The Company granted equity compensation under its Amended and Restated 1999 Long-Term Incentive Plan (the “1999 Plan”) until the 1999 Plan expired on December 31, 2013. On May 16, 2014, the Company’s stockholders approved the 2014 Management Incentive Plan (the “2014 Plan”). The 2014 Plan replaced the 1999 Plan. Like the 1999 Plan, the 2014 Plan provides for the Company to grant stock options, stock appreciation rights and restricted stock. The 2014 Plan also provides for awards based on a multi-year performance period and for annual short-term awards based on a twelve-month performance period. Shares available for issuance under the 2014 Plan are 7,676,038 shares. The Company may satisfy its obligations under any award granted under the 2014 Plan by issuing new shares. Awards previously granted under the 1999 Plan remain outstanding in accordance with their terms.

All awards have a contractual term of ten years and awards vest over a period of two to seven years depending upon each grant. The fair value of option grants is estimated at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including expected stock price characteristics which are significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, the existing models do not necessarily provide a reliable single measure of the fair value of stock-based compensation awards.

The assumptions used under the Black-Scholes option pricing model in computing fair value of options are based on the expected option life considering both the contractual term of the option and expected employee exercise behavior, the interest rate associated with U.S. Treasury issues with a remaining term equal to the expected option life and the expected volatility of the Company’s common stock over the expected term of the option. The assumptions used for grants in the years ended December 31, 2019, 2018 and 2017 were as follows:



	2019		2018		2017
Risk-free interest rate	2.5% - 2.7%		2.7% - 2.9%		2.1% - 2.4%
Expected volatility	20.24% - 20.45%		19.02% - 21.05%		18.88% - 21.62%
Dividend yield	0.0	%	0.0	%	0.0	%
Expected holding period	4.00 – 10.00 years		5.00 – 10.00 years		6.00 – 10.00 years
Weighted-average grant date fair value ⁽¹⁾	$2.36 - $4.08		$4.62 - $7.58		$5.39 - $8.17



	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value(1)
Outstanding on January 1, 2017	4,985,059		$	12.10	5.3	$	37,557
Granted	448,580		$	19.70
Exercised	—		$	—
Canceled	(13	)	$	—
Outstanding on December 31, 2017	5,433,626		$	12.74	4.7	$	41,069
Granted	427,219		$	18.42
Exercised	—		$	—
Canceled	(12	)	$	—
Outstanding on December 31, 2018	5,860,833		$	13.16	4.1	$	1,095
Granted	406,875		$	10.92
Exercised	(1,824,351	)	$	8.67
Canceled	(11	)	$	—
Outstanding on December 31, 2019	4,443,346		$	14.80	5.0	$	4,427
Options exercisable at:
December 31, 2017	3,500,201
December 31, 2018	4,019,477
December 31, 2019	2,689,673



			Options Outstanding				Options Exercisable
Range of Exercise Prices			Outstanding as of	Weighted-Average Remaining Contractual Life (Years)	Weighted-Average Exercise Price		Exercisable as of	Weighted-Average Remaining Contractual Life (Years)	Weighted-Average Exercise Price		Aggregate Intrinsic Value
Range of Exercise Prices			12/31/2019	Weighted-Average Remaining Contractual Life (Years)	Weighted-Average Exercise Price		12/31/2019	Weighted-Average Remaining Contractual Life (Years)	Weighted-Average Exercise Price		Aggregate Intrinsic Value
$9.86	-	$11.83	2,082,717	3.7	$	11.26	1,675,842	2.4	$	11.35	$	—
$11.83	-	$13.80	—	0	$	—	—	0	$	—	—
$13.80	-	$15.77	519,278	4.4	$	14.68	519,278	4.4	$	14.68	—
$15.77	-	$17.74	—	0	$	—	—	0	$	—	—
$17.74	-	$19.71	1,841,351	6.6	$	18.84	494,553	5.2	$	18.12	—
			4,443,346	5.0	$	14.80	2,689,673	3.3	$	13.24	$	4,427

As of December 31, 2019, there was $2,657 of total unrecognized compensation cost related to unvested stock options. The cost is expected to be recognized over a weighted-average period of approximately 1.60 years at December 31, 2019.

As a result of adopting ASU 2016-09, the Company reflects the net excess tax benefits of stock-based compensation in its consolidated financial statements as a component of “Cash Flows from Operating Activities.” Prior to the adoption of ASU 2016-09 as of January 1, 2017, the Company reflected the excess tax benefits of stock-based compensation in its consolidated financial statements as a component of “Cash Flows from Financing Activities.”

Non-qualified options for 406,875 shares of common stock were issued during 2019. The exercise price of the options granted was $10.92 in 2019. The exercise price of the options granted in 2019 was at the fair value on the date of the grants.

