Stock-Based Compensation

Our shareholders approved the 2014 Omnibus Stock Plan (the “2014 Stock Plan”) at our annual meeting of shareholders on May 20, 2014. The 2014 Stock Plan replaced the expired 2004 Omnibus Stock Plan (the “2004 plan”) previously approved by the shareholders in 2004. The 2014 Stock Plan is administered by the Compensation Committee of the Board of Directors and will remain in effect for ten years. All directors of the Company and employees of the Company and its subsidiaries are eligible to participate in the 2014 Stock Plan. The 2014 Stock Plan (similar to the 2004 plan) continues the maintenance of the Employee Stock Purchase Plan, as well as provisions for the grant of stock options and other stock-based incentives. The 2014 Stock Plan provides for the grant of five percent of the number of the Company’s common shares outstanding as of the first day of each fiscal year plus the number of common shares that were available for grant of awards, but not granted, in prior years. In no event, however, may the number of common shares available for the grant of awards in any fiscal year exceed ten percent of the common shares outstanding as of the first day of that fiscal year. Common shares subject to an


O.	Stock-Based Compensation (continued)

award that is forfeited, terminated, or canceled without having been exercised are generally added back to the number of shares available for grant under the 2014 Stock Plan.

Stock-based compensation expense under all share-based payment plans—our Employee Stock Purchase Plan, stock option plans, stock-settled stock appreciation rights, and performance-based restricted stock units—included in the results of operations follows:



	Year Ended December 31,
	2018		2017		2016
Compensation expense, all share-based payment plans	$	3,370	$	4,049	$	2,811
Income tax benefit	602		1,315		823

Stock-based compensation consisted of the following:

Employee Stock Purchase Plan--Under the Employee Stock Purchase Plan, all full-time employees with one year of service are eligible to purchase, through payroll deduction, common shares. Employee purchases under the Employee Stock Purchase Plan are at 85% of the fair market value of the common shares--a 15% discount. Compensation costs are recognized as payroll deductions are made. The 15% discount of total shares purchased under the plan resulted in compensation cost recognized of $998 in 2018, $888 in 2017 and $727 in 2016.

Stock Options Plan--The stock options outstanding were awarded under a graded vesting schedule, measured at fair value, and have a term of ten years. Compensation costs for stock options are recognized over the requisite service period on the straight-line recognition method. Compensation cost recognized for stock options was $663 in 2018, $705 in 2017 and $596 in 2016.

Stock-Settled Stock Appreciation Rights--During the year ended December 31, 2018, the Compensation Committee of the Board of Directors awarded 121,243 Stock-Settled Stock Appreciation Rights (“SSARs”) to certain management employees which vest ratably over five years. A stock-settled stock appreciation right is an award that allows the recipient to receive common stock equal to the appreciation in the fair market value of our common stock between the date the award was granted and the conversion date of the shares vested.

The following table summarizes the SSARs as of December 31, 2018:



Stock-Settled Stock Appreciation Rights	Number of Rights		Weighted- Average Award Date Value		Weighted- Average Remaining Contractual Life	Unrecognized Compensation Cost		Aggregate Intrinsic Value
Unvested, January 1, 2018	448,180		$	3.10
Granted	121,243		3.84
Forfeited	—		—
Vested	(188,441	)	2.93
Unvested, December 31, 2018	380,982		$	3.42	2.4 years	$	924	$	7,505

Compensation costs for SSARs are determined using a fair-value method and amortized over the requisite service period. Compensation expense for SSARs totaled $540 in 2018, $1,035 in 2017 and $591 in 2016.


