Share-Based Payments

We have one share-based compensation plan, the MCBC Incentive Compensation Plan (the "Incentive Compensation Plan"), as of June 30, 2018, and all outstanding awards fall under this plan. During the three and six months ended June 30, 2018, and June 30, 2017, we recognized share-based compensation expense related to the following Class B common stock awards to certain directors, officers and other eligible employees, pursuant to the Incentive Compensation Plan: RSUs, DSUs, PSUs and stock options.



	Three Months Ended						Six Months Ended
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
	(In millions)
Pretax compensation expense	$	10.3		$	16.1		$	25.1		$	31.6
Tax benefit	(2.1		)	(5.5		)	(3.7		)	(10.8		)
After-tax compensation expense	$	8.2		$	10.6		$	21.4		$	20.8

As of June 30, 2018, there was $73.3 million of total unrecognized compensation expense from all share-based compensation arrangements granted under the Incentive Compensation Plan, related to unvested awards. This total compensation expense is expected to be recognized over a weighted-average period of 2.1 years.



	RSUs and DSUs			PSUs
	Units		Weighted-average grant date fair value per unit	Units		Weighted-average grant date fair value per unit
	(In millions, except per unit amounts)
Non-vested as of December 31, 2017	1.0		$95.80	0.4		$89.57
Granted	0.4		$73.00	0.2		$78.30
Vested	(0.3	)	$90.30	(0.1	)	$75.15
Forfeited	—		$—	—		$—
Non-vested as of June 30, 2018	1.1		$89.16	0.5		$86.91

The weighted-average fair value per unit for the non-vested PSUs is $86.31 as of June 30, 2018.



	Stock options and SOSARs
	Awards	Weighted-average exercise price per share	Weighted-average remaining contractual life (years)	Aggregate intrinsic value
	(In millions, except per share amounts and years)
Outstanding as of December 31, 2017	1.5	$63.60	4.6	$	31.3
Granted	0.2	$78.79
Exercised	(0.2)	$50.28
Forfeited	—	$—
Outstanding as of June 30, 2018	1.5	$67.04	4.9	$	14.2
Expected to vest as of June 30, 2018	0.3	$85.32	8.8	$	—
Exercisable as of June 30, 2018	1.2	$61.35	3.7	$	14.2

The total intrinsic values of stock options and SOSARs exercised during the six months ended June 30, 2018, and June 30, 2017, were $5.1 million and $5.3 million, respectively. During the six months ended June 30, 2018, and June 30, 2017, cash received from stock option exercises was $6.3 million and $1.1 million, respectively, and total tax benefits realized, including excess tax benefits, from share-based awards vested or exercised was $5.9 million and $19.2 million, respectively.

The fair value of each option granted in the first half of 2018 and 2017 was determined on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:



	Six Months Ended
	June 30, 2018	June 30, 2017
Risk-free interest rate	2.65%	2.04%
Dividend yield	2.08%	1.64%
Volatility range	22.36%-24.14%	22.40%-22.88%
Weighted-average volatility	22.81%	22.52%
Expected term (years)	5.3	5.1
Weighted-average fair market value	$15.44	$18.66

The risk-free interest rates utilized for periods throughout the contractual life of the stock options are based on a zero-coupon U.S. Treasury security yield at the time of grant. Expected volatility is based on a combination of historical and implied volatility of our stock. The expected term of stock options is estimated based upon observations of historical employee option exercise patterns and trends of those employees granted options in the respective year.

The fair value of the market metric for each PSU granted in the first half of 2018 and 2017 was determined on the date of grant using a Monte Carlo model to simulate total stockholder return for MCBC and peer companies with the following weighted-average assumptions:



	Six Months Ended
	June 30, 2018	June 30, 2017
Risk-free interest rate	2.34%	1.59%
Dividend yield	2.08%	1.64%
Volatility range	13.03%-81.87%	13.71%-80.59%
Weighted-average volatility	22.76%	24.24%
Expected term (years)	2.8	2.8
Weighted-average fair market value	$78.30	$97.13

The risk-free interest rates utilized for periods throughout the expected term of the PSUs are based on a zero-coupon U.S. Treasury security yield at the time of grant. Expected volatility is based on historical volatility of our stock as well as the stock of our peer firms, as shown within the volatility range above, for a period from the grant date consistent with the expected term. The expected term of PSUs is calculated based on the grant date to the end of the performance period.

As of June 30, 2018, there were 3.4 million shares of the Company's Class B common stock available for issuance as awards under the Incentive Compensation Plan.