9.	Stock-based compensation

During the 2018 Annual Meeting of Shareholders, our shareholders approved the Amended and Restated 2012 Stock Incentive and Award Plan (the “2012 Plan”). The 2012 Plan provides for the granting of stock options, stock appreciation rights, restricted shares, restricted share units, performance shares, cash awards and other stock or performance-based incentives. A maximum of 4,525 common shares is available for grant under the 2012 Plan.

Stock Options

Nonqualified or incentive stock options may be granted to our employees and directors. Generally, options granted to employees may be exercised beginning one year from the date of grant at a rate not exceeding 25 percent per year and expire 10 years from the date of grant. Vesting accelerates upon a qualified termination in connection with a change in control. In the event of termination of employment due to early retirement or normal retirement at age 65, options granted within 12 months prior to termination are forfeited, and vesting continues post retirement for all other unvested options granted. In the event of disability or death, all unvested stock options granted within 12 months prior to termination (or at any time prior to December 28, 2017) fully vest. Termination for any other reason results in forfeiture of unvested options and vested options in certain circumstances. The amortized cost of options is accelerated if the retirement eligibility date occurs before the normal vesting date. Option exercises are satisfied through the issuance of treasury shares on a first-in, first-out basis. We recognized compensation expense related to stock options of $2,479 and $2,390 in the three months ended July 31, 2018 and 2017, respectively. Corresponding amounts for the nine months ended July 31, 2018 and 2017 were $7,550 and $7,024, respectively.

The following table summarizes activity related to stock options for the nine months ended July 31, 2018:

	Number of Options			Weighted-Average Exercise Price Per Share		Aggregate Intrinsic Value		Weighted Average Remaining Term
Outstanding at October 31, 2017		1,922		$	70.08
Granted		368		$	127.67
Exercised		(354	)	$	48.94
Forfeited or expired		(11	)	$	108.42
Outstanding at July 31, 2018		1,925		$	84.76	$	94,985	6.7 years
Vested or expected to vest at July 31, 2018		1,908		$	84.46	$	94,718	6.7 years
Exercisable at July 31, 2018		988		$	66.14	$	67,126	5.2 years

As of July 31, 2018, there was $10,330 of total unrecognized compensation cost related to unvested stock options. That cost is expected to be amortized over a weighted average period of approximately 1.5 years.

The fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Nine months ended	July 31, 2018	July 31, 2017
Expected volatility	24.0%-26.7%	26.0%-29.2%
Expected dividend yield	0.97%	0.91%-1.17%
Risk-free interest rate	2.09%-2.20%	1.89%-2.06%
Expected life of the option (in years)	5.4-6.2	5.4-6.2

The weighted-average expected volatility used to value the 2018 and 2017 options was 25.0% and 29.1%, respectively.

Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options. The risk-free interest rate was selected based upon yields of U.S. Treasury issues with a term equal to the expected life of the option being valued.

The weighted average grant date fair value of stock options granted during the nine months ended July 31, 2018 and 2017 was $31.42 and $28.86, respectively.

The total intrinsic value of options exercised during the three months ended July 31, 2018 and 2017 was $2,971 and $1,824, respectively. The total intrinsic value of options exercised during the nine months ended July 31, 2018 and 2017 was $32,715 and $21,081, respectively.

Cash received from the exercise of stock options for the nine months ended July 31, 2018 and 2017 was $17,352 and $13,209, respectively.

Restricted Shares and Restricted Share Units

We may grant restricted shares and/or restricted share units to our employees and directors. These shares or units may not be transferred for a designated period of time (generally one to three years) defined at the date of grant.

For employee recipients, in the event of termination of employment due to early retirement with the consent of the Company, restricted shares granted within 12 months prior to termination are forfeited, and other restricted shares vest on a pro-rata basis. In the event of termination of employment due to normal retirement at age 65, restricted shares granted within 12 months prior to termination are forfeited, and, for other restricted shares, the restriction period will lapse and the shares will vest and be transferable. For restricted shares granted within 12 months prior to termination (or at any time prior to December 28, 2017), the restrictions lapse in the event of a recipient’s disability or death. Termination for any other reason prior to the lapse of any restrictions results in forfeiture of the shares.