O.	Stock-Based Compensation (continued)

Restricted Stock Units--During the year ended December 31, 2018, the Compensation Committee of the Board of Directors awarded 31,738 performance-based restricted stock units ("PRSUs") to certain management employees and 13,188 restricted stock units ("RSUs") to nonemployee directors. The Compensation Committee made similar awards in prior periods. The awards vest over specified periods. The following table summarizes restricted stock units as of December 31, 2018:



Restricted Stock Units	Number of Stock Units		Weighted- Average Grant Date Value		Weighted- Average Remaining Contractual Life	Unrecognized Compensation Cost		Aggregate Intrinsic Value
Unvested, January 1, 2018	290,666		$	14.41
Granted	44,926		18.55
Forfeited	—		—
Vested	(87,754	)	12.94
Unvested, December 31, 2018	247,838		$	15.68	1.9 years	$	1,727	$	4,882
Employee PRSUs	209,186		$	15.40	2.2 years	$	1,401	$	4,121
Nonemployee Director RSUs	38,652		$	17.17	1.3 years	$	326	$	761

Compensation cost for awards is determined using a fair-value method, amortized over the requisite service period. “Intrinsic value” is defined as the amount by which the fair market value of a common share of stock exceeds the exercise price of a performance-based restricted stock unit. Compensation expense on restricted stock unit awards totaled $1,169 in 2018, $1,421 in 2017 and $897 in 2016.

The fair value of each award was estimated on the date of grant using a binomial option-pricing model. The binomial model considers a range of assumptions related to volatility, risk-free interest rate and employee exercise behavior. Expected volatilities utilized in the binomial model are based on historical volatility of our share prices and other factors. Similarly, the dividend yield is based on historical experience and expected future changes. The binomial model also incorporates exercise and forfeiture assumptions based on an analysis of historical data. The expected life of the stock-based awards is derived from the output of the binomial model and represents the period of time that awards granted are expected to be outstanding.

The fair values of stock-based awards granted were estimated at the dates of grant with the following weighted-average assumptions:



	Year Ended December 31,
	2018		2017		2016
Volatility rate	10.1	%	10.3	%	10.6	%
Risk-free interest rate	2.7	%	2.2	%	1.8	%
Expected dividend yield	.7	%	.7	%	.7	%
Expected life of awards (years)	9.2		8.9		9.5


O.	Stock-Based Compensation (continued)

General Stock Option Information--The following table summarizes activity under the stock option plans for the year ended December 31, 2018:



Stock Options	Number of Options Outstanding		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life	Unrecognized Compensation Cost		Aggregate Intrinsic Value
Outstanding, January 1, 2018	1,528,615		$	13.05
Granted	143,250		19.10
Exercised	(147,321	)	9.93
Forfeited	(58,280	)	13.29
Outstanding, December 31, 2018	1,466,264		$	13.94	5.9 years	$	1,393	$	8,446
Exercisable, December 31, 2018	889,814		$	11.79	4.7 years			$	7,037

“Intrinsic value” is defined as the amount by which the market price of a common share of stock exceeds the exercise price of an option. Information regarding the stock options outstanding at December 31, 2018 is summarized below:



Stock Options Exercise Price		Number Outstanding	Weighted-Average Remaining Contractual Life	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Exercise Price
Employee options:
$	8.00	88,413	0.8 years	$	8.00	88,413	$	8.00
8.30		107,000	1.8 years	8.30		107,000	8.30
11.60		270,414	4.5 years	11.60		270,414	11.60
13.20		284,822	5.5 years	13.20		211,422	13.20
15.05		219,965	6.5 years	15.05		112,765	15.05
16.35		230,800	7.5 years	16.35		77,800	16.35
17.60		129,300	8.5 years	17.60		22,000	17.60
19.10		135,550	9.5 years	19.10		—	19.10
		1,466,264	5.9 years	$	13.94	889,814	$	11.79

We issue common shares from treasury upon the exercise of stock options, stock-settled stock appreciation rights, performance-based restricted stock units or purchases under the Employee Stock Purchase Plan.

Tax Benefits of Stock-Based Compensation--Our total income tax benefit from share-based awards--as recognized in our consolidated statement of operations--for the last three years was: $602 in 2018, $1,315 in 2017, and $823 in 2016. Tax benefits for share-based awards are accrued as stock compensation expense and recognized in our consolidated statement of operations. Tax benefits on share-based awards are realized when: (a) stock-settled stock appreciation rights are exercised; (b) performance-based restricted stock units vest; and (c) stock options are exercised.

When actual tax benefits realized exceed the tax benefits accrued for share-based awards, we realize an excess tax benefit. We had excess tax benefits of: $453 in 2018, $691 in 2017, and $1,113 in 2016.