Stock Compensation Plans

The Company's 2014 Long-Term Incentive Compensation Plan, dated February 28, 2014 and subsequently approved by Shareholders on May 2, 2014 (the "2014 LT Plan") is authorized to issue up to 1.75 million shares of common stock as options, share appreciation rights, restricted shares and units, performance shares and units and other stock or cash-based awards. Approximately 572 thousand shares remain available for issuance at December 31, 2017.

Stock-based compensation expense for all stock-based compensation awards are based on the grant-date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award. Total compensation expense recognized in the Consolidated Statement of Income for all stock compensation programs was $6.1 million, $7.0 million, and $1.9 million in 2017, 2016 and 2015, respectively.

Non-Qualified Stock Options ("Options")

The Company granted non-qualified stock options during 2015 under the 2014 LT Plan, upon the hiring of our new Chief Executive Officer. The options have a term of seven years and have three year annual graded vesting. The fair value of the options was estimated at the date of grant under the Black-Scholes option pricing model with the following assumptions. Expected volatility was estimated based on the historical volatility of the Company's common shares over the 5.5 years prior to the grant date. The average expected life was based on the contractual term of the plan. The risk-free rate is based on the U.S. Treasury Strips available with maturity period consistent with the expected life. Forfeitures are estimated at the date of grant based on historical experience. The weighted average assumptions used in the determination of fair value for stock option awards were as follows:



	2015
Risk free interest rate	1.80	%
Dividend yield	1.58	%
Volatility factor of the expected market price of the common shares	0.35
Expected life for the options (in years)	5.50

A reconciliation of the number of Options outstanding and exercisable under the 2014 LT Plan as of December 31, 2017, and changes during the period then ended, is as follows:



	Shares (in thousands)	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (000's)
Options outstanding at January 1, 2017	325	$	35.40
Options granted	—	—
Options exercised	—	—
Options cancelled / forfeited	—	—
Options outstanding at December 31, 2017	325	$	35.40	0.84	$	—
Vested and expected to vest at December 31, 2017	325	$	35.40	0.84	$	—
Options exercisable at December 31, 2017	217	$	35.40	0.84	$	—



	Year ended December 31,
(in thousands)	2017
Total intrinsic value of Options exercised	$	—
Total fair value of shares vested	$	1,123
Weighted average fair value of Options granted	$	—

As of December 31, 2017, there was $0.3 million unrecognized compensation cost related to Options granted under the 2014 LT Plan. That cost is expected to be fully amortized by October 2018.

Restricted Stock Awards

The LT Plans permit awards of restricted stock. These shares carry voting and dividend equivalent rights upon vesting; however, sale of the shares is restricted prior to vesting. Restricted shares vest over a period of 3 years, with one-third vesting each January 1 of the following first, second, and third years. Total restricted stock expense is equal to the market value of the Company's common shares on the date of the award and is recognized over the service period on a straight line basis. In 2017, there were 133.8 thousand shares issued to members of management and directors.

A summary of the status of the Company's non-vested restricted shares as of December 31, 2017, and changes during the period then ended, is presented below:



	Shares (in thousands)		Weighted-Average Grant-Date Fair Value
Non-vested restricted shares at January 1, 2017	223		$	31.93
Granted	134		37.13
Vested	(113	)	33.12
Forfeited	(15	)	34.49
Non-vested restricted shares at December 31, 2017	229		$	34.22



	Year ended December 31,
	2017	2016	2015
Total fair value of shares vested (000's)	$3,751	$4,038	$4,918
Weighted average fair value of restricted shares granted	$37.13	$27.20	$42.32

As of December 31, 2017, there was $2.5 million of total unrecognized compensation cost related to non-vested restricted shares granted under the LT Plans. That cost is expected to be fully amortized by November 2021.

