Stock-Based Compensation Plans

As part of its long term compensation plans, the Company has granted stock options, performance awards and restricted stock. Details of the outstanding awards and activity are presented below.

Information with respect to stock options granted under the Company's 1994 Stock Option and Incentive Plan (the "1994 Plan") and its Second Amended and Restated 2009 Equity Incentive Plan (the "2009 Plan") for the nine months ended September 30, 2018, is as follows:



	2009 Plan shares		Weighted average exercise price per share		1994 Plan shares		Weighted average exercise price per share
Options Outstanding, December 31, 2017	149,973		$	126.77	7,778		$	48.60
Exercised	(3,000	)	130.23		(2,263	)	48.60
Granted (1)	6,995		161.10		—		—
Forfeited	—		—		—		—
Options Outstanding, September 30, 2018	153,968		$	128.26	5,515		$	48.60
Options Exercisable, September 30, 2018	146,973		$	126.70	5,515		$	48.60

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(1)	Options granted during the nine months ended September 30, 2018 are a result of recipient elections to receive a portion of earned performance awards and time-vesting restricted stock in the form of stock options.

Information with respect to performance awards granted is as follows:



	Performance awards		Weighted average grant date fair value per award
Outstanding at December 31, 2017	251,770		$	155.25
Granted (1)	100,965		155.31
Change in awards based on performance (2)	5,990		148.79
Converted to restricted stock or options	(88,477	)	148.79
Forfeited	(2,309	)	158.52
Outstanding at September 30, 2018	267,939		$	157.23

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(1)	The amount of restricted stock that ultimately may be earned is based on the total shareholder return metrics related to the Company's common stock for 62,043 performance awards and financial metrics related to operating performance and leverage metrics of the Company for 38,922 performance awards.


(2)	Represents the change in the number of performance awards earned based on actual performance achievement for the performance period.

The Company used a Monte Carlo model to assess the compensation cost associated with the portion of the performance awards granted in 2018 for which achievement will be determined by using total shareholder return measures. The assumptions used are as follows:



		2018
Dividend yield		3.7%
Estimated volatility over the life of the plan (1)		11.8% - 18.7%
Risk free rate		1.86% - 2.46%
Estimated performance award value based on total shareholder return measure		$151.67

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(1)	Estimated volatility over the life of the plan is using 50% historical volatility and 50% implied volatility.

For the portion of the performance awards granted in 2018 for which achievement will be determined by using financial metrics, the compensation cost was based on the grant date fair value of $161.10, and the Company's estimate of corporate achievement for the financial metrics.

Information with respect to restricted stock granted is as follows:



	Restricted stock shares		Restricted stock shares weighted average grant date fair value per share		Restricted stock shares converted from performance awards
Outstanding at December 31, 2017	133,633		$	172.33	233,928
Granted - restricted stock shares	98,713		161.58		88,297
Vested - restricted stock shares	(66,764	)	171.31		(112,230	)
Forfeited	(3,865	)	166.70		(757	)
Outstanding at September 30, 2018	161,717		$	166.32	209,238

Total employee stock-based compensation cost recognized in income was $15,189,000 and $13,245,000 for the nine months ended September 30, 2018 and 2017, respectively, and total capitalized stock-based compensation cost was $8,391,000 and $7,644,000 for the nine months ended September 30, 2018 and 2017, respectively. At September 30, 2018, there was a total unrecognized compensation cost of $34,159,000 for unvested restricted stock and performance awards, and is expected to be recognized over a weighted average period of 2.7 years.