12.

Stock Options and Restricted Stock

2005 Incentive Plan

The AMERISAFE 2005 Equity Incentive Plan (the “2005 Incentive Plan”) is administered by the Compensation Committee of the Board and is designed to provide incentive compensation to executive officers and other key management personnel. The 2005 Incentive Plan permits awards in the form of incentive stock options, as defined in Section 422(b) of the Internal Revenue Code of 1986, non-qualified stock options, restricted shares of common stock and restricted stock units. In connection with the approval of the 2012 Equity and Incentive Compensation Plan by the Company’s shareholders, no further awards will be made under the 2005 Equity Incentive Plan.

Stock options granted under the 2005 Incentive Plan have an exercise price of not less than 100% of the fair value of the common stock on the date of grant. However, any stock options granted to holders of more than 10% of the Company’s voting stock will have an exercise price of not less than 110% of the fair value of the common stock on the date of grant. Stock option grants are exercisable, subject to vesting requirements determined by the Compensation Committee, for periods of up to ten years from the date of grant, except for any grants to holders of more than 10% of the Company’s voting stock, which will have exercise periods limited to a maximum of five years. Stock options generally expire 90 days after the cessation of an optionee’s service as an employee. However, in the case of an optionee’s death or disability, the unexercised portion of a stock option remains exercisable for up to one year after the optionee’s death or disability. Stock options granted under the 2005 Incentive Plan are not transferable, except by will or the laws of descent and distribution.

The Company uses the Black-Scholes-Merton option pricing model to estimate the fair value of each option on the date of grant. The expected terms of options are developed by considering the Company’s historical attrition rate for those employees at the officer level, who are eligible to receive options. Further, the Company aggregates individual awards into homogenous groups based upon grant date. Expected volatility is estimated using daily historical volatility for six companies within the property and casualty insurance sector. The Company believes that historical volatility of this peer group is currently the best estimate of expected volatility of the market price of the Company’s common shares. The dividend yield was assumed to be zero as the Company did not pay cash dividends until 2013. The risk-free interest rate is the yield on the grant date of U.S. Treasury zero coupon securities with a maturity comparable to the expected term of the options.

The following table summarizes information about the stock options outstanding under the 2005 Incentive Plan at December 31, 2012, 2013 and 2014:


	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in years)
Outstanding at January 1, 2012		919,348			10.37		5.5
Granted		—			—		—
Exercised		(86,800	)		9.00		—
Canceled, forfeited, or expired		—			—		—

Outstanding at December 31, 2012		832,548			10.51		4.6

Exercisable at December 31, 2012		779,948			10.08		4.4

Outstanding at January 1, 2013		832,548			10.51		4.6
Granted		—			—		—
Exercised		(256,300	)		9.00		—
Canceled, forfeited, or expired		—			—		—

Outstanding at December 31, 2013		576,248			11.12		3.8

Exercisable at December 31, 2013		557,448			10.91		3.7

Outstanding at January 1, 2014		576,248			11.12		3.8
Granted		—			—		—
Exercised		(294,165	)		9.09		—
Canceled, forfeited, or expired		—			—		—

Outstanding at December 31, 2014		282,083			11.30		3.6

Exercisable at December 31, 2014		282,083			11.30		3.6


	2014		2013		2012
			(in thousands)
Cash received from option exercises	$	2,674	$	2,344	$	781
Total tax benefits realized for tax deductions from options exercised		2,797		2,002		405
Total intrinsic value of options exercised		9,145		6,654		1,468
Grant date fair value of options vested		144		226		310
Aggregate intrinsic value of vested options outstanding		8,763		17,467		13,393

The following table summarizes information about the restricted stock outstanding under the 2005 Incentive Plan at December 31, 2014:


	Shares			Weighted-Average Grant-Date Fair Value per Share
Nonvested balance at January 1, 2012		—			—
Granted		8,000			27.47
Vested		—			—
Forfeited		—			—

Nonvested balance at December 31, 2012		8,000			27.47

Granted		—			—
Vested		(1,600	)		27.47
Forfeited		—			—

Nonvested balance at December 31, 2013		6,400			27.47

Granted		—			—
Vested		(800	)		27.35
Forfeited		(3,200	)		27.59

Nonvested balance at December 31, 2014		2,400			27.35

The Company recognized compensation expense of $0.3 million in 2014 and 2013 and $0.2 million in 2012, related to awards made under the 2005 Incentive Plan. Total tax benefits realized for tax deductions from vesting of restricted stock in 2014 and 2013 were $38,000, and $4,000, respectively.

