The Company typically grants equity awards annually at its regularly scheduled first quarter meeting of the Board of Directors based on their recommendation from the Compensation Committee.

Stock options generally vest ratably over four years. Weighted average option fair values and assumptions for the periods specified are disclosed below. The fair value of each option grant was estimated on the date of the grant using the Binomial lattice option pricing model.



	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
Weighted average fair value of grants	$27.72	$40.83	$35.15	$38.14
Dividend yield	1.27%	1.14%	1.18%	1.07%
Volatility	22.33%	27.81%	24.78%	28.47%
Risk-free interest rate	1.75% - 1.77%	2.47% - 3.07%	2.53% - 3.04%	2.02% - 3.17%
Expected life (in years)	4.65	5.81	5.87	5.83



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Cost of goods sold	$	74		$	91		$	356		$	388
Selling, general and administrative expenses	2,137			1,929			6,663			6,334
Total expense before income taxes	2,211			2,020			7,019			6,722
Income tax benefit	(288		)	(385		)	(940		)	(1,219		)
Total expense after income taxes	$	1,923		$	1,635		$	6,079		$	5,503

A summary of the Company’s stock option activity as of September 30, 2019 and changes during the nine months ended September 30, 2019 are presented in the following table:



Stock Options	Shares		Weighted Average Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2019	1,714,003		$	85.08	6.70	$	74,191,783
Granted	335,095		144.91
Exercised	(513,317	)	69.34
Forfeited	(90,067	)	114.85
Outstanding at September 30, 2019	1,445,714		$	102.69	7.13	$	88,375,713
Vested and expected to vest as of September 30, 2019	1,346,871		$	100.97	7.04	$	84,725,335
Exercisable at September 30, 2019	649,766		$	78.22	5.69	$	55,657,413

Restricted stock awards generally cliff vest after three years for employees and non-employee directors. Unvested restricted stock carries dividend and voting rights and the sale of the shares is restricted prior to the date of vesting. A summary of the Company’s restricted stock activity as of September 30, 2019 and changes during the nine months ended September 30, 2019 are presented as follows:



Restricted Stock	Shares		Weighted-Average Grant Date Fair Value
Unvested at January 1, 2019	148,041		$	101.50
Granted	41,780		143.13
Vested	(50,892	)	80.51
Forfeited	(12,390	)	122.52
Unvested at September 30, 2019	126,539		$	122.69

Dividends are paid on restricted stock awards whose fair value is equal to the market price of the Company’s stock at the date of the grant.



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Cost of goods sold	$	(10	)	$	77		$	192		$	316
Selling, general and administrative expenses	1,094			902			3,419			3,155
Total expense before income taxes	1,084			979			3,611			3,471
Income tax benefit	(204		)	(177		)	(684		)	(620		)
Total expense after income taxes	$	880		$	802		$	2,927		$	2,851

The Company also maintains a cash-settled share based compensation plan for certain employees. Cash-settled restricted stock awards generally cliff vest after three years. Cash-settled restricted stock awards are recorded at fair value on a quarterly basis using the market price of the Company’s stock on the last day of the quarter. A summary of the Company’s unvested cash-settled restricted stock activity as of September 30, 2019 and changes during the nine months ended September 30, 2019 are presented in the following table:



Cash-Settled Restricted Stock	Shares		Weighted-Average Fair Value
Unvested at January 1, 2019	88,225		$	126.26
Granted	25,950		143.14
Vested	(28,150	)	144.27
Forfeited	(9,040	)	159.68
Unvested at September 30, 2019	76,985		$	172.08

Dividend equivalents are paid on certain cash-settled restricted stock awards. Total compensation cost for cash-settled restricted stock is as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Cost of goods sold	$	118		$	381		$	954		$	896
Selling, general and administrative expenses	435			1,064			3,132			2,776
Total expense before income taxes	553			1,445			4,086			3,672
Income tax benefit	(67		)	(158		)	(413		)	(368		)
Total expense after income taxes	$	486		$	1,287		$	3,673		$	3,304

Weighted average performance share unit fair values and assumptions for the period specified are disclosed below. The performance share units are market condition awards and have been assessed at fair value on the date of grant using a Monte Carlo simulation model.



	Nine Months Ended September 30,
	2019	2018
Weighted average fair value of grants	$207.26	$216.59
Dividend yield	—%	—%
Volatility	19.11%	17.42%
Risk-free interest rate	2.49%	2.40%
Expected life (in years)	2.83	2.85

A summary of the Company’s performance share unit activity as of September 30, 2019 and changes during the nine months ended September 30, 2019 are presented in the following table:



Performance Share Units	Shares		Weighted-Average Grant Date Fair Value
Unvested at January 1, 2019	111,155		$	142.42
Granted	56,860		207.26
Vested	—		—
Forfeited	(12,895	)	125.03
Unvested at September 30, 2019	155,120		$	178.97

On December 31, 2018, 69,995 performance share units vested. Based on the Company’s relative total shareholder return rank during the three year period ended December 31, 2018, the Company achieved a 250% payout factor and issued 174,994 common shares in February 2019.



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Cost of goods sold	$	—		$	—		$	—		$	—
Selling, general and administrative expenses	2,359			2,118			5,904			5,949
Total expense before income taxes	2,359			2,118			5,904			5,949
Income tax benefit	(196		)	(418		)	(447		)	(1,123		)
Total expense after income taxes	$	2,163		$	1,700		$	5,457		$	4,826

The Company’s policy is to recognize compensation cost on a straight-line basis, assuming forfeitures, over the requisite service period for the entire award. Classification of stock compensation cost within the Condensed Consolidated Statements of Operations is consistent with classification of cash compensation for the same employees.

As of September 30, 2019, there was $15.2 million of total unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 1.4 years, $6.2 million of total unrecognized compensation cost related to restricted stock that is expected to be recognized over a weighted-average period of 1.1 years, $4.3 million of total unrecognized compensation cost related to cash-settled restricted shares that is expected to be recognized over a weighted-average period of 1.0 years and $10.8 million of total unrecognized compensation cost related to performance share units that is expected to be recognized over a weighted-average period of 1.0 years.