9. Stock-based Compensation

As of March 31, 2018, there were 4,146,549 shares, 2,387,199 shares and 683,058 shares available for grant under The Hanover Insurance Group 2014 Long-Term Incentive Plan, The Hanover Insurance Group 2014 Employee Stock Purchase Plan and the Chaucer Share Incentive Plan, respectively.

Compensation cost for the Company’s stock-based awards and the related tax benefits were as follows:

	Three Months Ended March 31,
(in millions)	2018			2017
Stock-based compensation expense	$	3.0		$	3.2
Tax benefit		(0.6	)		(1.1	)
Stock-based compensation expense, net of taxes	$	2.4		$	2.1

Stock Options

Information on the Company’s stock option activity for the three months ended March 31, 2018 and 2017 is summarized below.

	Three Months Ended March 31,
	2018					2017
(in whole shares and dollars)	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding, beginning of period		1,062,177		$	75.53		1,396,152		$	68.63
Granted		291,390			110.58		417,690			91.18
Exercised		(84,353	)		70.31		(148,529	)		59.71
Forfeited or cancelled		(50,491	)		88.48		(2,334	)		67.62
Outstanding, end of period		1,218,723			83.73		1,662,979			75.10

Restricted Stock Units

The following tables summarize activity information about employee restricted stock units:

	Three Months Ended March 31,
	2018					2017
(in whole shares and dollars)	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Time-based restricted stock units:
Outstanding, beginning of period		298,528		$	83.45		269,063		$	73.91
Granted		131,290			110.60		105,410			91.18
Vested		(50,810	)		70.24		(69,030	)		58.72
Forfeited		(10,585	)		87.47		(3,005	)		82.75
Outstanding, end of period		368,423			94.83		302,438			83.31
Performance-based and market-based restricted stock units:
Outstanding, beginning of period		102,586		$	81.21		115,057		$	78.82
Granted		29,715			116.82		54,751			78.76
Vested		(14,032	)		70.24		(17,042	)		57.99
Forfeited		(7,625	)		81.91		(2,180	)		95.36
Outstanding, end of period		110,644			92.12		150,586			80.92

In the first three months of 2018 and 2017, the Company granted market-based awards totaling 29,715 and 51,221, respectively, to certain members of senior management, which are included in the table above as performance and market-based restricted stock activity. The vesting of these stock units is based on the relative total shareholder return (“TSR”) of the Company. This metric is generally based on relative TSR for a three year period as compared to a group of Property and Casualty peer companies. The fair value of market-based awards was estimated at the date of grant using a valuation model. These units have the potential to range from 0% to 150% of the shares disclosed. Included in the amount granted above in 2018 and 2017 are 3,115 shares and 5,681 shares, respectively, related to market-based awards that achieved a payout in excess of 100%. These awards vested in the first quarter of 2018 and 2017, respectively.

Performance-based restricted stock units are based upon the achievement of the performance metric at 100%. These units have the potential to range from 0% to 200% of the shares disclosed, which varies based on grant year and individual participation level. Increases above the 100% target level are reflected as granted in the period in which performance-based stock unit goals are achieved. Decreases below the 100% target level are reflected as forfeited. There were no awards vested in 2018 and 2017 at a level greater than 100%.