The Company maintains a stock incentive plan which provides for the grant of stock options, stock appreciation rights, restricted stock, performance shares, performance units, or other stock-based awards as incentives and rewards to encourage employees, consultants and non-employee directors to participate in the long-term success of the Company. As of December 31, 2019, there were 93,946 shares available for grant under the stock incentive plan.

	Year Ended December 31,
	2019		2018		2017
	(In thousands)
Employees:
Restricted stock and performance shares	$	20,182	$	12,559	$	11,566
Stock options		4,032		2,193		1,882
		24,214		14,752		13,448
Non-employee directors:
Restricted stock		1,080		1,098		973
Total stock-based compensation	$	25,294	$	15,850	$	14,421

The Company records stock-based compensation expense for employees in employee compensation and benefits and for non-employee directors in general and administrative expenses in the Consolidated Statements of Operations.

The exercise price of each option granted is equal to the market price of the Company’s common stock on the date of grant. Generally, option grants have provided for vesting over a three or five-year period. Options generally expire in six or ten years from the date of grant. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables, including the expected stock price volatility over the term of the awards, the risk-free interest rate, the expected dividend yield rate and the expected term. Expected volatilities are based on historical volatility of the Company’s stock. The risk-free interest rate is based on U.S. Treasury securities with a maturity value approximating the expected term of the option. The dividend yield rate is based on the expected annual dividends to be paid divided by the expected stock price. The expected term represents the period of time that options granted are expected to be outstanding based on actual and projected employee stock option exercise behavior.

The weighted-average fair value for options granted during 2019, 2018 and 2017 was $58.37, $56.11 and $40.08, respectively. The following table represents the assumptions used for the Black-Scholes option-pricing model to determine the per share weighted-average fair value for options granted, excluding the two awards discussed below:

	Year Ended December 31,
	2019			2018			2017
Expected life (years)		5.0			5.0			5.0
Risk-free interest rate		2.6	%		2.2	%		1.9	%
Expected volatility		25.9	%		26.9	%		28.0	%
Expected dividend yield		0.8	%		0.8	%		0.8	%

In addition to the option grants above, 76,868 stock options were granted to the Company’s President and Chief Operating Officer in January 2019 with an aggregate grant date fair value of $2.9 million as determined by an independent third party using a Monte Carlo simulation model. The exercise price is $272.88 for 35,679 of the stock options and $294.71 for the remaining 41,189 stock options, which is equal to 125% and 135%, respectively, of the fair market value of the Company’s common stock on the grant date. Subject to the grantee’s continued employment with the Company, the options will vest and become exercisable on January 22, 2024. The options expire on July 22, 2024. Key assumptions used for the Monte Carlo model included a risk-free interest rate of 2.6%, volatility of 25.8% and a dividend yield of 0.8%.

In November 2018, 148,524 stock options were granted to the Company’s Chief Executive Officer with a grant date fair value of $5.5 million as determined by an independent third party using a Monte Carlo simulation model. The exercise price is $257.78 for 69,113 of the stock options and $278.40 for the remaining 79,411 stock options, which is equal to 125% and 135%, respectively, of the fair market value of the Company’s stock on the grant date. Subject to the grantee’s continued employment with the Company, the options will vest and become exercisable on November 8, 2023. The options expire on May 8, 2024. Key assumptions used for the Monte Carlo model included a risk-free interest rate of 3.1%, volatility of 25.9% and a dividend yield of 0.8%.

The following table reports stock option activity during the three years ended December 31, 2019 and the intrinsic value as of December 31, 2019:

	Number of Shares			Weighted-Average Exercise Price ($)		Remaining Contractual Term		Intrinsic Value ($)
								(In thousands)
Outstanding at December 31, 2016		855,740		$	36.80
Granted		54,838			156.85
Canceled		—			—
Exercised		(380,967	)		11.26
Outstanding at December 31, 2017		529,611			67.60
Granted		168,217			261.19
Canceled		(1,676	)		142.69
Exercised		(120,588	)		24.66
Outstanding at December 31, 2018		575,564			132.93
Granted		82,474			279.57
Canceled		(548	)		198.67
Exercised		(106,899	)		28.24			$	33,639
Outstanding at December 31, 2019		550,591			175.16		2.8		112,294
Exercisable at December 31, 2019		171,782			96.71		1.5		48,512

The intrinsic value is the amount by which the closing price of the Company’s common stock on December 31, 2019 of $379.11 or the price on the day of exercise exceeds the exercise price of the stock options multiplied by the number of shares. As of December 31, 2019, there was $7.8 million of total unrecognized compensation cost related to non-vested stock options. That cost is expected to be recognized over a weighted-average period of 2.6 years.

