SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2017

12. SHARE-BASED COMPENSATION

On May 7, 2014, our shareholders approved the 2014 Omnibus Incentive Plan (the “2014 Plan”). The 2014 Plan includes 500,000 of our common shares that may be granted under various types of awards as described in the 2014 Plan. As of December 31, 2017, we were authorized to issue 135,560 shares under this plan.

Stock options

The following table presents the weighted average assumptions used in the option-pricing model at the grant date for options granted in the three years ended December 31:


		2017		2016		2015
Assumptions:
Exercise price per share	$	11.78	$	11.48	$	13.74
Risk-free interest rate		2.25	%	2.05	%	1.92	%
Expected dividend yield		3.74		3.84%		2.95%
Expected volatility of Rocky's common stock		35.33		42.32%		45.81%
Expected option term (years)		6.5		6.5		6.5
Weighted-average grant date fair value per share	$	2.94	$	3.37	$	4.78

For the years ended 2017, 2016, and 2015 we recognized share-based compensation expense and the corresponding tax benefit as follows:


		2017		2016		2015
Share-based compensation expense	$	145,810	$	162,449	$	237,978
Tax benefit		22,106		53,291		64,103

The following summarizes stock option activity for the year ended December 31, 2017:


$ amounts are per share	Shares		Weighted Average Exercise Price	Weighted Average Remaining Actual Term		Aggregate Intrinsic Value
Options outstanding at January 1, 2017	42,250	$	12.85
Issued	83,000		11.73
Exercised	(1,050)		13.56
Forfeited or expired	(34,900)		12.12
Options outstanding at December 31, 2017	89,300	$	12.09	7.5	$	-
Expected to vest	61,500	$	12.04	8.6	$	-
Exercisable at December 31, 2017	27,800	$	12.20	5.0	$	-

In the first quarter of 2017, officers and certain employees of the Company were granted 65,000 options. The plans generally provided for grants with the exercise price equal to fair value on the date of grant, graduated vesting periods of up to 5 years, and lives not exceeding 10 years. For the year ended December 31, 2017 cash received for the exercise of stock options was $14,236. No options were exercised in 2016. For the year ended December 31, 2015 cash received for the exercise of stock options was $8,742.

In the first quarter of 2017, Board of Director members were granted 18,000 stock options that immediately vest and will expire in 10 years.

Restricted stock units and performance share units

The following table summarizes the status of the Company’s restricted stock units and performance share units and activity as of December 31, 2017:


	Restricted Stock Units			Performance Share Units
	Quantity		Weighted-Average Grant Date Fair Value Per Share	Quantity		Weighted-Average Grant Date Fair Value Per Share
Nonvested at January 1, 2017	31,499	$	12.50	37,000	$	12.04
Granted	-		-	-		-
Vested	(10,876)		12.71	-		-
Forfeited	(8,686)		12.29	(13,000)		6.19
Nonvested at December 31, 2017	11,937	$	12.47	24,000	$	11.30

As of December 31, 2017, the total unrecognized compensation cost related to non-vested stock options and restricted stock units was $153,704 with a weighted-average expense recognition period of 4.0 years.

During the years ended December 31, 2017 and 2016, we issued 16,806 and 14,568 shares of common stock to members of our Board of Directors, respectively. We recorded compensation expense of approximately $210,000 and $168,000, respectively, which was the fair market value of the shares on the grant dates.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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