Stock Incentive Plans

The Company's 2016 Omnibus Stock Incentive Plan provides for the granting of share-based incentive awards in the form of nonqualified stock options, stock appreciation rights (SARs), restricted stock units (RSUs) and restricted and unrestricted stock to officers and key employees of the Company. The aggregate number of shares authorized for issuance under the 2016 Omnibus Stock Incentive Plan is 16 million. At June 30, 2018, 11.6 million common shares were available for future issuance.

The Company satisfies share-based incentive award obligations by issuing shares of common stock out of treasury, which have been repurchased pursuant to the Company's share repurchase program described in Note 11, or through the issuance of previously unissued common stock.

SARs - Upon exercise, SARs entitle the participant to receive shares of common stock equal to the increase in value of the award between the grant date and the exercise date. SARs are exercisable from one to three years after the date of grant and expire no more than 10 years after grant.

The fair value of each SAR award granted in 2018, 2017 and 2016 was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:



	2018			2017			2016
Risk-free interest rate	1.9		%	1.4		%	1.9		%
Expected life of award	5.2 years			5.3 years			5.4 years
Expected dividend yield of stock	2.0		%	2.0		%	1.9		%
Expected volatility of stock	23.4		%	28.5		%	28.7		%
Weighted-average fair value	$	29.71		$	27.39		$	26.88

The risk-free interest rate was based on U.S. Treasury yields with a term similar to the expected life of the award. The expected life of the award was derived by referring to actual exercise and post-vesting employment termination experience. The expected dividend yield was based on the Company's historical dividend rate and stock price over a period similar to the expected life of the award. The expected volatility of stock was derived by referring to changes in the Company's historical common stock prices over a time-frame similar to the expected life of the award.

SAR activity during 2018 is as follows (aggregate intrinsic value in millions):



	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding June 30, 2017	6,533,406		$	94.18
Granted	907,626		$	158.79
Exercised	(1,351,120	)	$	78.61
Canceled	(43,031	)	$	146.84
Outstanding June 30, 2018	6,046,881		$	106.98	5.8 years	$	298.1
Exercisable June 30, 2018	4,168,672		$	92.74	4.6 years	$	263.1

A summary of the status and changes of shares subject to SAR awards and the related average price per share follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Nonvested June 30, 2017	1,947,569		$	27.80
Granted	907,626		$	29.71
Vested	(933,955	)	$	28.33
Canceled	(43,031	)	$	28.34
Nonvested June 30, 2018	1,878,209		$	28.44

At June 30, 2018, $13,458 of expense with respect to nonvested SAR awards has yet to be recognized and will be amortized into expense over a weighted-average period of approximately 17 months. The total fair value of shares vested during 2018, 2017 and 2016 was $26,461, $33,094 and $34,706, respectively.

Information related to SAR awards exercised during 2018, 2017 and 2016 is as follows:



	2018		2017		2016
Net cash proceeds	$	3,682	$	2,202	$	126
Intrinsic value	136,000		153,908		40,612
Income tax benefit	28,701		31,193		7,188

During 2018, 2017 and 2016, the Company recognized stock-based compensation expense of $27,422, $28,535 and $28,129, respectively, relating to SAR awards. The Company derives a tax deduction measured by the excess of the market value over the grant price at the date stock-based awards are exercised. The related income tax benefit was credited to income tax expense in 2018 and 2017 and to additional capital in 2016.

Shares surrendered upon exercise of SARs: 2018 - 269,670; 2017 - 371,246; 2016 - 158,808.

RSUs - RSUs constitute an agreement to deliver shares of common stock to the participant at the end of a vesting period. Generally, the RSUs granted to employees vest and the underlying stock is issued ratably over a three-year graded vesting period. Nonvested RSUs may not be transferred and do not have dividend or voting rights. For each nonvested RSU, recipients are entitled to receive a dividend equivalent, payable in cash or common shares, equal to the cash dividend per share paid to common shareholders.

The fair value of each RSU award granted in 2018, 2017 and 2016 was based on the fair market value of the Company's common stock on the date of grant. A summary of the status and changes of shares subject to RSU awards for employees and the related average price per share follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Nonvested June 30, 2017	394,329		$	120.92
Granted	157,086		$	159.26
Vested	(176,855	)	$	116.94
Canceled	(13,949	)	$	139.61
Nonvested June 30, 2018	360,611		$	138.85

During 2018, 2017 and 2016, the Company recognized stock-based compensation expense of $24,073, $23,025 and $21,190 respectively, relating to RSU awards for employees. At June 30, 2018, $18,627 of expense with respect to nonvested RSU awards has yet to be recognized and will be amortized into expense over a weighted-average period of approximately 21 months. The total fair value of RSU awards vested during 2018, 2017 and 2016 was $20,681, $21,576 and $21,173, respectively. The Company recognized an income tax benefit of $2,451, $939 and $870 relating to the issuance of common stock for RSU awards that vested during 2018, 2017 and 2016, respectively.

During 2018, 2017 and 2016, 9,900, 12,430 and 14,404 RSU awards, respectively, with a one-year vesting period were granted to non-employee members of the Board of Directors. Although nonvested shares do not have dividend or voting rights, recipients receive a dividend equivalent payable in common shares, equal to the cash dividend per share paid to common shareholders. In 2018, 2017 and 2016, the Company recognized stock-based compensation expense of $1,697, $1,560, and $824, respectively, relating to these awards. At June 30, 2018, $596 of expense with respect to 9,845 nonvested RSU awards granted to the Board of Directors has yet to be recognized and will be amortized into expense over a weighted-average period of approximately four months. During 2018 and 2017, the Company recognized an income tax benefit of $270 and $105, respectively, related to the vesting of 12,639 and 13,740 RSU awards, respectively, issued to the Board of Directors.

LTIP - The Company's Long Term Incentive Plans (LTIP) provide for the issuance of unrestricted stock to certain officers and key employees based on the attainment of certain goals relating to the Company's revenue growth, earnings per share growth and return on invested capital during the three-year performance period. No dividends or dividend equivalents are paid on unearned shares.



Stock issued for LTIP	2018		2017		2016
LTIP three-year plan	2015-16-17		2014-15-16		2013-14-15
Number of shares issued	308,278		227,707		175,291
Share value on date of issuance	$	176.39	$	157.07	$	113.91
Total value	$	54,377	$	35,766	$	19,967

Under the Company's 2016-17-18 LTIP, a payout of unrestricted stock will be issued in April 2019.

The fair value of each LTIP award granted in 2018, 2017 and 2016 was based on the fair market value of the Company's common stock on the date of grant. A summary of the status and changes of shares relating to the LTIP and the related average price per share follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Nonvested June 30, 2017	734,744		$	119.56
Granted	191,986		$	206.99
Vested	(256,071	)	$	122.11
Canceled	(12,388	)	$	128.63
Nonvested June 30, 2018	658,271		$	143.90

During 2018, 2017 and 2016, the Company recorded stock-based compensation expense of $65,640, $27,219 and $21,150, respectively, relating to the LTIP. During 2018, 2017 and 2016, the Company recognized an income tax benefit of $3,893, $1,701 and $3,119, respectively, relating to the LTIP.

Shares surrendered in connection with the LTIP: 2018 - 139,918; 2017 - 113,074; 2016 - 78,173.

Restricted Shares - Prior to 2016, the Company issued restricted shares to non-employee members of the Board of Directors. The fair value of the restricted shares was based on the fair market value of the Company's common stock on the date of grant. During 2016, the Company recognized expense of $468 and tax cost of $(32) related to restricted shares.