NOTE 16 STOCK‑BASED COMPENSATION

We issue stock options and restricted stock units (“RSUs”), which consist of time-based and performance-based awards, to employees under stock awards plans approved by stockholders. In addition, RSUs are issued to non-employee directors under a Restricted Stock Unit Award Agreement for Directors pursuant to the 2018 Equity Incentive Plan. Previously, non-employee directors were issued stock options under a Director Stock Option Plan. Stock options are awarded with the exercise price equal to the market price on the date of grant and generally vest over three years and expire 10 years after grant.

RSUs granted to employees vest according to a specified performance period and/or vesting period. Time-based RSUs generally vest over three years. Performance-based RSUs vest at the end of the specified performance period, generally three years, assuming required performance or market vesting conditions are met. Performance-based RSUs have one of two vesting conditions: (1) based on Aptar’s internal financial performance metrics and (2) based on Aptar’s total shareholder return (“TSR”) relative to total shareholder returns of an industrial peer group, subject to discretion if the overall TSR is negative at the conclusion of the performance period. At the time of vesting, Aptar will issue or cause to be issued in the employee’s name the vested shares of common stock. In addition, RSU awards are generally net settled (shares are withheld to cover the employee tax obligation). Director RSUs are only time-based and generally vest over one year.

Compensation expense recorded attributable to stock options for the year ended December 31, 2018 was approximately $10.9 million ($8.4 million after tax). The income tax benefit related to this compensation expense was approximately $2.5 million. Approximately $8.7 million of the compensation expense was recorded in SG&A expenses and the balance was recorded in cost of sales. Compensation expense recorded attributable to stock options for the year ended December 31, 2017 was approximately $15.2 million ($10.5 million after tax). The income tax benefit related to this compensation expense was approximately $4.7 million. Approximately $13.2 million of the compensation expense was recorded in SG&A and the balance was recorded in cost of sales. Compensation expense recorded attributable to stock options for the year ended December 31, 2016 was approximately $16.9 million ($11.3 million after tax). The income tax benefit related to this compensation expense was approximately $5.6 million. Approximately $15.0 million of the compensation expense was recorded in SG&A expenses and the balance was recorded in cost of sales.

We use historical data to estimate expected life and volatility. The weighted‑average fair value of stock options granted under the Stock Awards Plans was $14.82, $11.86 and $10.59 per share in 2018, 2017 and 2016, respectively. These values were estimated on the respective dates of grant using the Black‑Scholes option‑pricing model with the following weighted‑average assumptions:


Stock Awards Plans:
Years Ended December 31,	2018		2017		2016
Dividend Yield	1.5	%	1.7	%	1.8	%
Expected Stock Price Volatility	14.2	%	15.8	%	16.9	%
Risk-free Interest Rate	2.8	%	2.2	%	1.6	%
Expected Life of Option (years)	6.6		6.7		6.7

A summary of option activity under our stock plans as of December 31, 2018, and changes during the period then ended is presented below:


	Stock Awards Plans					Director Stock Option Plans
			Weighted Average				Weighted Average
		Options	Exercise Price			Options	Exercise Price
Outstanding, January 1, 2018		8,059,319	$	61.67		214,967	$	57.44
Granted		603,901		88.39		—		—
Exercised		(1,631,218)		52.35		(59,767)		55.64
Forfeited or expired		(270,947)		75.12		—		—
Outstanding at December 31, 2018		6,761,055	$	65.76		155,200	$	58.13
Exercisable at December 31, 2018		4,922,937	$	61.08		155,200	$	58.13
Weighted-Average Remaining Contractual Term (Years):
Outstanding at December 31, 2018		5.9				4.1
Exercisable at December 31, 2018		5.0				4.1
Aggregate Intrinsic Value:
Outstanding at December 31, 2018	$	191,374			$	5,577
Exercisable at December 31, 2018	$	162,424			$	5,577
Intrinsic Value of Options Exercised During the Years Ended:
December 31, 2018	$	72,951			$	2,286
December 31, 2017	$	51,140			$	1,995
December 31, 2016	$	44,972			$	548

The grant date fair value of options vested during the years ended December 31, 2018, 2017 and 2016 was $16.5 million, $16.9 million and $17.2 million, respectively. Cash received from option exercises was approximately $88.2 million and the actual tax benefit realized for the tax deduction from option exercises was approximately $17.7 million in the year ended December 31, 2018. As of December 31, 2018, the remaining valuation of stock option awards to be expensed in future periods was $8.4 million and the related weighted‑average period over which it is expected to be recognized is 1.5 years.

The fair value of both time-based RSUs and performance-based RSUs pertaining to internal performance metrics is determined using the closing price of our common stock on the grant date. The fair value of performance-based RSUs pertaining to TSR is estimated using a Monte Carlo simulation. Inputs and assumptions used to calculate the fair value are shown in the table below. The fair value of these RSUs is expensed over the vesting period using the straight-line method or using the graded vesting method when an employee becomes eligible to retain the award at retirement.


Year Ended December 31,		2018
Fair value per stock award	$	128.70
Grant date stock price	$	89.42
Assumptions:
Aptar's stock price expected volatility		12.30	%
Expected average volatility of peer companies		27.50	%
Correlation assumption		20.20	%
Risk-free interest rate		2.42	%
Dividend yield assumption		1.43	%

A summary of RSU activity as of December 31, 2018, and changes during the period then ended is presented below:


	Time-Based RSUs			Performance-Based RSUs
		Weighted Average			Weighted Average
	Units	Grant-Date Fair Value		Units	Grant-Date Fair Value
Nonvested at January 1, 2018	124,067	$	74.65	—	$	—
Granted	208,783		96.79	80,843		111.55
Vested	(39,691)		75.09	—		—
Forfeited	(31,672)		78.62	(10,853)		111.55
Nonvested at December 31, 2018	261,487	$	91.78	69,990	$	111.55

Included in the December 31, 2018 time-based RSUs are 14,257 units awarded to non-employee directors and 14,793 units vested related to non-employee directors.

Compensation expense recorded attributable to RSUs for the years ended December 31, 2018, 2017 and 2016 was approximately $8.7 million, $3.7 million and $3.0 million, respectively. The actual tax benefit realized for the tax deduction from RSUs was approximately $0.7 million for the year ended December 31, 2018. The fair value of units vested during the years ended December 31, 2018, 2017 and 2016 was $3.0 million, $4.7 million and $1.9 million, respectively. The intrinsic value of units vested for the years ended December 31, 2018, 2017 and 2016 was $3.7 million, $5.2 million and $2.3 million, respectively. As of December 31, 2018, there was $20.6 million of total unrecognized compensation cost relating to RSU awards which is expected to be recognized over a weighted average period of 2.3 years.

We have a long-term incentive program for certain employees. Each award is based on the cumulative TSR of our common stock during a three year performance period compared to a peer group. The total expected expense related to this program for awards outstanding as of December 31, 2018 is approximately $2.8 million. For the years ended December 31, 2018, 2017 and 2016, we recognized expense of $2.3 million, expense of $1.5 million and income of $1.0 million, respectively.