Stock Compensation Plans

12 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Compensation Plans

Note 13 - Stock Compensation Plans

Under its long-term incentive plan, the Company’s common shares have been made available for grant, at the discretion of the Compensation Committee of the Board of Directors, to officers and key employees in the form of stock option awards. Stock option awards typically have a ten-year term and generally vest in 25% increments annually beginning on the first anniversary of the date of grant. In addition to stock option awards, the Company has granted restricted shares, deferred shares, performance-based restricted stock units and time-based restricted stock units under its long-term incentive plan.

During 2017, 2016 and 2015, the Company recognized stock-based compensation expense of $5.2 million ($3.2 million after tax or $0.04 per diluted share), $5.9 million ($3.7 million after tax or $0.05 per diluted share) and $6.6 million ($4.1 million after tax or $0.05 per diluted share), respectively, for stock option awards.

The fair value of stock option awards granted during 2017, 2016 and 2015 was estimated at the date of grant using a Black-Scholes option-pricing method with the following assumptions:

	2017			2016			2015
Weighted-average fair value per option	$	10.60		$	6.49		$	11.67
Risk-free interest rate	1.96		%	1.22		%	1.58		%
Dividend yield	2.96		%	3.04		%	2.29		%
Expected stock volatility	32.25		%	34.12		%	36.53		%
Expected life - years	5			5			5

Historical information was the primary basis for the selection of the expected dividend yield, expected volatility and the expected lives of the options. The dividend yield was calculated based upon the last dividend prior to the grant compared to the trailing 12 months' daily stock prices. The risk-free interest rate was based upon yields of U.S. zero coupon issues with a term equal to the expected life of the option being valued.

A summary of stock option award activity for the year ended December 31, 2017 is presented below:

	Number of Shares		Weighted-average Exercise Price		Weighted-average Remaining Contractual Term	Aggregate Intrinsic Value (millions)
Outstanding - beginning of year	3,783,497		$	34.41
Granted - new awards	484,186		45.43
Exercised	(1,053,189	)	32.62
Canceled or expired	(63,373	)	36.94
Outstanding - end of year	3,151,121		$	36.65	6 years	$	39.4
Options expected to vest	3,151,121		$	36.65	6 years	$	39.4
Options exercisable	1,859,277		$	36.05	5 years	$	24.4

The total intrinsic value of stock option awards exercised during the years ended December 31, 2017, 2016 and 2015 was $14.7 million, $1.7 million and $5.6 million, respectively. Net cash proceeds from the exercise of stock option awards were $32.9 million, $4.3 million and $4.1 million, respectively. On January 1, 2017, the Company adopted the provisions of ASU 2016-09. As a result, the Company began recording the tax effects associated with stock-based compensation through the income statement on a prospective basis. Prior to 2017, the Company recorded the tax effects associated with stock-based compensation in paid-in capital. Income tax benefits were $1.9 million and $1.3 million for the years ended December 31, 2017 and 2015, respectively. Income taxes were a shortfall of $0.3 million for the year ended December 31, 2016.

In 2017, the Company issued 226,640 performance-based restricted stock units and 191,256 time-based restricted stock units to officers and key employees. The performance-based restricted stock units are calculated and awarded based on the achievement of specified performance objectives and vest three years from the date of grant. The performance-based restricted stock units settle in either cash or shares, with 6,260 shares expected to settle in cash and 220,380 expected to settle in common shares. Time-based restricted stock units vest in 25% increments annually beginning on the first anniversary of the grant. Deferred shares cliff vest five years from the date of grant. Time-based restricted stock units also settle in either cash or shares, with 4,200 time-based restricted stock units expected to settle in cash and 187,056 time-based restricted stock units expected to settle in common shares. For time-based restricted stock units that are expected to settle in cash, the Company had $0.7 million and $1.2 million accrued in salaries, wages and benefits as of December 31, 2017 and 2016, respectively, on the Consolidated Balance Sheets.

A summary of stock award activity, including restricted shares, deferred shares, performance-based restricted stock units and time-based restricted stock units that will settle in common shares for the year ended December 31, 2017 is as follows:

	Number of Shares		Weighted-average Grant Date Fair Value
Outstanding - beginning of year	1,349,175		$	34.96
Granted - new awards	407,436		45.48
Vested	(445,036	)	37.18
Canceled or expired	(66,301	)	35.96
Outstanding - end of year	1,245,274		$	37.56

As of December 31, 2017, a total of 1,245,274 stock awards have been awarded that have not yet vested. The Company distributed 445,036, 188,383 and 103,953 shares in 2017, 2016 and 2015, respectively, due to the vesting of stock awards; the grant date fair value of these vested shares was $16.5 million, $7.8 million, and $3.8 million, respectively. Shares awarded in 2017, 2016 and 2015 totaled 407,436, 613,165 and 485,975, respectively. The Company recognized compensation expense of $19.5 million, $8.2 million and $11.8 million for the years ended December 31, 2017, 2016 and 2015, respectively, relating to stock award activity.

As of December 31, 2017, the Company had unrecognized compensation expense of $29.4 million related to stock options and stock awards. The unrecognized compensation expense is expected to be recognized over a total weighted-average period of two years. The number of shares available for future grants for all plans at December 31, 2017 was 4,920,863.