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STOCK COMPENSATION PLANS
 9 Months Ended
Sep. 29, 2019
Share-based Payment Arrangement [Abstract]  
Stock Compensation Plans STOCK COMPENSATION PLANS
We have various stock-based compensation programs under which awards, including stock options, performance stock units (“PSUs”) and performance stock, stock appreciation rights, restricted stock units (“RSUs”) and restricted stock may be granted to employees, non-employee directors and certain service providers upon whom the successful conduct of our business is dependent. These programs and the accounting treatment related thereto are described in Note 10 to the Consolidated Financial Statements included in our 2018 Annual Report on Form 10-K.
For the periods presented, compensation expense for all types of stock-based compensation programs and the related income tax benefit recognized were as follows:
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 29, 2019
 
September 30, 2018
 
September 29, 2019
 
September 30, 2018
Pre-tax compensation expense
 
$
15,867

 
$
12,122

 
$
39,579

 
$
35,668

Related income tax benefit
 
5,317

 
2,808

 
7,639

 
7,776


Compensation costs for stock compensation plans are primarily included in selling, marketing and administrative expense. As of September 29, 2019, total stock-based compensation cost related to non-vested awards not yet recognized was $72,334 and the weighted-average period over which this amount is expected to be recognized was approximately 2.1 years.
Stock Options
A summary of activity relating to grants of stock options for the period ended September 29, 2019 is as follows:
Stock Options
Shares
Weighted-Average
Exercise Price (per share)
Weighted-Average Remaining
Contractual Term
Aggregate Intrinsic Value
Outstanding at beginning of year
5,394,382

$94.28
5.6 years
 
Granted
1,640

$109.74
 
 
Exercised
(2,774,973
)
$90.78
 
 
Forfeited
(67,876
)
$101.58
 
 
Outstanding as of September 29, 2019
2,553,173

$97.89
6.0 years
$
142,704

Options exercisable as of September 29, 2019
1,492,037

$95.65
4.7 years
$
86,731


The weighted-average fair value of options granted was $15.25 and $15.57 per share for the periods ended September 29, 2019 and September 30, 2018, respectively. The fair value was estimated on the date of grant using a Black-Scholes option-pricing model and the following weighted-average assumptions:
 
 
Nine Months Ended
 
 
September 29, 2019
 
September 30, 2018
Dividend yields
 
2.7
%
 
2.3
%
Expected volatility
 
17.0
%
 
16.6
%
Risk-free interest rates
 
2.5
%
 
2.8
%
Expected term in years
 
6.5

 
6.6


The total intrinsic value of options exercised was $110,304 and $26,006 for the periods ended September 29, 2019 and September 30, 2018, respectively.
Performance Stock Units and Restricted Stock Units
A summary of activity relating to grants of PSUs and RSUs for the period ended September 29, 2019 is as follows:
Performance Stock Units and Restricted Stock Units
 
Number of units
 
Weighted-average grant date fair value
for equity awards (per unit)
Outstanding at beginning of year
 
999,018

 
$101.57
Granted
 
478,145

 
$115.29
Performance assumption change (1)
 
182,774

 
$125.20
Vested
 
(428,229
)
 
$98.85
Forfeited
 
(74,453
)
 
$107.98
Outstanding as of September 29, 2019
 
1,157,255

 
$112.06

(1)
Reflects the net number of PSUs above and below target levels based on the performance metrics.
The following table sets forth information about the fair value of the PSUs and RSUs granted for potential future distribution to employees and non-employee directors. In addition, the table provides assumptions used to determine the fair value of the market-based total shareholder return component using the Monte Carlo simulation model on the date of grant.
 
 
Nine Months Ended
 
 
September 29, 2019
 
September 30, 2018
Units granted
 
478,145

 
435,096

Weighted-average fair value at date of grant
 
$
115.29

 
$
97.74

Monte Carlo simulation assumptions:
 
 
 
 
Estimated values
 
$
48.40

 
$
29.17

Dividend yields
 
2.6
%
 
2.6
%
Expected volatility
 
20.3
%
 
20.4
%

The fair value of shares vested totaled $48,355 and $22,093 for the periods ended September 29, 2019 and September 30, 2018, respectively.
Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 337,224 units as of September 29, 2019. Each unit is equivalent to one share of the Company’s Common Stock.