4. SHARE-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 March 31, 2017 generally vest over a period of three years with an expiration term of ten years from the date of grant. The exercise price of these options ranges from $24.26 to $44.73. 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 option. 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:


	Three months ended March 31,
	2017	2016
Expected term (in years)	6	6
Risk-free interest rate	2.05%	1.11%
Expected volatility	38.33%	40.27%
Dividend yield	2.40%	3.56%

The following table is a summary of our stock option activity:


	Three months ended March 31,
	2017		2016
(shares in thousands)	Shares	Weighted-Average Exercise Price	Shares	Weighted-Average Exercise Price
Outstanding at beginning of period	129	$ 28.22	98	$ 28.17
Granted	38	44.73	50	27.99
Exercised	(21)	27.38	(1)	26.52
Forfeited	(9)	38.18	(6)	29.87
Outstanding at end of the period	137	$ 32.20	141	$ 28.05
Exercisable at end of the period	63	$ 28.15	61	$ 27.20

As of March 31, 2017, the weighted-average remaining contractual life was 8.50 years with an aggregate intrinsic value of $1.7 million for outstanding stock options and the weighted-average remaining contractual life was 7.68 years with an aggregate intrinsic value of $1.0 million for exercisable options.

The weighted-average grant date fair value of options granted during the three months ended March 31, 2017 and 2016 was $13.73 and $7.47, respectively. The unrecognized compensation expense calculated under the fair value method for shares expected to vest as of March 31, 2017 was $797 thousand and is expected to be recognized over a weighted average period of 2.23 years. The Company received $568 thousand and $26 thousand in cash proceeds from the exercise of stock options during the three months ended March 31, 2017 and 2016. The total intrinsic value for options exercised during the three months ended March 31, 2017 and 2016 was $325 thousand and $2 thousand, respectively.

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:


	Three months ended March 31,
	2017		2016
(shares in thousands)	Shares	Weighted-Average Grant Date Fair Value	Shares	Weighted-Average Grant Date Fair Value
Outstanding at beginning of period	215	$ 27.69	264	$ 26.38
Granted	44	44.73	15	27.68
Vested	(55)	25.94	(62)	25.19
Forfeited	(6)	32.80	(1)	26.85
Outstanding at end of the period	198	$ 31.79	216	$ 26.82

The total fair value of restricted stock awards vested during the three months ended March 31, 2017 and 2016 was $2.4 million and $1.9 million, respectively.

The total costs of the options and restricted stock awards charged against income during the three months ended March 31, 2017 and 2016 were $733 thousand and $524 thousand, respectively. Also included for the three months ended March 31, 2017 was $224 thousand in expense for 332,325 shares that will vest based on certain market and performance conditions. Included in share-based compensation for the three months ended March 31, 2016 is $228 thousand 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 total income tax benefit recognized in the condensed consolidated statements of income for restricted stock awards was $640 thousand and $251 thousand for the three months ended March 31, 2017 and 2016, respectively. 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 March 31, 2016 was $96 thousand.

There was $4.7 million of total unrecognized compensation cost related to restricted stock awards as of March 31, 2017 and is expected to be recognized over a weighted-average period of 1.81 years. There was $3.3 million of unrecognized compensation cost related to the 332,325 market and performance award shares discussed above as of March 31, 2017 and is expected to be recognized over a weighted-average period of 2.75 years.