9. Shared-based Compensation

Stock Options:

The Company has issued non-qualified and incentive stock options to employees and nonemployee directors. The fair value of these options are estimated on the date of grant using the Black-Scholes option pricing model, which requires estimates of the expected term of the option, the expected volatility of the price of the Company’s common stock, dividend yield and the risk-free interest rate. Options outstanding as of September 30, 2016 generally vest over a period of three years with an expiration term of ten years. The exercise price of these options ranges from $24.26 to $31.55. The expected volatility is based on the historical volatility of the Company’s common stock over the period of time equivalent to the expected term for each award. Due to the Company’s lack of option exercise history, the expected term is calculated using the simplified method defined as the midpoint between the vesting period and the contractual term of each award. The risk free interest rate is based on the U.S. Treasury yield curve in effect on the date of grant which most closely corresponds to the expected term of the option. The Company declared its first dividend in December 2015; and therefore, a dividend yield was not utilized in the Black-Scholes calculation for options granted prior to December 2015. The weighted average input assumptions used and resulting fair values were as follows:


	2016
Expected life (in years)	6
Risk-free interest rate	1.11%
Expected volatility	42.22%
Dividend yield	3.56%

The following table summarizes the stock option activity:


	Shares	Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Life (Yrs)	Aggregate Intrinsic Value
Outstanding at December 31, 2015	98	$ 28.17
Granted	50	27.99
Exercised	(12)	25.64
Forfeited	(6)	29.87
Expired	-	-
Outstanding at September 30, 2016	130	$ 28.22	8.45	$ 1,239
Exercisable at September 30, 2016	49	$ 27.45	7.56	$ 503

The weighted-average grant date fair value of options granted as of September 30, 2016 was $7.91. The unrecognized compensation expense calculated under the fair value method for shares expected to vest as of September 30, 2016 was approximately $0.6 million and is expected to be recognized over a weighted average period of 1.8 years. No cash proceeds from the exercise of stock options were received during the three months ended September 30, 2016 and 2015. The Company received $0.3 million and $44 thousand in cash proceeds from the exercise of stock options during the nine months ended September 30, 2016 and 2015.

Restricted Stock:

The Company has issued restricted stock to employees and nonemployee directors generally with vesting terms up to five years after the date of grant. The fair value is equal to the market price of the Company’s common stock on the date of grant. Expense for restricted stock is amortized ratably over the vesting period. The following table summarizes the restricted stock activity:


	Shares	Weighted-Average Grant Date Fair Value
Unvested at December 31, 2015	264	$ 26.38
Granted	17	28.35
Vested	(65)	25.14
Forfeited	(39)	26.43
Unvested at September 30, 2016	177	$ 27.02

The total costs of the options and restricted stock awards charged against income during the three months ended September 30, 2016 and 2015 were $678 thousand and $602 thousand, respectively, and $1.9 million and $1.7 million for the nine months ended September 30, 2016 and 2015, respectively. The Company accrued an additional $248 thousand and $156 thousand for performance-based restricted stock awards for the three months ended September 30, 2016 and 2015, respectively, and $613 thousand and $634 thousand for the nine months ended September 30, 2016 and 2015, respectively. The cost of the 2016 performance awards will depend on management’s achievement of pre-determined performance targets and the Company’s fiscal 2016 performance and will be finalized and approved at the first Board of Directors meeting in 2017. The cost recognized during the three months ended September 30, 2016 is based on the performance that management expects the Company will achieve as of September 30, 2016. The total income tax benefit recognized in the consolidated statements of income for restricted stock awards was approximately $228 thousand and $212 thousand for the three months ended September 30, 2016 and 2015, respectively and $622 thousand and $602 thousand for the nine months ended September 30, 2016 and 2015. The total tax benefit recognized in additional paid-in capital upon vesting of restricted stock awards and exercise of stock options for the three months ended September 30, 2015 was $5 thousand, and $105 thousand and $170 thousand for the nine months ended September 30, 2016 and 2015, respectively. No tax benefit was recognized in additional paid-in capital upon vesting of restricted stock awards and exercise of stock options for the three months ended September 30, 2016. There was approximately $2.5 million of total unrecognized compensation cost related to restricted stock awards as of September 30, 2016. The cost is expected to be recognized over a weighted-average period of approximately 1.8 years, respectively.

On October 3, 2016, the Company granted an award for an additional 16,061 of time-based restricted shares and 210,000 deferred shares that vest based on certain market and performance conditions to an executive. The cost of the award is $2.6 million and will be recognized through December 2019.