6. 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 risk-free interest rate, the expected volatility of the price of the Company’s common stock, and dividend yield. Options outstanding as of September 30, 2017 generally vest over a period of three years and expire ten years from the date of grant. The exercise price of these options ranges from $24.26 to $44.73. 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 that most closely corresponds to the expected term of the option. 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. The weighted average input assumptions used were as follows:


	Nine months ended September 30,
	2017	2016

Expected term (in years)	6	6
Risk-free interest rate	2.05%	1.11%
Expected volatility	38.33%	42.22%
Dividend yield	2.40%	3.56%

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


	Nine months ended September 30,
	2017		2016
	Shares	Weighted-Average Exercise Price	Shares	Weighted-Average Exercise Price
(shares in thousands)
Outstanding at beginning of period	129	$ 28.22	98	$ 28.17
Granted	38	44.73	50	27.99
Exercised	(21)	27.38	(12)	25.64
Forfeited	(17)	37.09	(6)	29.87
Expired	(1)	28.59	-	-
Outstanding at end of the period	128	$ 32.00	130	$ 28.22
Exercisable at end of the period	62	$ 28.14	49	$ 27.45

As of September 30, 2017, the weighted-average remaining contractual life was 7.95 years with an aggregate intrinsic value of $3.5 million for outstanding stock options and the weighted-average remaining contractual life was 7.16 years with an aggregate intrinsic value of $1.9 million for exercisable options.

The weighted-average grant date fair value of options granted during the nine months ended September 30, 2017 and 2016 was $13.73 and $7.91, respectively. The unrecognized compensation expense calculated under the fair value method for shares expected to vest as of September 30, 2017 was $517 thousand and is expected to be recognized over a weighted average period of 1.86 years. The Company received $568 thousand and $299 thousand in cash proceeds from the exercise of stock options during the nine months ended September 30, 2017 and 2016, respectively. The total intrinsic value for options exercised during the nine months ended September 30, 2017 and 2016 was $325 thousand and $69 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 our restricted stock activity:


	Nine months ended September 30,
	2017		2016
	Shares	Weighted-Average Grant Date Fair Value	Shares	Weighted-Average Grant Date Fair Value
(shares in thousands)
Outstanding at beginning of period	215	$ 27.69	264	$ 26.38
Granted	44	44.73	17	28.35
Vested	(58)	26.09	(65)	25.14
Forfeited	(8)	36.37	(39)	26.43
Outstanding at end of the period	193	$ 31.65	177	$ 27.02

The total fair value of restricted stock awards vested during the nine months ended September 30, 2017 and 2016 was $2.5 million and $1.9 million, respectively.

The total costs of the options and restricted stock awards charged against income during the three months ended September 30, 2017 and 2016 was $912 thousand and $678 thousand, respectively, and $2.6 million and $1.9 million during the nine months ended September 30, 2017 and 2016, respectively. Also included for the three and nine months ended September 30, 2017 was $291 thousand and $810 thousand in expense for 323,925 shares that will vest based on certain market and performance conditions. Included in share-based compensation for the three and nine months ended September 30, 2016 is $248 thousand and $613 thousand for 59,375 shares of performance awards issuable to certain key employees that will vest on December 31, 2017 based on achieving the 2016 financial plan.

The total income tax benefit recognized in the condensed consolidated statements of income for restricted stock awards was $451 thousand and $315 thousand for the three months ended September 30, 2017 and 2016, respectively, and $1.5 million and $839 thousand for the nine months ended September 30, 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 nine months ended September 30, 2016 was $105 thousand.

There was $3.0 million of total unrecognized compensation cost related to restricted stock awards as of September 30, 2017, which is expected to be recognized over a weighted-average period of 1.59 years. There was $2.6 million of unrecognized compensation cost related to the 323,925 market and performance award shares discussed above as of September 30, 2017, which is expected to be recognized over a weighted-average period of 2.25 years.