NOTE 11. STOCK-BASED COMPENSATION

Stock-based compensation granted under our Company’s stock plans is expensed in tranches over the vesting period. Non-performance based grants generally vest equally over a three or four-year period. Performance units generally cliff vest three years after they are granted. Each performance unit and restricted stock unit represents a contingent right to receive one share of Common Stock as of the vesting date. Such Common Stock may be subject to forfeiture for the payment of any required tax withholding.

The activity related to our Company's restricted stock unit awards was as follows:

	Nine Months Ended September 30, 2018
	Number of Awards			Weighted Average Grant Date Fair Value ⁽¹⁾
Nonvested at the beginning of the period		159,539		$	41.60
Granted		24,593		$	50.01
Vested ⁽²⁾		(76,168	)	$	35.23
Forfeited		(7,000	)	$	38.00
Nonvested at the end of the period		100,964		$	48.70

(1)	Fair value is based on the closing price of our common shares on the NASDAQ on the grant date.

(2)	This amount represents the gross number of shares vested before any share forfeiture to pay required tax withholdings. For the nine months ended September 30, 2018 share awards of 29,954 were withheld for tax payments at a weighted average vest date fair value of $56.83.

The activity related to our Company's performance-based equity awards was as follows:

	Nine Months Ended September 30, 2018
	Number of Awards			Weighted Average Grant Date Fair Value ⁽¹⁾
Nonvested at the beginning of the period		966,361		$	43.39
Granted		247,554		$	54.15
Performance Adjustment		(59,833	)	$	37.25
Vested ⁽²⁾		(274,299	)	$	37.25
Forfeited		(34,250	)	$	46.00
Nonvested at the end of the period		845,533		$	48.86

(1)	Fair value is based on the closing price of our common shares on the NASDAQ on the grant date.

(2)	This amount represents the gross number of shares vested before any share forfeiture to pay required tax withholdings. For the nine months ended September 30, 2018 share awards of 117,005 were withheld for tax payments at a weighted average vest date fair value of $55.65.

Awards that remain outstanding at the time of the Merger will be treated as follows in accordance with the Merger Agreement:

Each performance unit award granted prior to January 1, 2017, and each tranche of a restricted stock unit award that vests prior to January 1, 2020, that was granted prior to January 1, 2019, and that is payable in shares (together, the “2019 Vesting Company Awards”) will be converted into the right to receive an amount in cash equal to the product of (x) the Merger Consideration multiplied by (y) the number of restricted stock units in the applicable tranche or, in the case of performance unit awards, the target number of shares, in each case subject to the 2019 Vesting Company Award immediately prior to the Merger.

Each performance unit award granted on or after January 1, 2017 and prior to January 1, 2019, and each tranche of a restricted stock unit award that vests on or after January 1, 2020, that was granted prior to January 1, 2019, and that is payable in shares (together, the “2020 Vesting Company Awards”) will be canceled and converted into the right to receive a cash payment equal to the product of (x) the Merger Consideration multiplied by (y) the number of restricted stock units in the applicable tranche or, in the case of performance units, the target number of shares, in each case subject to the 2020 Vesting Company Award immediately prior to the Merger; provided that the right to a cash payment with respect to a 2020 Vesting Company Award shall be subject to the same vesting and payment schedules as the 2020 Vesting Company Award it replaces (other than performance-based vesting conditions).