Share-Based Compensation Plans

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

A summary of share-based compensation expense included in net income is as follows:



	Year Ended December 31,
	2019			2018			2017
	(In thousands)

Grants of common shares and options	$	13,330		$	12,736		$	12,371
Capitalized share-based compensation	(1,054		)	(1,017		)	(1,385		)
Share-based compensation expense	$	12,276		$	11,719		$	10,986

We have grants outstanding under our shareholder approved 2010 Performance Incentive Plan, as amended (the "2010 Plan”), which authorized the grant of share options, common shares and other share-based awards for up to 2,450,000 common shares of beneficial interest.

Option awards under the plan are required to have an exercise price at least equal to the closing trading price of our common shares on the date of grant. Options and restricted share awards under the plan generally vest over three to seven years and option awards typically have a ten-year contractual term. We pay dividends on unvested shares. Certain options and share awards provide for accelerated vesting if there is a change in control. Additionally, the vesting on certain option and share awards can accelerate in part or in full upon retirement based on the age of the retiree or upon termination without cause.

The fair value of each option award is estimated on the date of grant using the Black-Scholes model. Expected volatilities, term, dividend yields, employee exercises and estimated forfeitures are primarily based on historical data. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The fair value of each share award is determined based on the closing trading price of our common shares on the grant date. No options were granted in 2019 and 2017.

The following table provides a summary of the assumptions used to value options granted in 2018:



	Year Ended December 31,
	2018
Volatility	18.0	%
Expected dividend yield	3.6	%
Expected term (in years)	7.5
Risk free interest rate	2.8	%

The following table provides a summary of option activity for 2019:



	Shares Under Option	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
				(In years)	(In thousands)
Outstanding at December 31, 2018	682	$	152.34
Granted	—	—
Exercised	—	—
Forfeited or expired	—	—
Outstanding at December 31, 2019	682	$	152.34	6.1	$	—
Exercisable at December 31, 2019	409	$	152.34	6.1	$	—

The weighted-average grant-date fair value of options granted in 2018 was $14.42 per share, which were later forfeited during 2018. The total cash received from options exercised during 2018 and 2017 was $4.6 million and $10.0 million, respectively. The total intrinsic value of options exercised during the years ended December 31, 2018 and 2017 was $8.2 million and $10.7 million, respectively.

The following table provides a summary of restricted share activity for 2019:



	Shares		Weighted-Average Grant-Date Fair Value
Unvested at December 31, 2018	206,100		$	130.46
Granted	122,056		133.30
Vested	(97,077	)	133.35
Forfeited	(10,501	)	151.22
Unvested at December 31, 2019	220,578		$	129.78

The weighted-average grant-date fair value of stock awarded in 2019, 2018 and 2017 was $133.30, $112.88 and $139.31, respectively. The total vesting-date fair value of shares vested during the year ended December 31, 2019, 2018 and 2017, was $13.0 million, $9.7 million and $12.5 million, respectively.

As of December 31, 2019, there was $17.1 million of total unrecognized compensation cost related to unvested share-based compensation arrangements (i.e. options and unvested shares) granted under our plans. This cost is expected to be recognized over the next 4.9 years with a weighted-average period of 2.4 years.

Subsequent to December 31, 2019, common shares were awarded under various compensation plans as follows:



Date	Award		Vesting Term	Beneficiary
January 2, 2020	5,591	Shares	Immediate	Trustees
February 4, 2020	101,981	Restricted Shares	1-7 years	Officers and key employees