STOCKHOLDERS’ EQUITY AND EQUITY COMPENSATION

During 2018, 2017 and 2016, the Company declared and paid cash dividends totaling $0.28 per share, $0.24 per share and $0.20 per share, respectively. In addition, on March 7, 2018, the Board of Directors declared a special cash dividend of $1.00 per share, totaling $38,073 and paid on April 16, 2018 to shareholders of record as of the close of business on March 29, 2018. The Company currently intends to pay dividends each quarter; however, payment of dividends is determined by the Board of Directors at its discretion based on various factors, and no assurance can be provided as to the payment of future dividends. Dividends paid on shares in the ESOP, including the special dividend, were used to offset ESOP loan payments and prepay principal and recorded as a reduction of debt service payments and compensation expense. A dividend payable was established for the holders of restricted shares; such dividends will be released upon vesting of the underlying restricted shares.

On November 14, 2018, the Board of Directors declared a cash dividend of $0.0725 per share, payable on December 20, 2018 to shareholders of record as of the close of business on November 29, 2018.

On January 29, 2016, shareholders approved the Griffon Corporation 2016 Equity Incentive Plan ("Incentive Plan") under which awards of performance shares, performance units, stock options, stock appreciation rights, restricted shares, restricted stock units, deferred shares and other stock-based awards may be granted. On January 31, 2018, shareholders approved Amendment No. 1 to the Incentive Plan pursuant which, among other things, added 1,000,000 shares to the Incentive Plan. Options granted under the Incentive Plan may be either “incentive stock options” or nonqualified stock options, generally expire ten years after the date of grant and are granted at an exercise price of not less than 100% of the fair market value at the date of grant. The maximum number of shares of common stock available for award under the Incentive Plan is 3,350,000 (600,000 of which may be issued as incentive stock options), plus (i) any shares reserved for issuance under the 2011 Equity Incentive Plan as of the effective date of the Incentive Plan, and (ii) any shares underlying awards outstanding on such effective date under the 2011 Incentive Plan that are canceled or forfeited. As of September 30, 2018, 1,145,834 shares were available for grant.

All grants outstanding under former equity plans will continue under their terms; no additional awards will be granted under such plans.

Compensation expense for restricted stock and restricted stock units ("RSUs") is recognized ratably over the required service period based on the fair value of the grant, calculated as the number of shares (or RSUs) granted multiplied by the stock price on date of grant, and for performance shares (or performance RSUs), the likelihood of achieving the performance criteria. Compensation cost related to stock-based awards with graded vesting, generally over a period of three to four years, is recognized using the straight-line attribution method and recorded within Selling, general and administrative expenses. The following table summarizes the Company’s compensation expense relating to all stock-based incentive plans:



	For the Years Ended September 30,
	2018			2017			2016
Pre-tax compensation expense	$	10,078		$	8,090		$	10,136
Tax benefit	(2,469		)	(2,836		)	(3,553		)
Total stock-based compensation expense, net of tax	$	7,609		$	5,254		$	6,583

As of ended September 30, 2018 and 2017, a stock option to purchase 350,000 shares was outstanding and exercisable at a weighted average exercise price of $20.00. This option expired on October 1, 2018.

A summary of restricted stock activity, inclusive of restricted stock units, for the year ended September 30, 2018, is as follows:



	Shares		Weighted Average Grant- Date Fair Value
Unvested at September 30, 2017	2,255,796		$	13.65
Granted	1,343,929		17.30
Vested	(536,958	)	20.89
Forfeited	(212,939	)	20.91
Unvested at September 30, 2018	2,849,828		14.89

The fair value of restricted stock which vested during the year ended September 30, 2018, 2017, and 2016 was $11,216, $29,508 and $23,965, respectively.

Unrecognized compensation expense related to non-vested shares of restricted stock was $22,869 at September 30, 2018 and will be recognized over a weighted average vesting period of 2.3 years.

At September 30, 2018, a total of approximately 4,345,662 shares of Griffon’s authorized Common Stock were reserved for issuance in connection with stock compensation plans.

During 2018, Griffon granted 1,343,929 shares of restricted stock and restricted stock units. This included 815,929 shares of restricted stock and restricted stock units, subject to certain performance conditions, with vesting periods of three years, with a total fair value of $16,238, or a weighted average fair value of $19.90 per share. Also, this included 528,000 shares of restricted stock granted to two senior executives with a vesting period of four years and a two year post-vesting holding period, subject to the achievement of certain absolute and relative performance conditions relating to the price of Griffon's common stock. The Monte Carlo Simulation model was chosen to value the two senior executive awards; the total fair value of these restricted shares is approximately $7,008, or a weighted average fair value of $13.27. So long as the minimum performance condition is attained, the amount of shares that can vest will range from 384,000 to 528,000.

On each of August 3, 2016 and August 1, 2018, Griffon’s Board of Directors authorized the repurchase of up to $50,000 of Griffon’s outstanding common stock. Under these share repurchase programs, the Company may purchase shares of its common stock, depending upon market conditions, in open market or privately negotiated transactions, including pursuant to a 10b5-1 plan. Shares repurchased are recorded at cost. During 2018, Griffon purchased 2,088,739 shares of common stock under these repurchase programs, for a total of $41,110 or $19.68 per share. At September 30, 2018, an aggregate of $58,327 remains under Griffon's Board authorized repurchase authorizations.

In addition to the repurchases under Board authorized programs, during 2018, 199,978 shares, with a market value of $4,495, or $22.48 per share, were withheld to settle employee taxes due upon the vesting of restricted stock.

On December 10, 2013 Griffon repurchased 4,444,444 shares of common stock from GS Direct in a private transaction at a per share price of $11.25, an approximate 9.2% discount to the stock’s closing price on November 12, 2013, the day before announcement of the transaction. On June 19, 2018, GS Direct completed an underwritten secondary offering to sell 5,583,375 shares of Griffon's common stock, inclusive of the underwriters’ 30-day option to purchase additional shares. Following the closing of the offering, GS Direct no longer owns any shares of Griffon. GS Direct's initial 10,000,000 share investment was in 2008.

On December 21, 2009, Griffon issued $100,000 principal of 4% convertible subordinated notes due 2017 (the “2017 Notes”). On July 14, 2016, Griffon announced that it would settle, upon conversion, up to $125,000 of the conversion value of the 2017 Notes in cash, with amounts in excess of $125,000, if any, to be settled in shares of Griffon common stock. On January 17, 2017, Griffon settled the convertible debt for $173,855 with $125,000 in cash, utilizing borrowings under the Credit Agreement, and $48,858, or 1,954,993 shares of common stock issued from treasury.

During the year ended September 30, 2017, Griffon's ESOP purchased 621,875 shares of common stock for a total of $10,908 or $17.54 per share, under a borrowing line that has now been fully utilized.