NOTE L:

STOCK-BASED COMPENSATION PLANS

The Company has a long-term incentive program for directors, officers and employees. Under this program, the Company initially authorized four million shares of Company common stock for the grant of incentive stock options, nonqualified stock options, restricted stock awards, and retroactive stock appreciation rights. The long-term incentive program was amended effective May 25, 2011, May 14, 2014 and May 17, 2017 to authorize an additional 900,000 shares, 1,000,000 shares and 1,000,000 shares of Company common stock, respectively, for the grant of incentive stock options, nonqualified stock options, restricted stock awards, and retroactive stock appreciation rights. As of December 31, 2018, the Company has authorization to grant up to approximately 1.5 million additional shares of Company common stock for these instruments. The nonqualified (offset) stock options in its Director’s Stock Balance Plan vest and become exercisable immediately and expire one year after the date the director retires or two years in the event of death. The remaining options have a ten-year term, and vest and become exercisable on a grant-by-grant basis, ranging from immediate vesting to ratably over a five-year period.

Activity in this long-term incentive program is as follows:

	Stock Options
	Outstanding			Weighted- average Exercise Price of Shares
Outstanding at December 31, 2016		1,755,992		$	30.85
Granted		197,943			57.02
Exercised		(238,499	)		25.72
Forfeited		(7,140	)		37.47
Outstanding at December 31, 2017		1,708,296			34.57
Granted		213,504			55.92
Exercised		(268,004	)		27.94
Forfeited		(9,435	)		45.54
Outstanding at December 31, 2018		1,644,361		$	38.36
Exercisable at December 31, 2018		1,010,795		$	32.66

The following table summarizes the information about stock options outstanding under the Company’s stock option plan at December 31, 2018:

		Options outstanding						Options exercisable
Range of Exercise Price		Shares		Weighted -average Exercise Price		Weighted- average Remaining Life (years)		Shares		Weighted -average Exercise Price
$	0.00 – $18.00		10,978	$	17.82		0.31		10,978	$	17.82
$	18.001 – $28.00		215,014		23.26		2.67		215,014		23.26
$	28.001 – $29.00		142,691		28.78		3.22		142,691		28.78
$	29.001 – $30.00		185,866		29.79		4.21		185,866		29.79
$	30.001 – $40.00		686,103		37.09		6.34		391,658		37.06
$	40.001 – $60.00		403,709		56.45		8.73		64,588		56.72
TOTAL			1,644,361	$	38.36		5.90		1,010,795	$	32.66

The weighted-average remaining contractual term of outstanding and exercisable stock options at December 31, 2018 is 5.90 years and 4.71 years, respectively. The aggregate intrinsic value of outstanding and exercisable stock options at December 31, 2018 is $32.8 million and $25.9 million, respectively.

The Company recognized stock-based compensation expense related to non-qualified stock options of $2.6 million, $2.2 million and $2.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. A related income tax benefit was recognized of $0.6 million, $0.8 million and $0.8 million for the 2018, 2017 and 2016 years, respectively. Compensation expense related to restricted stock vesting recognized in the income statement for 2018, 2017 and 2016 was approximately $3.2 million, $2.7 million and $2.4 million, respectively.

Management estimated the fair value of options granted using the Black-Scholes option-pricing model. This model was originally developed to estimate the fair value of exchange-traded equity options, which (unlike employee stock options) have no vesting period or transferability restrictions. As a result, the Black-Scholes model is not necessarily a precise indicator of the value of an option, but it is commonly used for this purpose. The Black-Scholes model requires several assumptions, which management developed based on historical trends and current market observations.

	2018			2017			2016
Weighted-average Fair Value of Options Granted	$	13.44		$	12.78		$	7.90
Assumptions:
Weighted-average expected life (in years)		6.50			6.50			6.50
Future dividend yield		2.91	%		3.19	%		3.43	%
Share price volatility		29.44	%		29.71	%		30.00	%
Weighted-average risk-free interest rate		2.82	%		2.31	%		1.72	%

Unrecognized stock-based compensation expense related to non-vested stock options totaled $4.7 million at December 31, 2018. The weighted-average period over which this unrecognized expense would be recognized is 3.3 years. The total fair value of stock options vested during 2018, 2017, and 2016 were $2.3 million, $2.2 million and $2.1 million, respectively.

During the 12 months ended December 31, 2018 and 2017, proceeds from stock option exercises totaled $9.4 million and $7.7 million, respectively, and the related tax benefits from exercise were approximately $1.6 million and $2.3 million, respectively. During the twelve months ended December 31, 2018 and 2017, approximately 0.3 million and 0.2 million shares, respectively, were issued in connection with stock option exercises each year. The total intrinsic value of options exercised during 2018, 2017 and 2016 were $8.4 million, $7.6 million and $10.3 million, respectively.

A summary of the status of the Company’s unvested restricted stock awards as of December 31, 2018, and changes during the twelve months ended December 31, 2018 and 2017, is presented below:

	Restricted Shares			Weighted-average grant date fair value
Unvested at December 31, 2016		253,830		$	29.98
Awards		46,428			57.02
Forfeitures		(4,863	)		24.78
Vestings		(64,522	)		33.69
Unvested at December 31, 2017		230,873			34.06
Awards		50,133			55.92
Forfeitures		(3,429	)		34.95
Vestings		(56,514	)		39.40
Unvested at December 31, 2018		221,063		$	37.72

Unrecognized stock-based compensation expense related to unvested restricted stock totaled $4.6 million at December 31, 2018, which will be recognized as expense over the next five years. The weighted-average period over which this unrecognized expense would be recognized is 3.2 years. The total fair value of restricted stock vested during 2018, 2017, and 2016 were $2.3 million, $2.2 million and $2.5 million, respectively.