(

)

Stock Option and Equity Incentive Plans

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 below. The compensation cost charged against income for those plans is included in selling, general & administrative expenses as follows (in thousands):

	Years Ended December 31,
Share-based compensation related to:	2019		2018		2017
Common stock grants	$	400	$	505	$	505
Stock option grants		151		149		138
Restricted Stock Unit awards		1,040		558		425
Total share-based compensation	$	1,591	$	1,212	$	1,068

Incentive Plan

June 2003,

the Company formally adopted the

2003

Incentive Plan (the “Plan”). As amended and restated to date, the Plan is intended to benefit the Company by offering equity-based and other incentives to certain of the Company’s executives and employees who are in a position to contribute to the long-term success and growth of the Company, thereby encouraging the continuance of their involvement with the Company and/or its subsidiaries.

Two types of equity awards

may

be granted to participants under the Plan: restricted shares or other stock awards. Restricted shares are shares of common stock awarded subject to restrictions and to possible forfeiture upon the occurrence of specified events. Other stock awards are awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of common stock. Such awards

may

include Restricted Stock Unit Awards (“RSUs”), unrestricted stock, incentive and non-qualified stock options, performance shares, or stock appreciation rights. The Company determines the form, terms, and conditions, if any, of any awards made under the Plan.

Through

December 31, 2019,

1,252,613

shares of common stock have been issued under the

2003

Incentive Plan,

none

of which have been restricted. An additional

108,424

shares are being reserved for outstanding grants of RSUs and other share-based compensation that are subject to various performance and time-vesting contingencies. The Company has also granted awards in the form of stock options under this Plan. Through

December 31, 2019,

185,000

options have been granted and

10,000

options are outstanding. At

December 31, 2019,

803,244

shares or options are available for future issuance in the

2003

Incentive Plan.

Director Plan

Effective

July 15, 1998,

the Company adopted the

1998

Director Plan, which was amended and renamed, on

June 3, 2009,

the

2009

Non-Employee Director Stock Incentive Plan (the “Director Plan”). The Director Plan was amended on

March 7, 2013,

to (i) prohibit the repricing of stock options or other equity awards without the consent of the Company’s shareholders, and (ii) prohibit the Company from buying out underwater stock options. The Director Plan, as amended, provides for the issuance of stock options and other equity-based securities of up to

975,000

shares to non-employee members of the Company’s board of directors. Through

December 31, 2019,

365,026

options have been granted and

95,614

options are outstanding. For the year ended

December 31, 2019,

5,442

RSUs are being reserved for outstanding grants of RSUs, and

79,648

shares remained available to be issued under the Director Plan.

The following is a summary of stock option activity under all plans:

	Shares Under Options			Weighted Average Exercise Price (per share)		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)

Outstanding December 31, 2018		134,043		$	20.46
Granted		16,536			38.61
Exercised		(44,965	)		15.68
Outstanding December 31, 2019		105,614		$	25.34		5.70	$	2,563
Exercisable at December 31, 2019		85,328		$	22.62		5.10	$	2,303
Vested and expected to vest at December 31, 2019		105,614		$	25.34		5.70	$	2,563

During the years ended

December 31, 2019,

2018

and

2017,

the total intrinsic value of all options exercised (i.e., the difference between the market price and the price paid by the employees to exercise the options) was approximately

$1.0,

$1.2

million and

$0.6

million, respectively, and the total amount of consideration received from the exercise of these options was approximately

$0.7

million,

$1.3

million and

$0.8

million, 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 years ended

December 31, 2019

and

2018,

shares were surrendered for this purpose. During the year ended

December

31,

2017,

6,511

shares were surrendered to pay the exercise price at an average market price of

$26.45.

February 19, 2019,

the Company’s Compensation Committee approved the award of

$400

thousand payable in shares of the Company’s common stock to the Company’s Chairman, Chief Executive Officer, and President under the

2003

Equity Incentive Plan. The shares were issued on

December 12, 2019.

June 5, 2019

the Company issued

16,536

shares of unrestricted common stock to the non-employee members of the Company’s Board of Directors as part of their annual retainer for serving on the Board.

The Company grants RSUs to its executive officers and employees. The stock unit awards are subject to various time-based vesting requirements, and certain portions of these awards are subject to performance criteria of the Company. Compensation expense on these awards is recorded based on the fair value of the award at the date of grant, which is equal to the Company’s closing stock price, and is charged, to expense ratably during the service period.

compensation expense is taken on awards that do

not

become vested, and the amount of compensation expense recorded is adjusted based on management’s determination of the probability that these awards will become vested. The following table summarizes information about stock unit award activity during the year ended

December 31, 2019:

	Restricted Stock Units			Weighted Average Award Date Fair Value
Outstanding at December 31, 2018		72,996		$	23.60
Awarded		64,701			33.55
Shares vested		(20,529	)		23.74
Forfeitures		(3,302	)		33.31
Outstanding at December 31, 2019		113,866		$	28.36

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 year ended

December 31, 2019,

8,341

shares were redeemed for this purpose at an average market price of

$33.69.

During the years ended

December 31, 2018

and

2017,

5,238

and

4,377

shares were redeemed for this purpose at an average market price of

$27.60

and

$24.50,

respectively.

The following summarizes the future share-based compensation expense the Company will record as the equity securities granted through

December 31, 2019,

vest (in thousands):

	Options		Restricted Stock Units		Total
2020	$	116	$	999	$	1,115
2021		-		746		746
2022		-		409		409
2023		-		48		48
Total	$	116	$	2,202	$	2,318