(4)Share-Based Compensation

Share-based compensation is measured at the grant date based on the fair value of the award and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant).

The Company issues share-based awards through several plans that are described in detail in the notes to the consolidated financial statements for the year ended December 31, 2014. The compensation cost charged against income for those plans is included in selling, general & administrative expenses as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Total share-based compensation expense	$	226	$	215	$	873	$	945

Share-based compensation for the three-month periods ended September 30, 2015 and 2014 includes $0 and $5,000, respectively, representing the fair value of the Company’s common stock granted during the periods to the Board of Directors. Share-based compensation for the nine-month periods ended September 30, 2015 and 2014 includes $105,000 and $127,000, respectively, representing the fair value of the Company’s common stock granted during the periods to the Board of Directors.

The total income tax benefit recognized in the condensed consolidated statements of income for share-based compensation arrangements was approximately $63,000 and $60,000, respectively, for the three-month periods ended September 30, 2015 and 2014, and $256,000 and $276,000, respectively, for the nine-month periods ended September 30, 2015 and 2014.

The following is a summary of stock option activity under all plans for the nine-month period ended September 30, 2015:

	Shares Under Options		Weighted Average Exercise Price (per share)		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2014	340,107		$	12.84
Granted	17,526		19.97
Exercised	(58,758	)	4.40
Outstanding at September 30, 2015	298,875		$	14.92	3.92	$	2,437
Exercisable at September 30, 2015	246,376		$	13.66	4.14	$	2,307
Vested and expected to vest at September 30, 2015	298,875		$	14.92	3.92	$	2,437

On June 10, 2015, the Company granted options to its directors for the purchase of 17,526 shares of common stock at that day’s closing price of $19.97. The compensation expense related to these grants was determined as the fair value of the options using the Black Scholes option pricing model based on the following assumptions:

Expected volatility		32.3%
Expected dividends		None
Risk free interest rate		1.0%
Expected term		5.0 years

The stock volatility for each grant is determined based on a review of the experience of the weighted average of historical daily price changes of the Company’s common stock over the expected option term, and the risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. The weighted average grant date fair value of options granted during the nine- month period ended September 30, 2015 was $5.99.

During the nine-month periods ended September 30, 2015 and 2014, the total intrinsic value of all options exercised (i.e., the difference between the market price on the exercise date and the price paid by the employees to exercise the options) was approximately $989,000 and $3.4 million, respectively, and the total amount of consideration received by the Company from the exercised options was approximately $258,000 and $709,000, respectively. At its discretion, the Company allows option holders to surrender previously owned common stock in lieu of paying the exercise price and withholding taxes. During the nine-months ended September 30, 2015, there were 1,632 shares surrendered at an average market price of $21.97. During the nine-months ended September 30, 2014, 32,164 shares were surrendered at an average market price of $25.42.

During each of the three-month periods ended September 30, 2015 and 2014, the Company recognized compensation expense related to stock options granted to directors and employees of approximately $44,000. During the nine-month periods ended September 30, 2015 and 2014, the Company recognized compensation expenses related to stock options granted to directors and employees of approximately $237,000 and $310,000, respectively.

On February 24, 2015, the Company’s Compensation Committee approved the award of $400,000, payable in shares of common stock to the Company’s Chairman, Chief Executive Officer, and President under the 2003 Incentive Plan. The shares will be issued on or before December 31, 2015. The Company recorded compensation expense associated with the award of $100,000 and $300,000, respectively, during the three- and nine-month periods ended September 30, 2015. The Company recorded compensation expense associated with a similar award of $100,000 and $300,000, respectively, during the three- and nine-month periods ended September 30, 2014.

The following table summarizes information about Restricted Stock Units (“RSUs”) activity during the nine-month period ended September 30, 2015:

	Restricted Stock Units		Weighted Average Award Date Fair Value
Unvested at December 31, 2014	35,088		$	17.87
Awarded	23,975		23.46
Shares vested	(10,426	)	18.35
Unvested at September 30, 2015	48,637		$	20.11

During the three- and nine-month periods ended September 30, 2015, the Company recorded compensation expense related to RSUs of approximately $82,000 and $231,000, respectively. The Company recorded compensation expense of approximately $71,000 and $207,000, respectively, for the same periods in 2014.

At the Company’s discretion, RSU holders are given the option to net-share settle to cover the required minimum withholding tax, and the remaining amount is converted into the equivalent number of common shares. During the nine-month periods ended September 30, 2015 and 2014, 3,405 and 9,878 shares were surrendered at an average market price of $23.15 and $25.88, respectively.

As of September 30, 2015, the Company had approximately $1.0 million of unrecognized compensation expense, which is expected to be recognized over a period of 3.5 years.