We have two primary stock-based compensation programs under which we annually grant stock option, restricted stock unit (RSU) and performance stock unit (PSU) awards to key managers and directors.

In our main long-term incentive program, key managers can elect to receive options or RSUs. All options vest after three years and have a 10-year life. Exercise prices on options are set equal to the market price of the underlying shares on the date of the grant. Effective in fiscal year 2017, RSUs vest and settle in shares of common stock three years from the grant date. RSUs granted prior to fiscal year 2017 vest and settle in shares of common stock five years from the grant date.

Senior-level executives participate in an additional long-term incentive program that awards PSUs, which are paid in shares after the end of a three-year performance period subject to pre-established performance goals. Effective in fiscal year 2019, we added a Relative Total Shareholder Return (R-TSR) modifier to the PSU, under which the number of shares ultimately granted is also impacted by the Company's actual

In addition to these long-term incentive programs, we award RSUs to the Company's non-employee directors and make other minor stock option and RSU grants to employees for which the terms are not substantially different from our long-term incentive awards.

A total of 185 million shares of common stock were authorized for issuance under the stock-based compensation plan approved by shareholders in 2014, of which 41 million shares remain available for grant.

The Company recognizes stock-based compensation expense based on the fair value of the awards at the date of grant. The fair value is amortized on a straight-line basis over the requisite service period. Awards to employees eligible for retirement prior to the award becoming fully vested are recognized as compensation expense from the grant date through the date the employee first becomes eligible to retire and is no longer required to provide services to earn the award. Stock-based compensation expense is included as part of Cost of products sold and SG&A in the Consolidated Statement of Earnings and



Years ended June 30	2019		2018		2017 ⁽¹⁾
Stock options	$	246	$	220	$	216
RSUs and PSUs	269		175		150
Total stock-based expense	$	515	$	395	$	366

Income tax benefit	$	101	$	87	$	111

We utilize an industry standard lattice-based valuation model to calculate the fair value for stock options granted. Assumptions utilized in the model, which are evaluated and revised to reflect market conditions and experience, were as follows:



Years ended June 30	2019				2018				2017
Interest rate	2.5	-	2.7	%	1.9	-	2.9	%	0.8	-	2.6	%
Weighted average interest rate	2.6			%	2.8			%	2.6			%
Dividend yield	3.0			%	3.1			%	3.2			%
Expected volatility	17			%	18			%	15			%
Expected life in years	9.2				9.2				9.6

Lattice-based option valuation models incorporate ranges of assumptions for inputs and those ranges are disclosed in the preceding table. Expected volatilities are based on a combination of historical volatility of our stock and implied volatilities of call options on our stock. We use historical data to estimate option exercise and employee termination patterns within the valuation model. The expected life of options granted is derived from the output of the option valuation model and represents the average period of time that options granted are expected to be outstanding. The interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of grant.



Options	Options (in thousands)		Weighted Average Exercise Price		Weighted Average Contract-ual Life in Years	Aggregate Intrinsic Value
Outstanding, beginning of year	205,654		$	74.21
Granted	13,451		95.78
Exercised	(53,670	)	62.99
Forfeited/expired	(694	)	81.58
OUTSTANDING, END OF YEAR	164,741		$	79.59	5.6	$	4,951
EXERCISABLE	110,504		$	75.07	4.2	$	3,822



Years ended June 30	2019		2018		2017
Weighted average grant-date fair value of options granted	$	13.60	$	11.89	$	10.45
Intrinsic value of options exercised	1,770		500		1,334
Grant-date fair value of options that vested	180		209		246
Cash received from options exercised	3,381		1,245		2,630
Actual tax benefit from options exercised	221		127		421

At June 30, 2019, there was $174 of compensation cost that has not yet been recognized related to stock option grants. That cost is expected to be recognized over a remaining weighted average period of 1.9 years.

A summary of non-vested RSUs and PSUs outstanding under the plans as of June 30, 2019 and activity during the year then ended is presented below:



	RSUs				PSUs
RSU and PSU awards	Units (in thousands)		Weighted Average Grant Date Fair Value		Units (in thousands)		Weighted Average Grant Date Fair Value
Non-vested at July 1, 2018	5,376		$	77.17	1,385		$	84.08
Granted	1,970		96.74		555		112.83
Vested	(1,685	)	78.40		(642	)	91.40
Forfeited	(168	)	79.67		(3	)	92.72
Non-vested at June 30, 2019	5,493		$	84.00	1,295		$	92.98

At June 30, 2019, there was $261 of compensation cost that has not yet been recognized related to RSUs and PSUs. That cost is expected to be recognized over a remaining weighted average period of 2.0 years. The total grant date fair value of shares vested was $205, $175 and $163 in 2019, 2018 and 2017, respectively.

The Company settles equity issuances with treasury shares. We have no specific policy to repurchase common shares to mitigate the dilutive impact of options, RSUs and PSUs. However, we have historically made adequate discretionary purchases, based on cash availability, market trends and other factors, to offset the impacts of such activity.