Restricted stock generally vests over a three or five-year period. Compensation expense is measured at the grant date and recognized ratably over the vesting period. Annual performance share awards are granted to certain officers and senior managers. Each performance share award is earned or forfeited based on the level of achievement by the Company of pre-tax operating income, as defined. The pay-out ranges from zero to 150% of the performance share award. For each performance share earned, a participant is awarded an equal number of shares of restricted stock. Any restricted stock awarded to a participant vests in two equal installments on each of the second and third anniversaries of the date of grant of the applicable performance share award. Compensation expense for performance shares is measured at the grant date and recognized on a graded basis over the vesting period.

The following table reports performance share activity for annual awards for the three years ended December 31, 2019:


Performance year:	2019		2018		2017
Target share pay-out		16,716		10,479		12,971
Actual share pay-out (paid in following year)		19,400		10,479		8,094
Weighted average fair value per share on grant date	$	223.81	$	202.04	$	155.53

In addition to the grants above, 18,914 performance shares were granted to the Company’s President and Chief Operating Officer in January 2019 with an aggregate fair value of $2.9 million as determined by an independent third party using a Monte Carlo simulation model. The performance share award provides that the number of shares earned will be based on the Company’s achievement of certain share price levels during the five-year performance period. The performance level is $272.88 for 8,969 of the performance shares and $294.71 for the remaining 9,945 performance shares, which is equal to 125% and 135%, respectively, of the fair market value of the Company’s common stock on the grant date. Each of the performance levels have been achieved. Subject to the grantee’s continued employment with the Company, earned shares will vest on January 22, 2024. Key assumptions used for the Monte Carlo simulation included a risk-free interest rate of 2.6%, volatility of 25.9% and a dividend yield of 0.8%.

In November 2018, 37,742 performance shares were granted to the Company’s Chief Executive Officer with a grant date fair value of $5.5 million as determined by an independent third party using a Monte Carlo simulation model. The performance share award provides that the number of shares earned will be based on the Company’s achievement of certain share price levels during the five-year performance period. The performance level is $257.78 for 17,942 of the performance shares and $278.40 for the remaining 19,800 performance shares, which is equal to 125% and 135%, respectively, of the fair market value of the Company’s stock on the grant date. Each of the performance levels have been achieved. Subject to the grantee’s continued employment with the Company, earned shares will vest on November 8, 2023. Key assumptions used for the Monte Carlo model included a risk-free interest rate of 3.1%, volatility of 26.1% and a dividend yield of 0.8%.

In April 2017, the Company granted 9,367 multi-year performance shares to a certain officer. The performance share awards are earned or forfeited based on attaining certain cumulative operating income thresholds of the Company and select subsidiaries over the two-year period beginning January 1, 2017. The pay-out ranges were from zero to 150% of the performance award value. Any restricted stock awarded will vest 50% on April 1, 2020 and 50% on April 1, 2021. The fair value per share of the awards on the grant date was $186.74. The actual share payout was 38.8% or 3,634 shares.

In January 2016, the Company granted 33,509 multi-year performance shares to certain officers and senior managers. Each performance share award is earned or forfeited based on the level of achievement by the Company of aggregate operating income over the four-year period beginning January 1, 2016. The pay-out ranges were from zero to 150% of the performance award value. Any restricted stock awarded will vest 50% on January 31, 2020 and 50% on January 31, 2021. The fair value per share of the awards on the grant date was $103.30. The actual share payout was 106.5% or 35,680 shares.

The following table reports restricted stock and performance share activity during the three years ended December 31, 2019:

	Number of Restricted Shares			Weighted-Average Grant Date Fair Value

Outstanding at December 31, 2016		383,978		$	71.50
Granted		61,434
Performance share pay-out		21,422
Canceled		(4,590	)
Vested		(142,645	)
Outstanding at December 31, 2017		319,599		$	88.77
Granted		59,179
Performance share pay-out		8,094
Canceled		(4,046	)
Vested		(110,956	)
Outstanding at December 31, 2018		271,870		$	112.47
Granted		118,632
Performance share pay-out		87,163
Canceled		(2,321	)
Vested		(129,312	)
Outstanding at December 31, 2019		346,032		$	154.27

As of December 31, 2019, there was $31.0 million of total unrecognized compensation expense related to non-vested restricted stock and performance shares. That cost is expected to be recognized over a weighted-average period of 1.6 years.

The Company offers a non-qualified employee stock purchase plan for non-executive employees. Under the plan, participants are granted the right to purchase shares of common stock based on the fair market value on the last day of the six-month offering period. On the purchase date, the Company grants to the participants a number of shares of common stock equal to 20% of the aggregate shares purchased by the participant. These matching shares vest over a one-year period. The Company issued 617, 989 and 1,034 matching shares in connection with the plan for the years ended December 31, 2019, 2018, and 2017, respectively.