STOCK-BASED COMPENSATION PLANS

We maintain the Flowserve Corporation Equity and Incentive Compensation Plan (the "2010 Plan"), which is a shareholder-approved plan authorizing the issuance of up to 8,700,000 shares of our common stock in the form of incentive stock options, non-statutory stock options, restricted shares, restricted share units and performance-based units (collectively referred to as "Restricted Shares"), stock appreciation rights and bonus stock. Of the 8,700,000 shares of common stock authorized under the 2010 Plan, 2,619,677 were available for issuance as of December 31, 2017. The long-term incentive program was amended to allow Restricted Shares granted after January 1, 2016 to employees who retire and have achieved at least 55 years of age and ten years of service to continue to vest over the original vesting period ("55/10 Provision").

Stock Options — Options granted to officers, other employees and directors allow for the purchase of common shares at the market value of our stock on the date the options are granted. Options generally become exercisable after three years. Options generally expire ten years from the date of the grant or within a short period of time following the termination of employment or cessation of services by an option holder. Until the second quarter of 2017, no previous stock options were outstanding. On May 4, 2017, 114,943 stock options were granted with a grant date fair value of $2.0 million, which is expected to be recognized over a weighted-average period of approximately two years. No options were granted during years ending December 31, 2016 or 2015. No stock options vested during 2017, 2016 or 2015.

Information related to stock options issued to officers, other employees and directors under all plans is presented in the following table:



	2017			2016				2015
	Shares	Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Number of shares under option:
Outstanding — beginning of year	—	$	—	84,261		$	17.42	97,962		$	16.61
Granted	114,943	48.63		—		—		—		—
Exercised	—	—		(84,261	)	17.42		(13,701	)	11.66
Canceled	—	—		—		—		—		—
Outstanding — end of year	114,943	$	48.63	—		$	—	84,261		$	17.42
Exercisable — end of year	—	$	—	—		$	—	84,261		$	17.42

The weighted average remaining contractual life of options outstanding at December 31, 2017 was 9.3 years. The weighted average remaining contractual life of options outstanding at December 31, 2015 was one year. The total intrinsic value of stock options exercised was $2.4 million and $1.0 million for the periods ended December 31, 2016 and 2015, respectively.

Restricted Shares — Generally, the restrictions on Restricted Shares do not expire for a minimum of one year and a maximum of three years, and shares are subject to forfeiture during the restriction period. Most typically, Restricted Share grants have staggered vesting periods over one to three years from grant date. The intrinsic value of the Restricted Shares, which is typically the product of share price at the date of grant and the number of Restricted Shares granted, is amortized on a straight-line basis to compensation expense over the periods in which the restrictions lapse.

Awards of Restricted Shares are valued at the closing market price of our common stock on the date of grant. The unearned compensation is amortized to compensation expense over the vesting period of the restricted shares, except for awards related to the 55/10 Provision which are expensed when granted. Unearned compensation is amortized to compensation expense over the vesting period of the Restricted Shares. As of December 31, 2017 and 2016, we had $16.7 million and $15.2 million, respectively, of unearned compensation cost related to unvested Restricted Shares, which is expected to be recognized over a weighted-average period of approximately one year. These amounts will be recognized into net earnings in prospective periods as the awards vest. The total fair value of Restricted Shares vested during the years ended December 31, 2017, 2016 and 2015 was $30.5 million, $38.8 million and $41.3 million, respectively.

We recorded stock-based compensation for Restricted Shares as follows:



	Year Ended December 31,
	2017			2016		2015
	(Amounts in millions)
Stock-based compensation expense	$	22.8		$	30.2	$	34.8
Related income tax benefit	(5.2		)	(10.4)		(11.8)
Net stock-based compensation expense	$	17.6		$	19.8	$	23.0

The following table summarizes information regarding Restricted Shares:



	Year Ended December 31, 2017
	Shares		Weighted Average Grant-Date Fair Value
Number of unvested Restricted Shares:
Outstanding — beginning of year	1,259,275		$	50.77
Granted	692,819		49.20
Vested	(523,529	)	58.28
Canceled	(224,713	)	48.05
Outstanding — ending of year	1,203,852		$	47.10

Unvested Restricted Shares outstanding as of December 31, 2017, includes approximately 830,000 units with performance-based vesting provisions. Performance-based units are issuable in common stock and vest upon the achievement of pre-defined performance targets. Performance-based units granted prior to 2017 have performance targets based on our average annual return on net assets over a three-year period as compared with the same measure for a defined peer group for the same period. Performance-based units granted in 2017 have performance targets based on our average return on invested capital and our total shareholder return ("TSR") over a three-year period as compared with the same measures for a defined peer group for the same period. Most performance units were granted in three annual grants since January 1, 2015 and have a vesting percentage between 0% and 200% depending on the achievement of the specific performance targets. Except for shares granted under the 55/10 Provision, compensation expense is recognized ratably over a cliff-vesting period of 36 months based on the fair value of our common stock on the date of grant, as adjusted for actual forfeitures. During the performance period, earned and unearned compensation expense is adjusted based on changes in the expected achievement of the performance targets for all performance-based units granted except for the TSR-based units. Vesting provisions range from 0 to approximately 1,637,000 shares based on performance targets. As of December 31, 2017, we estimate vesting of approximately 565,000 shares based on expected achievement of performance targets.