016	242,556		$	100.15
Granted	136,198		67.80
Vested	(37,670	)	83.47
Forfeited	(51,972	)	90.14
Restricted stock outstanding at December 31, 2016	289,112		$	88.88
Granted	177,708		85.88
Vested	(68,819	)	88.58
Forfeited	(43,482	)	76.10
Restricted stock outstanding at December 31, 2017	354,519		$	89.00
Granted	142,332		83.09
Vested	(52,479	)	124.50
Forfeited	(37,828	)	91.71
Restricted stock outstanding at December 31, 2018	406,544		$	82.10

The grant date fair value of restricted stock is based on the closing sales price of common stock on the grant date. For restricted stock awards that vest based on shareholder returns, the grant date fair values are calculated using a Monte-Carlo approach which simulates the Company's stock price on the corresponding vesting dates before applying the Black-Scholes model.

Net of amounts capitalized relating to the Company's developments, HHC recognized compensation expense related to restricted stock awards of $7.5 million, $5.7 million and $4.5 million for the years ended December 31, 2018, 2017 and 2016, respectively, included in General and Administrative expense in the accompanying Consolidated Statements of Operations. The fair value of restricted stock that vested during 2018 was $5.5 million. The balance of unamortized restricted stock expense as of December 31, 2018 was $21.6 million, which is expected to be recognized over a weighted‑average period of 3.8 years.