Stock-Based Compensation Plans

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement, Noncash Expense [Abstract]

At December 31, 2019, we had stock-based compensation awards outstanding under the following shareholder-approved plans: the 2013 Stock Incentive Plan (the "2013 Plan") and 2018 Stock Incentive Plan (the "2018 Plan"), applicable to employees and non-employee directors.

The 2013 Plan was approved by the Board of Directors and stockholders at the annual meeting in 2013. The 2013 Plan originally authorized the issuance of up to 9,500,000 shares of stock pursuant to awards under the plan. In 2018, in view of the limited number of shares remaining available under the 2013 Plan, the Board of Directors and stockholders approved the adoption of the 2018 Plan which authorized the issuance of up to 6,500,000 shares of Crane Co. stock. No further awards will be made under the 2013 Plan.

The stock incentive plans are used to provide long-term incentive compensation through stock options, restricted share units, performance-based restricted share units and deferred stock units.

Stock Options

Options are granted under the Stock Incentive Plan to officers and other key employees and directors at an exercise price equal to the closing price on the date of grant. Unless otherwise determined by the Compensation Committee which administers the plan, options become exercisable at a rate of 25% after the first year, 50% after the second year, 75% after the third year and 100% after the fourth year from the date of grant. Options granted to officers and employees from 2004 to 2013 expire six years after the date of grant. All options granted to directors and options granted to officers and employees after 2014 expire 10 years after the date of grant.

We determine the fair value of each grant using the Black-Scholes option pricing model. The weighted-average assumptions for grants made during the years ended December 31, 2019, 2018 and 2017 are as follows:



	2019		2018		2017
Dividend yield	2.20	%	1.74	%	2.27	%
Volatility	25.17	%	23.25	%	23.32	%
Risk-free interest rate	2.64	%	2.45	%	1.94	%
Expected lives in years	4.2		4.2		4.2

Expected dividend yield is based on our dividend rate. Expected stock volatility was determined based upon the historical volatility for the four year period preceding the date of grant. The risk-free interest rate was based on the yield curve in effect at the time the options were granted, using U.S. constant maturities over the expected life of the option. The expected lives of the awards represents the period of time that options granted are expected to be outstanding.

Activity in our stock option plans for the year ended December 31, 2019 were as follows:



Option Activity	Number of Shares (in 000’s)		Weighted Average Exercise Price		Weighted Average Remaining Life (Years)
Options outstanding as of January 1, 2019	2,410		$	62.84
Granted	500		79.14
Exercised	(217	)	52.58
Canceled	(111	)	76.91
Options outstanding as of December 31, 2019	2,582		$	66.26	6.62
Options exercisable as of December 31, 2019	1,417		$	59.06	5.65

Included in our share-based compensation was expense recognized for our stock option awards of $6.0 million, $5.9 million and $6.2 million in 2019, 2018 and 2017, respectively. The weighted-average fair value of options granted during 2019, 2018 and 2017 was $15.79, $17.79 and $12.98, respectively. The total fair value of shares vested during 2019, 2018 and 2017 was $6.3 million, $6.5 million and $6.3 million, respectively. The total intrinsic value of options exercised during 2019, 2018 and 2017 was $6.8 million, $17.6 million and $16.9 million, respectively. The total cash received from these option exercises during 2019, 2018 and 2017 was $11.4 million, $24.2 million and $31.2 million, respectively. The tax benefit realized for the tax deductions from option exercises and vesting of restricted share units was $3.8 million and $5.4 million as of December 31, 2019 and December 31, 2018, respectively. The aggregate intrinsic value of exercisable options was $39.4 million, $16.7 million and $29.9 million as of December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, there was $10.3 million of total future compensation cost related to unvested share-based awards to be recognized over a weighted-average period of 1.84 years.

Restricted Share Units and Performance-Based Restricted Share Units

Restricted share units vest at a rate of 25% after the first year, 50% after the second year, 75% after the third year and 100% after the fourth year from the date of grant and are subject to forfeiture restrictions which lapse over time. The vesting of performance-based restricted share units is determined in three years based on relative total shareholder return for Crane Co. compared to the S&P Midcap 400 Capital Goods Group, with payout potential ranging from 0% to 200% but capped at 100% if our three year total shareholder return is negative.

Included in our share-based compensation was expense recognized for our restricted share unit and performance-based restricted share unit awards of $16.3 million, $15.7 million and $13.9 million in 2019, 2018 and 2017, respectively. As of December 31, 2019, there was $23.6 million of total future compensation cost related to restricted share unit and performance-based restricted share unit awards, to be recognized over a weighted-average period of 1.84 years.

Changes in our restricted share units for the year ended December 31, 2019 were as follows:



Restricted Share Unit Activity	Restricted Share Units (in 000’s)		Weighted Average Grant-Date Fair Value
Restricted share units as of January 1, 2019	503		$	77.58
Restricted share units granted	178		80.27
Restricted share units vested	(162	)	67.11
Restricted share units forfeited	(45	)	77.62
Performance-based restricted share units granted	82		79.14
Performance-based restricted share units vested	(61	)	80.00
Performance-based restricted share units forfeited	(15	)	88.79
Restricted share units as of December 31, 2019	480		$	83.23