Share-Based Compensation Plans

Share-based incentive awards are granted to employees under the 2013 Incentive Award Plan, or the 2013 Plan, which is administered by the Compensation Committee of the Board of Directors, or Compensation Committee. Awards include stock options, restricted stock and other stock awards. The maximum number of shares of common stock that can be granted under the 2013 Plan is 33 million shares plus any shares awarded under the 2013 Plan and any prior plan that have been forfeited or have expired. Stock option awards reduce the number of shares available for grant on a one-for-one basis and all other awards reduce the number of shares available for grant by 3.5 shares for each share awarded. The terms of each award and the exercise date are determined by the Compensation Committee. The 2013 Plan does not permit the holder of an award to elect cash settlement under any circumstances. At December 31, 2018, there were 26,731,624 shares available for grant under the 2013 Plan. If all shares available for grant were for awards other than stock options, shares available for grant would be 7,637,607.

Share-based compensation expense was $70.5 million, $80.2 million and $93.4 million in 2018, 2017 and 2016, respectively. At December 31, 2018, unamortized share-based compensation that will be expensed over the next five years is $160.7 million.

We record a deferred tax asset for the share-based compensation expense recognized for financial reporting purposes that has not been deducted on our income tax return. Beginning in 2017, excess tax benefits and deficiencies related to share-based compensation are recorded as compensation expense in results of operations upon vesting of restricted stock awards or exercise of stock options. Excess tax benefits and deficiencies represent the difference between the actual compensation deduction for tax purposes, which is calculated as the difference between the grant date price of the award and the price of our common stock on the vesting or exercise date. In 2018 and 2017 we recognized excess tax benefits of $7.4 million and $20.8 million, respectively.

Stock Options

The exercise price of stock option awards cannot be less than 100% of the market price of our common stock on the grant date. The 2017 option awards vest 100% three years from grant date and have a maximum contractual life of six years. All prior option awards have a maximum contractual life of 10 years.

Stock option activity for the three years ended December 31, 2018 was:



	2018			2017			2016
	Shares		Weighted Average Exercise Price	Shares		Weighted Average Exercise Price	Shares		Weighted Average Exercise Price
January 1	1,593,422		$63.11	719,757		$27.88	1,140,547		$28.86
Granted	—			1,000,000		$84.94	—
Exercised	(500,122	)	$24.43	(102,335	)	$23.40	(420,790	)	$30.56
Forfeited	(105,250	)	$84.94	(24,000	)	$84.94	—
December 31	988,050		$80.37	1,593,422		$63.11	719,757		$27.88

Exercisable December 31	117,300		$46.43	617,422		$28.61	695,757		$26.54

Options outstanding and exercisable at December 31, 2018 were:



			Options Outstanding			Options Exercisable
Exercise Price Range			Shares	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price	Shares	Weighted Average Exercise Price
$23.00	to	$24.00	57,300	0.2 years	$23.40	57,300	$23.40
$66.00	to	$71.00	60,000	5.4 years	$68.42	60,000	$68.42
$84.00	to	$85.00	870,750	4.2 years	$84.94	—	$84.94
			988,050			117,300

The 2017 option award grant date fair value of $9.87 was determined using the Black-Scholes option valuation model. The assumptions for the model, without adjusting for the risk of forfeiture and lack of liquidity, were: expected life 4.5 years, risk free interest rate 2.0%, expected volatility 16.3% and dividend yield 2.6%.

Restricted Stock

Restricted stock activity for the three years ended December 31, 2018 was:



	2018		2017		2016
January 1	2,859,373		3,802,105		4,349,105
Granted	815,810		966,919		1,100,396
Vested	(944,048	)	(1,757,269	)	(1,438,386	)
Forfeited	(177,233	)	(152,382	)	(209,010	)
December 31	2,553,902		2,859,373		3,802,105

Weighted average grant date fair value of shares granted in the period	$67.62		$74.10		$73.16

Weighted average grant date fair value at December 31	$69.77		$68.85		$61.72

Generally, restricted shares vest ratably over five years from the grant date provided the employee remains employed by us. Restricted shares may not be sold, transferred, pledged or otherwise encumbered until the forfeiture restrictions lapse. Under most circumstances, the employee forfeits the shares if employment ceases prior to the end of the restriction period.

Performance Restricted Stock Units

The Compensation Committee grants certain employees performance restricted stock units, or PRSU. Each PRSU represents the right to receive one share of common stock on vesting. The ultimate number of PRSUs received by the employee depends on the Company's average return on equity over a three year period compared to the average return on equity of a peer group of principal competitors over the same period. The PRSUs vest three years from the grant date. The PRSUs have a service and performance vesting condition and compensation expense is recognized on a graded-vesting basis. Over the performance period, compensation expense is adjusted upward or downward based on our estimate of the probability of achieving the performance target for the portion of the awards subject to the performance vesting condition. We have assumed that all the PRSUs will vest.

PRSU activity for the three years ended December 31, 2018 was:



	2018				2017				2016
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
January 1	488,887		$	82.01	462,381		$	77.05	534,456		$	66.05
Granted	182,582		73.72		173,770		84.94		153,492		83.23
Distributed	(161,625	)	77.68		(147,264	)	69.89		(225,567	)	55.20
December 31	509,844		$	80.41	488,887		$	82.01	462,381		$	77.05

Employee Stock Purchase Plan

The employee stock purchase plan, or ESPP, enables employees to purchase our common stock through payroll deductions over each plan quarter at 95% of the market price on the last trading day of the plan quarter. Purchases are limited to 10% of eligible compensation as defined by the Employee Retirement Income Security Act of 1974, or ERISA. Our employees purchased 91,086 shares, 101,862 shares and 97,935 shares in 2018, 2017 and 2016, respectively. All shares purchased were treasury stock, for which we received $6.5 million, $7.6 million and $7.8 million, respectively. At December 31, 2018, there were 8,675,351 shares available under the ESPP.