NOTE 9 – STOCK-BASED COMPENSATION

Stock-Based Compensation Expense:

The following table presents the total stock-based compensation expense resulting from stock option awards, restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), and the Employee Stock Purchase Plan (“ESPP”) included in the Condensed Consolidated Statements of Income (Loss):

In millions
	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Selling, general and administrative - stock option plan	$	2.5	$	3.7	$	8.4	$	11.6
Selling, general and administrative - RSUs		2.0		1.2		5.8		4.1
Selling, general and administrative - PSUs		1.9		0.2		4.5		0.6
Selling, general and administrative - ESPP		0.3		0.3		0.8		1.0
Total pre-tax expense	$	6.7	$	5.4	$	19.5	$	17.3

Stock Options:

Options granted to directors vest in one year and options granted to officers and employees generally vest over five years. Expense related to options with graded vesting is recognized using the straight line method over the vesting period. Stock option activity for the nine months ended September 30, 2018 is summarized as follows:

	Number of Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life		Total Aggregate Intrinsic Value
						(in years)		(in millions)
Outstanding at January 1, 2018		5,393,417		$	96.91
Granted		362,382			62.06
Exercised		(311,792	)		49.78
Forfeited		(191,322	)		103.38
Canceled or expired		(255,538	)		105.88
Outstanding as of September 30, 2018		4,997,147		$	96.61		4.23	$	3.0
Exercisable as of September 30, 2018		3,557,911		$	96.39		3.61	$	3.0

At September 30, 2018, there was $21.9 million of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 2.75 years.

For the three months ended September 30, 2018 and 2017, the intrinsic value of options exercised was $3.3 million and $0.3 million, respectively. For the nine months ended September 30, 2018 and 2017, the intrinsic value of options exercised was $4.8 million and $3.5 million, respectively. The exercise intrinsic value represents the total pre-tax intrinsic value (the difference between the fair value on the trading day the option was exercised and the exercise price associated with the respective option).

The Company uses historical data to estimate expected life and volatility. The estimated fair value of stock options at the time of the grant using the Black-Scholes option pricing model was as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Stock options granted (shares)		1,712			18,015			362,382			454,799
Weighted average fair value at grant date	$	18.09		$	17.83		$	16.87		$	19.48
Assumptions:
Expected term (in years)		4.89			4.83			4.89			4.82
Expected volatility		25.68	%		22.95	%		25.34	%		22.68	%
Expected dividend yield		—	%		—	%		—	%		—	%
Risk free interest rate		2.74	%		1.81	%		2.58	%		1.90	%

Restricted Stock Units:

The fair value of RSUs is based on the closing price of the Company's common stock on the date of grant and is amortized to expense over the service period. RSUs generally vest over five years.

A summary of the status of our non-vested RSUs and changes during the nine months ended September 30, 2018, are as follows:

	Number of Units			Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life		Total Aggregate Intrinsic Value
						(in years)		(in millions)
Non-vested at January 1, 2018		267,297		$	89.74
Granted		293,698			62.23
Vested and Released		(62,313	)		88.29
Forfeited		(56,151	)		74.89
Non-vested as of June 30, 2018		442,531		$	73.28		2.08	$	26.0

At September 30, 2018, there was $25.7 million of total unrecognized compensation expense related to RSUs, which is expected to be recognized over a weighted average period of 3.7 years. The fair value of RSUs that vested during the nine months ended September 30, 2018 was $4.2 million.

Performance-Based Restricted Stock Units:

Our executive officers have been granted PSUs. These PSUs vest, or not, in three equal annual installments based on the achievement of pre-determined annual earnings per share performance goals, as approved by the Compensation Committee.

In addition, certain employees have been granted PSUs which vest, or not, in four equal annual installments based on the achievement of performance goals related to the Business Transformation, as approved by the Compensation Committee.

Each of the units granted represent the right to receive one share of the Company’s common stock at a specified future date.

A summary of the status of our non-vested PSUs and changes during the nine months ended September 30, 2018, are as follows:

	Number of Units			Weighted Average Grant Date Fair Value
Non-vested at January 1, 2018		11,149		$	82.85
Granted		131,182			63.92
Vested and Released		-			-
Forfeited		(24,579	)		72.23
Non-vested as of September 30, 2018		117,752		$	63.98

At September 30, 2018, there was approximately $1.7 million of total unrecognized compensation expense related to the 2018 installments of PSUs. At September 30, 2018, approximately 315,000 of additional installments of PSUs exist which will vest based on achievement of performance goals to be established for fiscal years 2019 through 2021.