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Stock Plans
 6 Months Ended
Jun. 30, 2020
Share-based Payment Arrangement [Abstract]  
Stock Plans Stock Plans
The 2016 Management Equity Incentive Plan provides for various forms of stock-based compensation for eligible key employees through May 2026. Management stock-based compensation includes stock options, restricted stock awards, restricted stock units and performance stock units. The 2017 Non-Employee Directors’ Equity Incentive Plan provides for grants of stock options and restricted stock to non-employee directors through May 2027. We issue treasury shares for stock option exercises and grants of restricted stock and performance stock. Please refer to Note 7—Capital Stock for further information regarding stock compensation share issuance.
Stock compensation expense is as follows:
 Three Months Ended June 30,Six Months Ended June 30,
(In thousands)2020201920202019
Stock compensation expense$830  $3,340  $4,352  $6,086  
Income tax benefit202  815  1,062  1,485  
Stock compensation expense, net of income tax benefit$628  $2,525  $3,290  $4,601  
A summary of stock option activity for the six months ended June 30, 2020, follows:
SharesWeighted Average
Exercise Price
Outstanding at January 1, 2020559,656  $45.78  
Exercised(96,101) 38.92  
Forfeited(952) 41.98  
Outstanding at June 30, 2020462,603  47.21  
Exercisable at June 30, 2020458,919  $47.21  
Restricted stock awards and restricted stock units are valued at the market value of the stock on the grant date. A summary of restricted stock activity for the six months ended June 30, 2020, follows:
SharesWeighted Average
Grant Date Fair Value
Unvested at January 1, 2020172,701  $90.38  
Granted47,355  122.65  
Vested(59,464) 81.30  
Forfeited(3,065) 97.28  
Unvested at June 30, 2020157,527  $103.38  
Performance stock units have a market condition modifier and are valued at an estimated fair value using a Monte Carlo model. The final number of shares to be issued for performance stock units granted in the first quarter of 2020 may range from 0% to 200% of the target award based on achieving the specified performance targets over the performance period plus an additional modifier based on total shareholder return (TSR) over the performance period. The following weighted average assumptions were used in estimating the fair value of the performance stock units granted in the first quarter of 2020.
Fair value per unit$127.36
Risk-free interest rate1.16%
Expected dividend yield1.48%
Expected volatility24.8%
MSA stock beta0.988
The risk-free interest rate is based on the U.S. Treasury Constant Maturity rates as of the grant date converted into an implied spot rate yield curve. Expected dividend yield is based on the most recent annualized dividend divided by the one year average closing share price. Expected volatility is based on the ten year historical volatility using daily stock prices. Expected life is based on historical stock option exercise data.
A summary of performance stock unit activity for the six months ended June 30, 2020, follows:
SharesWeighted Average
Grant Date Fair Value
Unvested at January 1, 2020238,035  $85.39  
Granted64,791  127.36  
Performance adjustments33,499  72.36  
Vested(132,036) 73.00  
Forfeited(3,698) 120.69  
Unvested at June 30, 2020200,591  $104.28  
The performance adjustments above relate primarily to the final number of shares issued for the 2017 performance unit awards which vested in the first quarter of 2020 at 135.7% of the target award based on both cumulative performance against the operating margin and revenue growth targets and MSA's TSR during the three year performance period.