2010 Restricted Stock Plan

In 2010, the Company’s shareholders approved an amendment to the AMERISAFE Non-Employee Director Restricted Stock Plan (the “2010 Restricted Stock Plan”). The Plan is administered by the Compensation Committee of the Board and provides for the automatic grant of restricted stock awards to non-employee directors of the Company. Awards to non-employee directors are generally subject to terms including non-transferability, immediate vesting upon death or total disability of a director, forfeiture of unvested shares upon termination of service by a director and acceleration of vesting upon a change of control of the Company. The maximum number of shares of common stock that may be issued pursuant to restricted stock awards under the 2010 Restricted Stock Plan is 100,000 shares, subject to the authority of the Board to adjust this amount in the event of a merger, consolidation, reorganization, stock split, combination of shares, recapitalization or similar transaction affecting the common stock. At December 31, 2014, there were 33,186 shares of common stock available for future awards under the 2010 Restricted Stock Plan.

Under the 2010 Restricted Stock Plan, each non-employee director is automatically granted a restricted stock award for a number of shares equal to $30,000 divided by the closing price of the Company’s common stock on the date of the annual meeting of shareholders at which the non-employee director is elected or is continuing as a member of the Board. Each restricted stock award vests on the date of the next annual meeting of shareholders following the date of grant, subject to the continued service of the non-employee director.

As of December 31, 2014, there were 5,229 shares of restricted stock outstanding under the 2010 Restricted Stock Plan, all of which will vest on the date of the annual meeting of shareholders in 2015.

The following table summarizes information about the restricted stock outstanding under the 2010 Restricted Stock Plan at December 31, 2014:


	Shares			Weighted-Average Grant-Date Fair Value per Share
Nonvested balance at January 1, 2012		9,513			22.06
Granted		7,833			26.79
Vested		(9,513	)		22.06
Forfeited		—			—

Nonvested balance at December 31, 2012		7,833			26.79

Granted		5,376			33.47
Vested		(7,833	)		26.79
Forfeited		—			—

Nonvested balance at December 31, 2013		5,376			33.47

Granted		5,229			37,27
Vested		(5,376	)		33.47
Forfeited		—			—

Nonvested balance at December 31, 2014		5,229			37.27

The Company recognized compensation expense of $0.2 million in 2014, 2013 and 2012 related to the 2010 Restricted Stock Plan. Total tax benefits realized for tax deductions from vesting of restricted stock in 2014, 2013 and 2012 were $7,000, $18,000 and $16,000, respectively.

2012 Equity and Incentive Compensation Plan

In 2012, the Company’s shareholders approved the AMERISAFE 2012 Equity and Incentive Compensation Plan (the “2012 Incentive Plan”). The 2012 Incentive Plan is administered by the Compensation Committee of the Board and is designed to attract, retain and motivate non-employee directors, officers, key employees and consultants by providing incentives for superior performance. The 2012 Incentive Plan authorizes the grant of equity-based compensation in the form of option rights, appreciation rights, restricted shares, restricted stock units, cash incentive awards, performance shares and units, and other types of awards.

A maximum of 500,000 shares of common stock may be issued or transferred upon the exercise of option rights or appreciation rights, as restricted shares and released from substantial risk of forfeiture, in payment of restricted stock units, in payment of performance shares or performance units that have been earned, as awards of shares of common stock to non-employee directors, as other awards granted under the 2012 Incentive Plan, or in payment of dividend equivalents paid with respect to awards made under the plan subject to adjustment in the event of a merger, stock dividend, stock split or similar event, which may be original issue shares or treasury shares or a combination of the two.

In 2014, 4,312 shares of restricted stock were granted under the 2012 Incentive Plan, which will vest through 2017. In 2013, 80,278 shares of restricted stock were granted under the 2012 Incentive Plan, which will vest through 2020. At December 31, 2014, there were 413,079 shares of common stock available for future awards under the 2012 Incentive Plan.

The following table summarizes information about the restricted stock outstanding under the 2012 Incentive Plan at December 31, 2014:


	Shares			Weighted-Average Grant-Date Fair Value per Share
Nonvested balance at January 1, 2012		—			—
Granted		2,331			26.79
Vested		—			—
Forfeited		—			—

Nonvested balance at December 31, 2012		2,331			26.79

Granted		80,278			34.14
Vested		—			—
Forfeited		—			—

Nonvested balance at December 31, 2013		82,609			33.93

Granted		4,312			43.83
Vested		(14,000	)		33.58
Forfeited		—			—

Nonvested balance at December 31, 2014		72,921			34.59

The Company recognized compensation expense of $0.6 million, $0.3 million and $12,000 in 2014, 2013 and 2012, respectively, related to share-based grants. The Company recognized compensation expense of $0.4 million, $0.6 million and $0.2 million in 2014, 2013 and 2012, respectively, related to long-term incentive awards under the 2012 Incentive Plan. The long-term incentive award is a liability award.