For non-employee directors, all restrictions lapse in the event of disability or death of the non-employee director. Termination of service as a director for any other reason within one year of date of grant results in a pro-rata vesting of shares or units.

As shares or units are issued, deferred stock-based compensation equivalent to the fair value on the date of grant is expensed over the vesting period.

The following table summarizes activity related to restricted shares during the nine months ended July 31, 2018:

	Number of Shares			Weighted-Average Grant Date Fair Value
Restricted shares at October 31, 2017		58		$	90.38
Granted		21		$	127.89
Vested		(24	)	$	85.15
Restricted shares at July 31, 2018		55		$	107.39

As of July 31, 2018, there was $3,632 of unrecognized compensation cost related to restricted shares. The cost is expected to be amortized over a weighted average period of 1.9 years. The amount charged to expense related to restricted shares during the three months ended July 31, 2018 and 2017 was $644 and $551, respectively. These amounts included common share dividends for the three months ended July 31, 2018 and 2017 of $17 and $15, respectively. For the nine months ended July 31, 2018 and 2017, the amounts charged to expense related to restricted shares were $2,035 and $1,639, respectively. These amounts included common share dividends for the nine months ended July 31, 2018 and 2017 of $51 and $46, respectively.

The following table summarizes activity related to restricted share units during the nine months ended July 31, 2018:

	Number of Units		Weighted-Average Grant Date Fair Value
Restricted share units at October 31, 2017		0	$	—
Granted		8	$	126.38
Restricted share units at July 31, 2018		8	$	126.38

As of July 31, 2018, there was $250 of remaining expense to be recognized related to outstanding restricted share units, which is expected to be recognized over a weighted average period of 0.3 years. The amount charged to expense related to restricted share units during each of the three months ended July 31, 2018 and 2017 was $253 and $252, respectively. For the nine months ended July 31, 2018 and 2017, the corresponding amounts were $758.

Deferred Directors’ Compensation

Non-employee directors may defer all or part of their cash and equity-based compensation until retirement. Cash compensation may be deferred as cash or as share equivalent units. Deferred cash amounts are recorded as liabilities, and share equivalent units are recorded as equity. Additional share equivalent units are earned when common share dividends are declared.

The following table summarizes activity related to director deferred compensation share equivalent units during the nine months ended July 31, 2018:

	Number of Shares		Weighted-Average Grant Date Fair Value
Outstanding at October 31, 2017		101	$	46.74
Dividend equivalents		1	$	138.21
Outstanding at July 31, 2018		102	$	47.34

The amount charged to expense related to director deferred compensation for the three months ended July 31, 2018 and 2017 was $31 and $25, respectively. For the nine months ended July 31, 2018 and 2017, the corresponding amounts were $92 and $77, respectively.

Performance Share Incentive Awards

Executive officers and selected other key employees are eligible to receive common share-based incentive awards. Payouts, in the form of unrestricted common shares, vary based on the degree to which corporate financial performance exceeds predetermined threshold, target and maximum performance goals over three-year performance periods. No payout will occur unless threshold performance is achieved.

The amount of compensation expense is based upon current performance projections for each three-year period and the percentage of the requisite service that has been rendered. The calculations are also based upon the grant date fair value determined using the closing market price of our common shares at the grant date, reduced by the implied value of dividends not to be paid. The per share values were $123.45 for 2018, $103.75 and $104.49 per share for 2017 and $67.69 per share for 2016. During the three months ended July 31, 2018 and 2017, $942 and $1,813 was charged to expense, respectively. For the nine months ended July 31, 2018 and 2017, the corresponding amounts were $5,928 and $5,243, respectively. The cumulative amount recorded in shareholders’ equity at July 31, 2018 was $13,050.

Deferred Compensation

Our executive officers and other highly compensated employees may elect to defer up to 100% of their base pay and cash incentive and for executive officers, up to 90% of their share-based performance incentive payout each year. Additional share units are credited for quarterly dividends paid our common shares. Expense related to dividends paid under this plan for the three months ended July 31, 2018 and 2017 was $67 and $68, respectively. For the nine months ended July 31, 2018 and 2017, the corresponding amounts were $201 and $197, respectively.