Share-Based Awards

The Company has a share-based compensation plan which was approved by its shareholders in April 2014 (Plan) under which the Board of Directors may grant to employees share-based awards including restricted stock units (RSUs), performance shares, nonqualified stock options and stock appreciation rights (SARs). Performance shares include a three-year performance period with vesting based on achievement of internal performance targets. Forfeitures are estimated at the grant date and adjusted when it is likely to change. RSUs granted under the Plan vest ratably over a three-year period with the first one-third of the grant vesting one year after the date of grant. Dividends are paid on RSUs settled with stock and performance shares settled with stock. Dividend equivalents are paid on RSUs and performance shares settled with cash. The options and SARs granted under the Plan have an exercise price equal to the fair market value of the underlying stock at the date of grant and vest ratably over a three-year period with the first one-third of the grant becoming exercisable one year after the date of grant. The options and SARs expire 10 years from the date of grant. At December 31, 2017, there were 10.8 million shares of common stock available for future awards under the Plan.

Restricted Stock Units and Performance Shares Settled in Stock:

The fair value of RSUs and performance shares settled in stock is determined based on the market price of the Company’s shares on the grant date. The following table summarizes the activity for these awards for the year ended December 31, 2017 (in thousands except for per share amounts):



	Shares / Units		Grant Date Fair Value Per Share
Nonvested, beginning of period	1,371		$	46
Granted	730		$	56
Vested	(408	)	$	51
Forfeited	(92	)	$	50
Nonvested, end of period	1,601		$	49

As of December 31, 2017, there was $33.9 million of unrecognized compensation cost related to RSUs and performance shares settled in stock (net of estimated forfeitures) that is expected to be recognized over a weighted-average period of 1.7 years.

Restricted Stock Units and Performance Shares Settled in Cash:

RSUs and performance shares that are settled in cash are recorded in the Company’s consolidated balance sheets as a liability until vested. The fair value is determined based on the market price of the Company’s stock and is remeasured at each balance sheet date. The following table summarizes the activity for these awards for the year ended December 31, 2017 (in thousands except for per share amounts):



	Units		Weighted-Average Grant Date Fair Value Per Share
Nonvested, beginning of period	124		$	54
Granted	56		$	52
Vested	(49	)	$	60
Forfeited	(30	)	$	59
Nonvested, end of period	101		$	53

Stock Options:

There were no stock options granted in 2017 and 2016. In 2015, the Company estimated the grant date fair value of its option awards granted using a lattice-based option valuation model. The Company believes that the lattice-based option valuation model provided a more precise estimate of fair value than the Black-Scholes option pricing model. Lattice-based option valuation models utilize ranges of assumptions over the expected term of the options. The Company used implied volatility to determine the expected volatility of its stock. The Company used historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted was derived from the output of the option valuation model and represents the average period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Assumptions used in calculating the lattice-based fair value of options granted during 2015 were as follows:



	2015
Expected average term (in years)	6.0
Expected volatility	24% - 30%
Weighted average volatility	28	%
Expected dividend yield	2.0	%
Risk-free interest rate	0.1% - 2.0%

The following table summarizes the stock option transactions for the year ended December 31, 2017 (in thousands except for per share amounts):



	Options		Weighted- Average Price
Options outstanding, beginning of period	1,878		$	49
Options exercised	(282	)	$	40
Options forfeited	(192	)	$	68
Options outstanding, end of period	1,404		$	48
Exercisable, end of period	1,309		$	47

The weighted-average fair value of options granted during the year ended December 31, 2015 was $13.

As of December 31, 2017, there was $0.1 million of unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 0.1 year.

The following table summarizes the aggregate intrinsic value related to options outstanding, exercisable and exercised as of and for the years ended December 31 (in thousands):



	2017		2016		2015
Exercised	$	4,051	$	9,595	$	9,890
Outstanding	$	11,711	$	22,383	$	16,605
Exercisable	$	11,711	$	22,383	$	16,605

The Company’s policy is to issue new shares of common stock upon the exercise of employee stock options.

Stock options outstanding at December 31, 2017 were as follows (options in thousands):



Price Range	Weighted-Average Contractual Life	Options	Weighted-Average Exercise Price
$10.01 to $20	1.2	151	$	13
$20.01 to $30	2.1	145	$	24
$30.01 to $40	0.1	37	$	39
$40.01 to $50	3.6	239	$	44
$50.01 to $60	4.6	193	$	52
$60.01 to $70	5.2	639	$	63
Options outstanding	4.0	1,404	$	48
Options exercisable	3.7	1,309	$	47

Stock Appreciation Rights (SARs):

There were no SARs granted in 2017 or 2016. SARs vest under the same terms and conditions as options; however, they are settled in cash equal to their settlement date fair value. As a result, SARs are recorded in the Company’s consolidated balance sheets as a liability until the date of exercise. The fair value of each SAR award is estimated using a lattice-based valuation model. In accordance with ASC Topic 718, “Stock Compensation,” the fair value of each SAR award is recalculated at the end of each reporting period and the liability and expense adjusted based on the new fair value and the percent vested. The assumptions used to determine the fair value of the SAR awards at December 31, 2017 and 2016 were as follows:



	2017		2016
Expected average term (in years)	5.7		5.2 - 5.7
Expected volatility	28% - 31%		28% - 31%
Expected dividend yield	2.9	%	2.4	%
Risk-free interest rate	1.3% - 2.5%		0.5% - 2.6%

The following table summarizes the SAR transactions for the year ended December 31, 2017 (in thousands except for per share amounts):



	SARs		Weighted-Average Price
Outstanding, beginning of period	75		$	37
Granted	—		$	—
Exercised	(32	)	$	31
Forfeited	(16	)	$	62
Outstanding, end of period	27		$	30
Exercisable, end of period	27		$	30

The weighted-average fair value of SARs granted during the year ended December 31, 2015 was $13.