Stock Option Plans

The Company has established two stock incentive plans, the 1993 plan and the 2004 plan, as amended, (together, the “Plans”). Under the Plans, options were granted at an exercise price not less than the market value of the common stock on the date of grant and expire ten years from the date of grant. Officer options vest ratably over four years following the grant and are charged to expense using the straight-line method over the vesting period. Director options vest immediately and are charged to expense as of the date of grant.

The following table summarizes the amount and activity of each grant with outstanding unexercised options, the total value and variables used in the computation and the amount expensed and included in general and administrative expense in the Consolidated Statements of Operations for the nine months ended September 30, 2017.



	Directors
Grant date	4/25/2008			4/24/2009			5/7/2010			5/13/2011			5/4/2012			5/10/2013			5/9/2014			5/8/2015			5/6/2016			5/5/2017			Subtotals
Total grant	30,000			32,500			32,500			32,500			35,000			35,000			30,000			35,000			32,500			27,500			322,500
Vested	30,000			32,500			32,500			32,500			35,000			35,000			30,000			35,000			32,500			27,500			322,500
Exercised	20,000			27,500			25,000			22,500			22,500			22,500			17,500			12,500			7,500			—			177,500
Forfeited	7,500			—			2,500			2,500			—			—			—			—			—			—			12,500
Exercisable at September 30, 2017	2,500			5,000			5,000			7,500			12,500			12,500			12,500			22,500			25,000			27,500			132,500
Remaining unexercised	2,500			5,000			5,000			7,500			12,500			12,500			12,500			22,500			25,000			27,500			132,500
Exercise price	$	50.15		$	32.68		$	38.76		$	41.82		$	39.29		$	44.42		$	47.03		$	51.07		$	57.74		$	59.41
Volatility	0.237			0.344			0.369			0.358			0.348			0.333			0.173			0.166			0.166			0.173
Expected life (years)	7.0			6.0			5.0			5.0			5.0			5.0			5.0			5.0			5.0			5.0
Assumed yield	4.09		%	4.54		%	4.23		%	4.16		%	4.61		%	4.53		%	4.48		%	4.54		%	3.75		%	3.45		%
Risk-free rate	3.49		%	2.19		%	2.17		%	1.86		%	0.78		%	0.82		%	1.63		%	1.50		%	1.23		%	1.89		%
Total value at grant date	$	254,700		$	222,950		$	287,950		$	297,375		$	257,250		$	278,250		$	109,500		$	125,300		$	151,125		$	165,550		$	2,149,950
Expensed in previous years	254,700			222,950			287,950			297,375			257,250			278,250			109,500			125,300			151,125			—			1,984,400
Expensed in 2017	—			—			—			—			—			—			—			—			—			165,550			165,550
Future expense	—			—			—			—			—			—			—			—			—			—			—
	Officers
Grant date	5/13/2011			5/4/2012			5/10/2013			5/9/2014			5/8/2015			5/6/2016			5/5/2017			Subtotal									Grand Totals
Total grant	162,500			242,500			202,500			170,000			190,000			194,000			205,000			1,366,500									1,689,000
Vested	118,750			107,500			171,875			126,875			94,375			48,500			—			667,875									990,375
Exercised	96,100			91,830			83,000			35,000			8,981			625			—			315,536									493,036
Forfeited	43,750			135,000			30,625			1,875			3,125			1,875			—			216,250									228,750
Exercisable at September 30, 2017	22,650			15,670			88,875			91,875			85,394			47,875			—			352,339									484,839
Remaining unexercised	22,650			15,670			88,875			133,125			177,894			191,500			205,000			834,714									967,214
Exercise price	$	41.82		$	39.29		$	44.42		$	47.03		$	51.07		$	57.74		$	59.41
Volatility	0.330			0.315			0.304			0.306			0.298			0.185			0.170
Expected life (years)	8.0			8.0			8.0			7.0			7.0			7.0			7.0
Assumed yield	4.81		%	5.28		%	5.12		%	4.89		%	4.94		%	3.80		%	3.50		%
Risk-free rate	2.75		%	1.49		%	1.49		%	2.17		%	1.89		%	1.55		%	2.17		%
Gross value at grant date	$	1,366,625		$	1,518,050		$	1,401,300		$	1,349,800		$	1,584,600		$	1,136,840		$	1,324,300		$	9,681,515								$	11,831,465
Estimated forfeitures	367,937			845,100			211,925			168,749			141,780			86,628			91,642			1,913,761									1,913,761
Expensed in previous years	998,688			672,950			1,031,134			787,392			601,180			175,032			—			4,266,376									6,250,776
Expensed in 2017	—			—			158,241			221,454			270,531			196,911			128,400			975,537									1,141,087
Future expense	—			—			—			172,205			571,109			678,269			1,104,258			2,525,841									2,525,841
Weighted average term of remaining future expense (in years)				2.7

The table below summarizes the option activity for the nine months ended September 30, 2017:



	Number of Shares		Weighted Average Exercise Price per share		Aggregate Intrinsic Value
Outstanding at January 1	833,630		$	49.92	$	13,913,891
Granted	232,500		59.41		581,250
Exercised	(95,166	)	47.03		1,403,256
Expired/Forfeited	(3,750	)	53.73
Outstanding at September 30	967,214		52.47		9,130,494
Exercisable at September 30	484,839		48.70		6,402,577

The intrinsic value measures the price difference between the options’ exercise price and the closing share price quoted by the New York Stock Exchange as of the date of measurement. The intrinsic value for shares exercised during the period was calculated by using the closing share price on the date of exercise. At September 29, 2017, the final trading day of the third quarter, the closing share price of $61.91 was used in the calculation of the aggregate intrinsic value of options exercisable and outstanding at that date. The weighted average remaining contractual life of the Company’s outstanding and exercisable options is 7.7 years and 6.7 years, respectively.