Common Shares, Redeemable Common Shares and Preferred Shares

We have given retroactive consideration to the two-for-one stock split of our common shares effective June 1, 2017 including all common share and per share data.

Preferred Shares--We have authorized a class of 4,000,000 preferred shares, no par value, of which none were issued as of December 31, 2018.

Redeemable Common Shares-Our Davey 401KSOP and ESOP Plan includes a put option for shares of the Company’s common stock distributed from the plan. Due to the Company’s obligation under the put option, shares held in the Davey 401KSOP and ESOP Plan as well as distributed shares subject to the put option are reclassified from permanent equity to temporary equity. The number of redeemable common shares for each of the three years in the period ended December 31, 2018 was as follows: 2018--5,642,154; 2017--6,467,027; and 2016--7,056,904.

Common Shares--The number of common shares authorized is 48,000,000, par value $1.00. The number of common shares issued during each of the three years in the period ended December 31, 2018 was as follows: 2018--37,271,606; 2017--36,446,890 and 2016--35,856,856. The number of shares in the treasury for each of the three years in the period ended December 31, 2018 was as follows: 2018--20,033,108; 2017--18,692,901; and 2016--17,990,620.


L.	Common Shares, Redeemable Common Shares and Preferred Shares (continued)

Our common and redeemable common shares are not listed or traded on an established public trading market, and market prices are, therefore, not available. Semiannually, an independent stock valuation firm determines the fair market value of our common and redeemable common shares based upon our performance and financial condition. Since 1979, we have provided a ready market for all shareholders through our direct purchase of their common shares, although we are under no obligation to do so (other than repurchases pursuant to the put option under the Davey 401KSOP and ESOP Plan, as described in Note N). During 2018, purchases of common shares, both redeemable and common, totaled 2,636,943 shares for $51,116 in cash; we also had direct sales to directors and employees of 17,992 shares for $345, excluding those shares issued through either the exercise of options or the Employee Stock Purchase Plan. We also sold 395,586 shares to our 401(k) plan for $7,647 and issued 198,189 shares to participant accounts to satisfy our liability for the 2017 employer match in the amount of $3,785. The liability accrued at December 31, 2018 for the 2018 employer match was $4,126. There were also 348,973 shares purchased during 2018 under the Employee Stock Purchase Plan.

Common and Redeemable Shares Outstanding--The table below reconciles the activity of the common and redeemable shares outstanding:



	Common Shares Net of Treasury Shares		Redeemable Shares		Total
Shares outstanding, December 31, 2016	17,866,236		7,056,904		24,923,140
Shares purchased	(807,718	)	(890,009	)	(1,697,727	)
Shares sold	362,674		300,132		662,806
Stock subscription offering, employee cash purchases	90,645		—		90,645
Options exercised	241,995		—		241,995
Shares outstanding, December 31, 2017	17,753,832		6,467,027		24,220,859
Shares purchased	(1,530,528	)	(1,106,415	)	(2,636,943	)
Shares sold	679,197		281,543		960,740
Stock subscription offering, employee cash purchases	129,245		—		129,245
Options exercised	206,751		—		206,751
Shares outstanding, December 31, 2018	17,238,497		5,642,155		22,880,652

On December 31, 2018, we had 22,880,652 common shares outstanding, employee options exercisable to purchase 889,814 common shares, partially-paid subscription for 690,260 common shares and purchase rights outstanding for 241,236 common shares.

Stock Subscription Offering--Beginning May 2012, the Company offered to eligible employees and nonemployee directors the right to subscribe to common shares of the Company at $9.85 per share in accordance with the provisions of The Davey Tree Expert Company 2004 Omnibus Stock Plan and the rules of the Compensation Committee of the Company's Board of Directors (collectively, the "plan"). The offering period ended on August 1, 2012 and resulted in the subscription of 1,275,428 common shares for $12,563 at $9.85 per share.

Under the plan, a participant in the offering purchasing common shares for an aggregate purchase price of less than $5 had to pay with cash. All participants (excluding Company directors and officers) purchasing $5 or more of the common shares had an option to finance their purchase through a down-payment of at least 10% of the total purchase price and a seven-year promissory note for the balance due with interest at 2%. Payments on the promissory note can be made either by payroll deductions or annual lump-sum payments of both principal and interest.

Common shares purchased under the plan have been pledged as security for the payment of the promissory note and the common shares will not be issued until the promissory note is paid-in-full. Dividends will be paid on all subscribed shares, subject to forfeiture to the extent that payment is not ultimately made for the shares.


L.	Common Shares, Redeemable Common Shares and Preferred Shares (continued)

All participants in the offering purchasing in excess of $5 of common shares were granted a "right" to purchase one additional common share at a price of $9.85 per share for every three common shares purchased under the plan. As a result of the stock subscription, employees were granted rights to purchase 423,600 common shares. Each right may be exercised at the rate of one-seventh per year and will expire seven years after the date that the right was granted. Employees may not exercise a right should they cease to be employed by the Company.