Share-Based Compensation

Stock Benefit Plans

We maintain benefit plans whereby shares of our common stock may be issued pursuant to the exercise of stock options or restricted stock granted to officers and key employees. Our Amended and Restated Incentive Plan reserves 44,000,000 shares of common stock for outstanding and future awards of stock options, restricted stock, and other share-based awards to officers and key employees. In May 2017, our shareholders approved the amended 2016 Equity Incentive Plan that reserves 13,404,404 shares of common stock for outstanding and future awards of stock options, restricted stock, and other awards to officers and key employees. On August 25, 2017, we issued 340,510 deferred common stock equivalents, or units, pursuant to provisions regarding our 2016 Equity Incentive Plan. The 63,894 remaining shares left available under grant from the Director Fee Plan were merged into the 2016 Equity Incentive Plan.

Our benefit plans allow for options to be granted as either non-qualified or incentive stock options. The options historically have been granted annually, or upon hire, as approved by the Compensation Committee of the Board of Directors. The options are granted with an exercise price equal to the market price of our common stock on the date of the grant, as approved by the Compensation Committee of the Board of Directors. The options are generally exercisable at a rate of 33¹/3% each year unless alternative vesting methods are approved by the Compensation Committee of the Board of Directors. Outstanding options will expire, if not exercised or forfeited, within eight years from the date of grant. Restricted shares are generally expensed ratably over the period during which the restrictions lapse, which is typically 33¹/3% each year. At December 31, 2018 and 2017, 8,287,804 and 10,125,235 shares, respectively, were reserved for future option and restricted share grants under our stock benefit plans.

We utilize the Black-Scholes option valuation model for estimating the fair value of our stock options. This model allows the use of a range of assumptions related to volatility, risk-free interest rate, expected holding period, and dividend yield. The expected volatility utilized in the valuation model is based on the historical volatility of our stock price. The dividend yield and expected holding period are based on historical experience and management’s estimate of future events. The risk-free interest rate is derived from the U.S. Treasury yield curve based on the expected life of the option in effect at the time of grant. The fair values of our stock options are calculated using the following weighted average assumptions, based on the methods described above:



	Years Ended December 31,
Assumptions	2018	2017	2016
Dividend yield	1.8%	2.0%	2.0%
Expected volatility	18.5%	19.0%	19.7%
Risk-free interest rate	2.4%	1.6%	1.0%
Expected holding period (years)	4.0	4.0	4.0

The following table summarizes certain information with respect to stock option and restricted share compensation as included in our Consolidated Statement of Operations:



	Years Ended December 31,
	2018		2017		2016
	(In thousands)
Total pretax employee share-based compensation expense included in net income	$	15,626	$	14,788	$	14,056
Income tax benefit related to share-based compensation included in net income	$	3,998	$	5,416	$	6,427

Stock Options

The following table sets forth stock option activity for the year ended December 31, 2018 (shares reported in whole numbers):



	Options		Weighted-Average Exercise Price
Outstanding at December 31, 2017	9,520,299		$	19.77
Granted	1,199,420		$	37.50
Exercised	(1,801,776	)	$	13.61
Outstanding at December 31, 2018	8,917,943		$	23.40
Exercisable at December 31, 2018	6,145,297		$	19.81

The aggregate intrinsic value for stock options outstanding and exercisable was $150.4 million and $125.7 million, respectively, at December 31, 2018.

Set forth below is certain information related to stock options outstanding and exercisable at December 31, 2018 (shares reported in whole numbers):



	Options Outstanding				Options Exercisable
Range of Exercise Price	Number Outstanding at December 31, 2018	Weighted-Average Remaining Contractual Life (in years)	Weighted- Average Exercise Price		Number Exercisable at December 31, 2018	Weighted- Average Exercise Price
$ 0.00 — 10.00	3,127	0.1	$	9.09	3,127	$	9.09
$10.01 — 20.00	2,878,785	2.4	$	15.38	2,878,785	$	15.38
$20.01 — 30.00	4,836,611	5.1	$	24.68	3,263,385	$	23.73
$30.01 — 40.00	1,199,420	7.1	$	37.50	—	$	—
$0.00 — 40.00	8,917,943	4.5	$	23.40	6,145,297	$	19.81

Other information pertaining to stock options was as follows (in thousands, except weighted-average grant date fair value):



	Years Ended December 31,
	2018		2017		2016
Weighted average grant-date fair value of stock options granted	$	5.52	$	3.90	$	4.01
Total fair value of stock options vested	$	6,857	$	7,425	$	7,690
Total intrinsic value of stock options exercised	$	48,643	$	56,946	$	37,284
Cash received from the exercise of stock options	$	24,517	$	33,611	$	17,662
Recognized compensation expense	$	6,648	$	6,909	$	7,633

As of December 31, 2018, the unrecognized compensation expense related to stock options of $7.1 million is expected to be recognized over a weighted average period of 1.3 years.

Restricted Shares

The fair value of our restricted share awards and units, as determined on the grant date, is being amortized and charged to income (with an offsetting credit to Capital in excess of par value) generally over the average period during which the restrictions lapse.

Restricted share award activity was as follows (shares reported in whole numbers):



	Restricted Share Awards		Weighted-Average Grant-Date Fair Value
Nonvested restricted share awards at December 31, 2017	441,811		$	25.70
Granted	177,944		$	37.50
Vested	(230,510	)	$	24.74
Nonvested restricted share awards at December 31, 2018	389,245		$	31.67

Other information pertaining to restricted share awards was as follows (in thousands, except weighted-average grant date fair value):



	Years Ended December 31,
	2018		2017		2016
Recognized compensation expense related to restricted share awards	$	6,063	$	5,564	$	5,640
Weighted-average grant date fair value for nonvested restricted stock granted	$	37.50	$	29.28	$	22.28
Total fair market value of restricted share awards vested	$	5,702	$	5,463	$	5,682
Aggregate intrinsic value of restricted share awards vested	$	3,578	$	4,454	$	3,214

At December 31, 2018, unrecognized compensation expense of $6.9 million related to restricted share awards is expected to be recognized over a weighted average period of 1.7 years.