EPS-Based Performance Share Units (“EPS PSUs”)

The LT Plans also allow for the award of EPS PSUs. Each EPS PSU gives the participant the right to receive common shares dependent on the achievement of specified performance results over a 3 year performance period. At the end of the performance period, the number of shares of stock issued will be determined by adjusting the award upward or downward from a target award. Fair value of EPS PSUs issued is based on the market value of the Company's common shares on the date of the award. The related compensation expense is recognized over the performance period when achievement of the award is probable and is adjusted for changes in the number of shares expected to be issued if changes in performance are expected. In 2017, there were 84.3 thousand PSUs issued to members of management. Currently, the Company is accounting for the awards granted in 2015, 2016 and 2017 at 0%, 0% and 30% of the maximum amount available for issuance, respectively.

EPS PSUs Activity

A summary of the status of the Company's EPS PSUs as of December 31, 2017, and changes during the period then ended, is presented below:



	Shares (in thousands)		Weighted-Average Grant-Date Fair Value
Non-vested at January 1, 2017	304		$	40.76
Granted	84		39.20
Vested	—		—
Forfeited	(113	)	49.67
Non-vested at December 31, 2017	275		$	36.61



	Year ended December 31,
	2017	2016	2015
Weighted average fair value of PSUs granted	$39.20	$27.54	$44.76

As of December 31, 2017, there was $0.6 million unrecognized compensation cost related to non-vested EPS PSUs granted under the LT Plans. That cost is expected to be fully amortized by December 2019.

TSR-Based Performance Share Units (“TSR PSUs”)

Beginning in 2016, the Company began granting Total Shareholder Return-Based PSUs ("TSR PSUs"). Each PSU gives the participant the right to receive common shares dependent on total shareholder return over a 3 year period. At the end of the period, the number of shares of stock issued will be determined by adjusting the award upward or downward from a target award. Fair value of TSR PSUs was estimated at the date of grant using a Monte Carlo Simulation with the following assumptions. Expected volatility was estimated based on the historical volatility of the Company's common shares over the 2.83 year period prior to the grant date. The average expected life was based on the contractual term of the plan. The risk-free rate is based on the U.S. Treasury Strips available with maturity period consistent with the expected life. Forfeitures are estimated at the date of grant based on historical experience. In 2017, there were 84.3 thousand TSR PSUs issued to members of management.



	2017
Risk free interest rate	1.55	%
Dividend yield	—	%
Volatility factor of the expected market price of the common shares	0.41
Expected term (in years)	2.83
Correlation coefficient	0.40

TSR PSUs Activity

A summary of the status of the Company's PSUs as of December 31, 2017, and changes during the period then ended, is presented below:



	Shares (in thousands)		Weighted-Average Grant-Date Fair Value
Non-vested at January 1, 2017	118		$	26.43
Granted	84		42.53
Vested	—		—
Forfeited	(19	)	32.04
Non-vested at December 31, 2017	183		$	33.26



	Year ended December 31,
	2017		2016		2015
Weighted average fair value of PSUs granted	$	42.53	$	26.43	$	—

As of December 31, 2017, there was approximately $1.6 million unrecognized compensation cost related to non-vested TSR PSUs granted under the LT Plans. That cost is expected to be fully amortized by December 2019.

Employee Share Purchase Plan (the “ESP Plan”)

The Company's 2004 ESP Plan allows employees to purchase common shares through payroll withholdings. The Company has approximately 96 thousand common shares remaining available for issuance to and purchase by employees under this plan. The ESP Plan also contains an option component. The purchase price per share under the ESP Plan is the lower of the market price at the beginning or end of the year. The Company records a liability for withholdings not yet applied towards the purchase of common stock.

The fair value of the option component of the ESP Plan is estimated at the date of grant under the Black-Scholes option pricing model with the following assumptions at the grant date. Expected volatility was estimated based on the historical volatility of the Company's common shares over the past year. The average expected life was based on the contractual term of the plan. The risk-free rate is based on the U.S. Treasury yield curve rate with a one year term. Forfeitures are estimated at the date of grant based on historical experience.



	2017		2016		2015
Risk free interest rate	1.76	%	0.61	%	0.25	%
Dividend yield	2.06	%	1.96	%	1.05	%
Volatility factor of the expected market price of the common shares	0.28		0.36		0.41
Expected life for the options (in years)	1.00		1.00		1.00