(11) Share-Based Compensation

We have historically awarded stock options and restricted stock awards for employees and non-employee directors as a means of attracting and retaining quality personnel and to align employee performance with stockholder value.  Stock option plans are approved by our stockholders and administered by the stock compensation committee of the Company’s Board of Directors (the “Board”). The current plan allows for a variety of equity programs designed to provide flexibility in implementing equity and cash awards, including incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance stock, performance units and other stock-based awards. Participants may be granted any one of the equity awards or any combination. We do not award stock options with an exercise price below the market price of the underlying securities on the date of grant.  As of June 30, 2017, 1.7 million shares are available for future grants, assuming performance-based options vest at their target amount.  Generally, stock options have contractual terms of ten years.

The following table summarizes the Company’s share-based compensation for the three and six months ended June 30:

 

 

During the three months ended June 30, 2017, the final vesting dates were accelerated for certain share-based compensation awards to an executive departing the Company.  The vesting dates were adjusted to correspond to the executive’s departure date, resulting in expense of $1.0 million in the current year.  The expense related to the acceleration is included in rental, selling and general expense in the condensed consolidated statement of income for the three and six months ended June 30, 2017.

As of June 30, 2017, total unrecognized compensation cost related to stock option awards was approximately $3.8 million and the related weighted-average period over which it is expected to be recognized is approximately 1.3 years. As of June 30, 2017, the unrecognized compensation cost related to restricted stock awards was approximately $6.4 million, which is expected to be recognized over a weighted-average period of approximately 2.6 years.

Stock Options. The fair value of each stock option award is estimated on the date of the grant using the Black-Scholes-Merton option pricing model which requires the input of assumptions. We estimate the risk-free interest rate based on the U.S. Treasury security rate in effect at the time of the grant. The expected life of the options, volatility and dividend rates are estimated based on our historical data. The following are the key assumptions used for each of the six-month periods ended June 30:

 

 

The following table summarizes stock option activity for the six months ended June 30, 2017:

 

 

A summary of stock options outstanding as of June 30, 2017 is as follows:

 

 

The aggregate intrinsic value of options exercised during the six months ended June 30, 2017 was approximately $0.9 million and the weighted average fair value of stock options granted during the six months ended June 30, 2017 was $8.33.

The option awards granted in 2017 will vest based upon the achievement of specified performance criteria related to fiscal 2017, 2018 and 2019. In addition, included in options outstanding at the end of the period are 0.3 million options granted in 2016 that will vest based upon the achievement of specified performance criteria related to fiscal 2017 and 2018. Such awards have been granted assuming a target number of options. However, the terms of these awards provide that the number of options that ultimately vest may vary between 50% and 200% of the target award, or may be zero. The tables present the options at their target amount.  Included in the table above are cancellations of approximately 0.2 million options granted in previous years subject to performance criteria.  These awards were canceled during the current-year period due to vesting at less than 100% of the target award.

Restricted Stock Awards. The fair value of restricted stock awards is estimated as the closing price of our common stock on the date of grant. A summary of restricted stock award activity is as follows:

 

 

The restricted stock awards that vested during the six months ended June 30, 2017 had an aggregate grant date fair value of $2.3 million and an aggregate vesting date fair value of $2.3 million.