(5) Stock-Based and Long-Term Incentive Compensation

The Company is authorized to grant restricted stock units, stock options, performance share units and other cash and stock awards as part of the Long-Term Incentive Program (LTIP). The Compensation Committee determines the recipients of the equity awards, the type of awards made, the required performance measures, and the timing and duration of each grant. At December 31, 2018, 5,877,000 shares of the Company’s common stock were available for future grants under the plan.

Total stock-based compensation expense and the associated tax benefits are as follows (in thousands):



	Years ended December 31,
	2018		2017		2016
Stock options	$	4,247	$	4,289	$	4,870
Restricted stock		-		-		382
Restricted stock units		19,828		21,899		24,762
Performance share units		6,912		9,740		10,167
Total compensation expense		30,987		35,928		40,181

Related income taxes		7,189		8,335		14,867
Total compensation expense, net of income taxes	$	23,798	$	27,593	$	25,314

Total stock-based compensation expense is reflected in general and administrative expenses in the consolidated statements of operations.

Stock Options

Stock options are granted with an exercise price equal to the market price of the Company’s common stock at the date of grant. The stock options generally vest in equal installments over three years and expire in ten years from the grant date. Non-vested stock options are generally forfeited upon termination of employment.

The Company recognizes compensation expense for stock option grants based on the fair value at the date of grant using the Black-Scholes-Merton option pricing model. The Company uses historical data, among other factors, to estimate the expected volatility and the expected life of the stock options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected life of the stock option. The dividend yield is based on our historical and projected dividend payouts.

The weighted average fair values of stock options granted and the assumptions used in estimating those fair values are as follows:



	Years ended December 31,
	2018			2017			2016
Weighted average fair value of stock options granted	$	5.61		$	8.36		$	3.61

Black-Scholes-Merton Assumptions:
Risk free interest rate		2.43	%		1.96	%		1.46	%
Expected life (years)		6			6			5
Volatility		51.21	%		48.22	%		55.72	%
Dividend yield		-			-			3.28

The following table summarizes stock option activity for 2018:



	Number of Options	Weighted Average Option Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at beginning of period	6,138,653	$	18.75	5.4	$	-
Granted	567,967	$	11.04
Exercised	-	$	-
Expired	(271,167)	$	14.1
Outstanding at end of period	6,435,453	$	18.27	5.0	$	-
Exercisable at end of period	5,022,592	$	20.13	4.2	$	-
Options expected to vest at end of period	1,412,861	$	11.65	8.0	$	-

The total intrinsic value of stock options exercised during 2018, 2017 and 2016 was $0, $0 and $0.3 million, respectively. The Company received $0, $0.1 million and $0.5 million during 2018, 2017 and 2016, respectively, from employee stock option exercises. The Company has reported tax benefits of $0, $0 and $0.1 million from the exercise of stock options for 2018, 2017 and 2016, respectively.

The following table summarizes non-vested stock option activity for 2018:



	Number of Options	Weighted Average Grant Date Fair Value
Non-vested at beginning of period	1,748,933	$	12.18
Granted	567,967	$	11.04
Vested	(904,039)	$	12.3
Non-vested at end of period	1,412,861	$	8.00

At December 31, 2018, the unrecognized compensation expense related to non-vested stock options was $3.3 million. The Company expects to recognize $2.2 million and $1.1 million of compensation expense associated with these options during 2019 and 2020, respectively.

Restricted Stock Units

Restricted stock unit awards (RSUs) vest in equal annual installments over three years. On the vesting date, each RSU is converted to one share of the Company’s common stock having an aggregate value determined by the Company’s closing stock price on the vesting date. Holders of RSUs are not entitled to any rights of a stockholder, such as the right to vote shares.

The following table summarizes RSU activity for 2018:



	Number of RSUs	Weighted Average Grant Date Fair Value
Non-vested at beginning of period	3,192,000	$	14.87
Granted	2,030,896	$	11.31
Vested	(1,534,153)	$	14.26
Forfeited	(266,307)	$	12.51
Non-vested at end of period	3,422,436	$	13.22

At December 31, 2018, there was $21.0 million of unrecognized compensation expense related to unvested RSUs. The Company expects to recognize $13.7 million, $7.0 million, and $0.3 million associated with unvested RSUs for 2019, 2020, and 2021, respectively.

Performance Share Units

The Company has issued performance share units (PSUs) to its employees as part of the Company’s LTIP. There is a three-year performance period associated with each PSU grant. The two performance metrics are the Company’s return on assets and total stockholder return relative to those of the Company’s pre-defined “peer group.” The PSUs will settle in cash or a combination of cash and up to 50% of equivalent value in the Company’s common stock, at the discretion of the Compensation Committee. At December 31, 2018, there were 320,284 PSUs outstanding (115,397, 97,044 and 107,843 related to performance periods ending December 31, 2018, 2019 and 2020, respectively). The Company has recorded both current and long-term liabilities for this liability-based compensation award.

Employee Stock Purchase Plan (ESPP)

Eligible employees are allowed to purchase shares of the Company’s common stock at a discount during six-month offering periods beginning on January 1st and July 1st of each year and ending on June 30 and December 31 of each year, respectively.

The following table summarizes ESPP activity (in thousands except shares):



	Years ended December 31,
	2018		2017		2016
Cash received for shares issued	$	2,625	$	3,074	$	3,681
Compensation expense	$	463	$	542	$	1,492
Shares issued		550,950		360,465		290,987

401(k)/Profit Sharing Plan

The Company maintains a defined contribution profit sharing plan for employees who have satisfied minimum service requirements. Employees may contribute up to 75% of their eligible earnings to the plan subject to the contribution limitations imposed by the Internal Revenue Service. The Company provides a nondiscretionary match of 100% of an employee’s contributions to the plan, up to 4% of the employee’s salary. The Company made contributions of $10.0 million, $8.4 million and $8.7 million 2018, 2017 and 2016, respectively.

Non-Qualified Deferred Compensation Plans

The Company maintains a non-qualified deferred compensation plan which allows senior management to defer up to 75% of their base salary, up to 100% of their bonus, up to 100% of the cash portion of their PSU compensation and up to 100% of the vested RSUs to the plan. The Company also maintains a non-qualified deferred compensation plan for its non-employee directors which allows each director to defer up to 100% of their cash compensation paid by the Company and up to 100% of their vested RSUs to the plan. Payments are made to participants based on their annual enrollment elections and plan balances.

The following table summarizes deferred compensation balances (in thousands):



		December 31,
	Balance sheet location	2018		2017
Deferred compensation assets	Intangible and other long-term assets, net	$	13,306	$	14,187
Deferred compensation liabilities, short-term	Accounts payable	$	1,138	$	1,253
Deferred compensation liabilities, long-term	Other long-term liabilities	$	19,766	$	21,085

Supplemental Executive Retirement Plan

The Company has a supplemental executive retirement plan (SERP). The SERP provides retirement benefits to the Company’s executive officers and certain other designated key employees. The SERP is an unfunded, non-qualified defined contribution retirement plan, and all contributions under the plan are unfunded credits to a notional account maintained for each participant. Under the SERP, the Company will generally make annual contributions to a retirement account based on age and years of service. The participants in the plan receive contributions ranging from 5% to 35% of salary and annual cash bonus, which totaled $1.2 million, $0.9 million and $2.2 million during 2018, 2017 and 2016, respectively. During 2018, 2017 and 2016, the Company paid $0, $0 and $1.4 million, respectively, to eligible participants in the SERP.