Stock-Based Compensation

6 Months Ended

Jun. 30, 2018

The Company issues stock-based compensation in the form of nonvested restricted stock and stock appreciation rights (SARs). Most of the awards are issued during the first quarter of each year. The stock-based compensation expense that has been charged against income was $3.1 million in both the three months ended June 30, 2018 and 2017, and $6.4 million and $6.2 million in the six months ended June 30, 2018 and 2017, respectively.

Nonvested stock awards generally vest in 4 to 7 years and contain restrictions as to transferability, sale, pledging, or assigning, among others, prior to the end of the vesting period. Dividend and voting rights are conferred upon grant. A summary of the status of the Company’s nonvested share awards as of June 30, 2018, and changes during the six month period then ended, is presented below.



	Shares		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2018	1,254,518		$38.67
Granted	225,764		59.23
Vested	(344,830	)	32.27
Forfeited	(15,049	)	45.88
Nonvested at June 30, 2018	1,120,403		$44.69

SARs are granted with exercise prices equal to the market price of the Company’s stock at the date of grant. SARs vest ratably over 4 years of continuous service and have 10-year contractual terms. All SARs must be settled in stock under provisions of the plan. In determining compensation cost, the Black-Scholes option-pricing model is used to estimate the fair value of SARs on date of grant. The current year per share average fair value and the model assumptions are shown in the table below.



Weighted per share average fair value at grant date		$12.44
Assumptions:
Dividend yield	1.6		%
Volatility	20.6		%
Risk-free interest rate	2.7		%
Expected term	6.6 years

A summary of SAR activity during the first six months of 2018 is presented below.



(Dollars in thousands, except per share data)	Rights		Weighted Average Exercise Price	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2018	1,179,286		$37.13
Granted	168,716		58.42
Forfeited	(8,856	)	46.86
Expired	(276	)	43.52
Exercised	(226,488	)	29.82
Outstanding at June 30, 2018	1,112,382		$41.77	7.1 years	$	25,584