Non-qualified options for 427,219 shares of common stock were issued during 2018. The exercise price of the options granted was $18.42 in 2018. The exercise price of the options granted in 2018 was at the fair value on the date of the grants.

Non-qualified options for 448,580 shares of common stock were issued during 2017. The exercise price of the options granted was $19.70 in 2017. The exercise price of the options granted in 2017 was at the fair value on the date of the grants.

The Company has elected to use the long-form method under which each award grant is tracked on an employee-by-employee basis and grant-by-grant basis to determine if there is a tax benefit or tax deficiency for such award. The Company then compares the fair value expense to the tax deduction received for each grant in order to calculate the related tax benefits and deficiencies. With the adoption of ASU 2016-09 as of January 1, 2017, all excess tax benefits and deficiencies are recognized as a component of income tax expense or benefit on the income statement.

The total intrinsic value of options exercised during the year ended December 31, 2019 was $6,577. Tax benefits related to option exercises of $363 were recorded as increases to stockholders’ deficiency for the year ended December 31, 2019. A total of 1,824,351 options were exercised during the year ended December 31, 2019.

Restricted Stock Awards. On May 2, 2019, the Company granted 63,000 restricted shares of the Company’s common stock (the “May 2019 Grant”) pursuant to the 1999 Plan to six of its outside directors. The shares vest over a period of three years and the Company will recognize $564 of expense over the vesting period of the May 2019 grant. The Company recognized expense of $124 for the year ended December 31, 2019.

On May 29, 2018, the Company granted 27,563 restricted shares of the Company’s common stock pursuant to the 1999 Plan to one of its executive officers. The shares vest over a period of two years with one-half of the shares vesting on the first anniversary of the grant date and the remaining half vesting on the second anniversary of the date thereof. The Company will recognize $481 of expense over the vesting period of the May 2018 grant. The Company recognized expense of $241 and $142 for the years ended December 31, 2019 and 2018, respectively.

Additionally, on May 29, 2018, the Company granted 7,348 restricted shares of the Company’s common stock pursuant to the 1999 Plan to two of its outside directors. The shares vested on April 25, 2019 and the Company recognized $128 of expense through the vesting date. The Company recognized expense of $46 and $82 for the years ended December 31, 2019 and 2018, respectively.

In April 2016, the Company granted 60,775 restricted shares of the Company’s common stock (the “April 2016 Grant”) pursuant to the 1999 Plan to five of its outside directors. The shares vested in April 2019 and the Company recognized $1,054 of expense over the vesting period of three years. The Company recognized expense of $92, $374 and $351 for the years ended December 31, 2019, 2018 and 2017, respectively.

On November 10, 2015, the Company granted its President and Chief Executive Officer an award of 1,458,608 shares of its common stock subject to service and performance-based vesting. The award shares were issued pursuant to the terms of an agreement that provides that both a performance requirement and a continued employment requirement must be met over a seven-year performance period to earn vested rights with respect to the award shares. The maximum potential amount of the award shares reflects recognition of the CEO’s contributions as CEO since January 1, 2006 and the value of his management and real estate expertise to the Company. The fair market value of the restricted shares on the date of grant was $28,374 and is being amortized over the performance period as a charge to compensation expense. The Company recognized expense of $4,053, $4,053 and $5,275 for the years ended December 31, 2019, 2018 and 2017, respectively.

On July 23, 2014, the Company granted its President and Chief Executive Officer an award of 1,340,096 shares of its common stock subject to service and performance-based vesting. The award shares were issued pursuant to the terms of an agreement that provides that both a performance requirement and a continued employment requirement must be met over a seven-year performance period to earn vested rights with respect to the award shares. The maximum potential amount of the award shares reflects recognition of the CEO’s contributions as CEO since January 1, 2006 and the value of his management and real estate expertise to the Company. The fair market value of the restricted shares on the date of grant was $20,780 and is being amortized over the performance period as a charge to compensation expense. The Company recognized expense of $2,969 for each of the years ended December 31, 2019, 2018 and 2017, respectively.

In October 2013, the President and Chief Executive Officer of Liggett and Liggett Vector Brands was awarded a restricted stock grant of 36,853 shares of Vector’s common stock pursuant to the 1999 Plan. The shares vested on March 15, 2019, contingent upon the certification of performance-based targets being achieved by the Company’s Tobacco segment. He received dividends on the restricted shares as paid. The fair market value of the restricted shares on the date of grant was $458 and was amortized over the vesting period as a charge to compensation expense. The Company recognized expense of $21, $85 and $85 for the years ended December 31, 2019, 2018 and 2017, respectively.

As of December 31, 2019, there was $15,095 of total unrecognized compensation costs related to unvested restricted stock awards. The cost is expected to be recognized over a weighted-average period of approximately 1.30 years.