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 December 31, 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	2015	2014
Expected term (in years)	6	6	6
Risk-free interest rate	1.11%	1.71%	1.61%
Expected volatility	42.22%	50.91%	63.15%
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	(1)	31.55
Outstanding at December 31, 2016	129	$ 28.22	8.20	$ 1,736
Exercisable at December 31, 2016	49	$ 27.45	7.31	$ 689

The weighted-average grant date fair value of options granted during 2016 was $7.91. The unrecognized compensation expense calculated under the fair value method for shares expected to vest as of December 31, 2016 was approximately $0.5 million and is expected to be recognized over a weighted average period of 1.7 years. The Company received $0.3 million and $44 thousand in cash proceeds from the exercise of stock options during the years ended December 31, 2016 and 2015, respectively. The total intrinsic value of options exercised during the years ended December 31, 2016 and 2015 was $69 thousand and $10 thousand, respectively. No options were exercised in 2014.

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	92	30.61
Vested	(102)	27.42
Forfeited	(39)	26.43
Unvested at December 31, 2016	215	$ 27.69

The total fair value of restricted stock awards vested during the years ended December 31, 2016, 2015, and 2014 were $3.5 million, $3.9 million, and $3.2 million, respectively. The total costs of the options and restricted stock awards charged against income during the years ended December 31, 2016, 2015, and 2014 were $3.4 million, $3.1 million, and $3.9 million, respectively. Included in share-based compensation expense for 2016 is $0.8 million for 59,375 shares of performance awards issuable to certain key employees based on achieving the 2016 financial plan that will vest on December 31, 2017. The Company intends to issue additional performance awards in 2017 to certain key employees that will vest if certain market performance targets are achieved by December 31, 2019. Also included in the 2016 expense, is $0.2 million in expense for 210,000 shares that will vest based on certain market and performance conditions. The total expense of the award based on the Monte Carlo method is $2.0 million which will be recognized evenly through December 2019. The total income tax benefit recognized in the consolidated statements of income for restricted stock awards was approximately $1.2 million, $1.0 million and $1.4 million for the years ended December 31, 2016, 2015, and 2014, respectively. The total tax benefit recognized in additional paid-in capital upon vesting of restricted stock awards and exercise of stock options for the years ended December 31, 2016, 2015, and 2014 was $230 thousand, $247 thousand and $275 thousand, respectively. There was approximately $3.6 million of total unrecognized compensation cost related to restricted stock awards, excluding $1.8 million of unrecognized compensation expense related to the 210,000 market and performance award shares discussed above, as of December 31, 2016. The cost is expected to be recognized over a weighted-average period of approximately 1.7 years.