Stock-Based Compensation

Stock Award Plans

Our 2004 Fourth Amended and Restated Stock Option and Incentive Plan (the "Plan”) provides for awarding 20,150,000 (adjusted for stock splits) shares of common stock plus (i) shares covered by forfeited, expired, and canceled options granted under prior plans; and (ii) shares tendered as full or partial payment for the purchase price of an award or to satisfy tax withholding obligations. At December 31, 2018, a total of 3,520,541 shares were available for issuance. The Plan provides for the granting of nonqualified and incentive stock options having maximum ten-year terms to purchase common stock at its market value on the award date; stock appreciation rights based on common stock fair market values with settlement in common stock or cash; restricted stock awards; restricted stock units; and performance awards with settlement in common stock or cash on achievement of specific business objectives. Options become exercisable in various percentages over periods ranging up to five years.

Conversion of Equity Awards Outstanding at Spin-Off Date

In connection with the Arcosa spin-off and pursuant to the anti-dilution provisions included in the Company's stock award plans, certain adjustments were made to outstanding stock-based compensation awards to Trinity employees and directors at the time of the spin-off to maintain the aggregate intrinsic value of the awards at the date of the Arcosa spin-off. Certain of these awards were converted under the shareholder method, which aligns the conversion ratio for outstanding awards with the spin-off distribution ratio set by our Board of Directors. Therefore, for every three shares of unvested Trinity restricted stock held immediately prior to the spin-off date that were converted using the shareholder method, the holder of such stock awards received an award of one share of Arcosa restricted stock.

With respect to awards that were not converted under the shareholder method, we have proportionately adjusted the number of such awards granted to Trinity employees and directors that were outstanding at the time of the Arcosa spin-off to maintain the aggregate intrinsic value of the awards at the date of the Arcosa spin-off. The conversion ratio was determined based on the volume weighted-average trading price for Trinity common stock for the five trading days before and after the Arcosa spin-off. The ratio used to adjust these awards differed insignificantly from the conversion ratio that would have resulted had the ratio been calculated based on the Trinity stock price immediately following the Arcosa spin-off. These modified awards otherwise retained substantially the same terms and conditions, including term and vesting provisions. The adjustment to these awards did not result in any additional compensation expense, and the awards will continue to vest over their original vesting period. Additionally, we will not incur any future compensation cost related to restricted shares and restricted stock units held by Arcosa employees and directors.

Stock-Based Compensation Expense

The cost of employee services received in exchange for awards of equity instruments is referred to as share-based compensation and is based on the grant date fair-value of those awards. Stock-based compensation includes compensation expense, recognized over the applicable vesting periods, for share-based awards. Stock-based compensation expense totaled $29.3 million, $24.6 million, and $30.9 million for the years ended December 31, 2018, 2017, and 2016, respectively.

The income tax benefit related to stock-based compensation expense was $7.7 million, $14.5 million, and $14.5 million for the years ended December 31, 2018, 2017, and 2016, respectively.

Stock options

Expense related to stock options issued to eligible employees under the Plan is recognized over their vesting period on a straight- line basis. Stock options generally vest over five years and have contractual terms of ten years. There were no options outstanding at December 31, 2018. All options outstanding at December 31, 2017 were exercisable.



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)	Aggregate Intrinsic Value
						(in millions)
Options outstanding at December 31, 2017	34,343		$	8.12	0.9	$1.0
Granted	—		—
Exercised	(34,343	)	8.12
Cancelled	—		—
Options outstanding at December 31, 2018	—		$	—	0.0	$—

At December 31, 2018, there was no unrecognized compensation expense related to stock options. The intrinsic value of options exercised totaled $0.7 million, $0.5 million, and zero during the years ended December 31, 2018, 2017, and 2016, respectively.

Restricted Stock

Restricted share awards consist of restricted stock, restricted stock units, and performance units. Restricted stock and restricted stock units generally vest for periods ranging from one to fifteen years from the date of grant. Certain restricted stock and restricted stock units vest in their entirety upon the employee's retirement from the Company, taking into consideration the employee's age and years of service to the Company, as defined more specifically in our benefit plans. Restricted stock and restricted stock units granted to non-employee directors under the Plan generally vest one year from the grant date and are released at that time or upon completion of the directors' service to the Company. Expense related to restricted stock and restricted stock units issued to eligible employees under the Plan is recognized ratably over the vesting period or to the date on which retirement eligibility is achieved, if shorter. Performance units are granted to employees based upon a target level; however, depending upon the achievement of certain specified goals during the performance period, performance units may be adjusted to a level ranging between 0% and 200% of the target level. The performance units vest upon certification by the Human Resources Committee of the Board of Directors of the achievement of the specified performance goals. Expense related to performance units is recognized ratably from their award date to the end of the performance period, generally three years. Forfeitures are recognized as reduction to expense in the period in which they occur.



	Number of Restricted Share Awards		Weighted Average Grant-Date Fair Value per Award
Restricted share awards outstanding at December 31, 2017	6,810,381		$	21.91
Granted	1,375,017		35.02
Vested	(1,231,614	)	24.41
Forfeited	(692,637	)	26.33
Cancelled in connection with Arcosa spin-off ⁽¹⁾	(1,639,283	)	28.87
Spin-off adjustment for outstanding awards ⁽²⁾	1,335,938		20.48
Restricted share awards outstanding at December 31, 2018 ⁽³⁾	5,957,802		$	21.67

⁽¹⁾ Includes cancellations of restricted share awards attributable to Arcosa employees that were converted to equivalent shares of Arcosa restricted stock in connection with the spin-off and cancellations of certain performance units that were converted to time-based restricted stock units at the spin-off date based on performance attainment as determined by the Human Resources Committee of Trinity's Board of Directors.

⁽²⁾ Includes additional restricted stock units granted to Trinity employees to maintain the aggregate intrinsic value of awards granted prior to the spin-off and restricted stock units that were converted from performance units to time-based restricted stock units in connection with the spin-off as described above.

⁽³⁾ The balance of restricted share awards outstanding at December 31, 2018 includes approximately 1.1 million restricted shares for Arcosa employees that were converted under the shareholder method. These restricted shares will be released to Arcosa employees upon vesting, but as of the spin-off date, Trinity no longer records the compensation expense associated with these shares.

At December 31, 2018, unrecognized compensation expense related to restricted share awards totaled $52.4 million, which will be recognized over a weighted average period of 3.6 years. The total vesting-date fair value of shares vested and released during the years ended December 31, 2018, 2017, and 2016 was $30.1 million, $50.2 million, and $47.0 million, respectively. The weighted average grant-date fair value of restricted share awards granted during the years ended December 31, 2018, 2017, and 2016 was $35.02, $28.87, and $19.06 per share, respectively.