Stock-Based Compensation

The Company follows the provisions of ASC 718, “Compensation — Stock Compensation” (“ASC 718”), which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their grant date fair values. Compensation expense for awards with service conditions only that are subject to graded vesting is recognized on a straight-line basis over the term of the vesting period. Compensation expense of performance-based awards is recognized as an expense over the vesting periods of the awards using the accelerated attribution method once performance achievement is deemed probable.

Under the provisions of the Company’s 2018 Equity and Incentive Compensation Plan (“2018 Plan”), which is administered by the Compensation Committee of the Company’s Board of Directors, incentive stock options, non-statutory stock options, stock appreciation rights (“SARs”), restricted share units, performance shares or stock awards may be awarded to directors and all employees of the Company and its subsidiaries. The 2018 Plan replaces in its entirety the 2015 Long-Term Incentive Plan, as amended (“2015 Plan”), but shares that remained available under the 2015 Plan were added to the aggregate share limit under the 2018 Plan. Stock options will be exercisable in whole or in installments as may be determined, provided that no options will be exercisable more than ten years from the date of grant. The exercise price will be the fair value at the date of grant. The aggregate number of shares of the Company’s common stock that may be awarded under the 2018 Plan is 566,698.

A summary of restricted share and performance share activity for the year ended December 31, 2018 is as follows:



	Time-Based				Performance-Based
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
	(in whole shares)				(in whole shares)
Outstanding — beginning of year	342,859		$	34.71	165,000		$	38.10
Granted^(a)	249,700		39.53		—		—
Vested	(164,778	)	39.99		(55,000	)	38.10
Performance- to time-based^(b)	110,000		38.10		(110,000	)	38.10
Canceled or expired	(7,834	)	38.93		—		—
Outstanding — end of year	529,947		$	34.71	—		$	38.10

(a) Included in the granted amount are 4,600 restricted share units.

(b) During the second quarter of 2018, 55,000 of the performance-based restricted shares granted in 2017 fully vested based on achievement of the performance criteria. In accordance with the grant agreements, the remaining 110,000 shares became time-based, vesting over the remaining two years of the requisite service period.

The Company recognized compensation expense of $8.3 million, $8.6 million and $10.6 million for the years ended December 31, 2018, 2017 and 2016, respectively, relating to time-based shares and performance-based shares.

The total fair value of restricted shares and share units that vested during the years ended December 31, 2018, 2017 and 2016 was $8.3 million, $7.0 million and $5.1 million, respectively.

As of December 31, 2018, the Company had unrecognized compensation expense of $10.5 million related restricted shares. The unrecognized compensation expense is expected to be recognized over a total weighted average period of 1.9 years.