STOCK-BASED COMPENSATION

We account for stock-based compensation under the fair value recognition provisions of ASC Topic 718 - Compensation - Stock Compensation. We recognize stock-based compensation cost over the award’s requisite service period on a straight-line basis for time-based restricted stock grants and performance-based restricted stock grants. We record forfeitures as they occur for all stock-based compensation.

The following table presents our total stock-based compensation expense:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Employee stock-based compensation expense
Pre-tax	$	536	$	248	$	1,482	$	736
Post-tax ⁽¹⁾	424		196		1,171		581
Director stock-based compensation expense
Pre-tax	178		379		810		940
Post-tax ⁽¹⁾	141		299		640		743

⁽¹⁾ The after tax amounts are determined using the 21% corporate federal tax rate.

We had approximately $4,087,000 of unrecognized stock compensation expense at September 30, 2019 related to non-vested stock-based compensation granted, which we expect to recognize over a weighted-average period of approximately 2.1 years. We had approximately $424,000 of unrecognized director stock-based compensation expense at September 30, 2019 related to non-vested director stock-based compensation granted, which we expect to recognize over a weighted-average period of approximately 0.6 years.

Restricted stock, restricted stock units and performance stock units

Stock-based compensation cost for restricted stock awards, restricted stock units and performance stock units is measured based on the closing fair market value of our common stock on the date of grant and the grants vest in equal installments over the requisite service period of typically three years. Restricted stock awards granted to non-employee directors vest over a one-year period. Each restricted stock unit and performance stock unit represents our obligation to deliver to the holder one share of common stock upon vesting.

Performance stock units vest based on the Company's return on average equity compared to a defined group of peer companies. On the grant date, we issue the target number of performance stock units. They are subject to forfeitures if performance goals are not met. The actual number of performance stock units earned can vary from zero to 150 percent of the target for the 2018 and 2019 awards.

We granted 843 and 133,421 shares of restricted common stock during the three and nine-month periods ended September 30, 2019, respectively, which had a weighted-average grant date fair value of $12.82 and $16.26 per share, respectively. We granted 88,392 and 174,602 shares of restricted common stock during the three and nine-month periods ended September 30, 2018, respectively, which had weighted-average grant date fair values of $20.44 and $20.07 per share, respectively. Additionally, during the nine-month period ended September 30, 2019, the Company granted 45,000 shares of restricted common stock, with a fair value of $15.70 per share, which is contingent upon stockholder approval of an increase in the number of shares of our common stock that may be issued pursuant to the 2013 Omnibus Incentive Plan. Stockholders will vote on this matter at our 2020 annual meeting of stockholders.

The following table presents certain information related to the activity of our non-vested common stock grants:



	Number of Restricted Shares	Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2018	217,936	$	18.96
Granted ⁽¹⁾	133,421	16.26
Less: Forfeited	6,059	20.15
Less: Vested	131,613	19.22
Outstanding as of September 30, 2019	213,685	$	17.51

⁽¹⁾ Contingent shares have been excluded from the calculations in the table above.

Stock options

Stock option fair value was estimated on the grant date using the Black-Scholes-Merton formula. Stock options vest in equal installments over the requisite service period of typically three years. The following weighted-average assumptions were used to value the stock options granted:



	2019
Expected annual dividend yield	1.28	%
Expected volatility	41.07	%
Risk-free interest rate	3.11	%
Expected term	6	years

Expected annual dividend yield is based on the current quarterly dividend of $0.06 per share and the stock price on the grant date. The expected volatility is a historical volatility calculated based on the daily closing prices over a period equal to the expected term. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date. Expected term takes into account the three-year graded vesting term and the 10-year contractual term of the option.

We granted 99,181 stock options during the nine-month period ended September 30, 2019, which had a weighted-average grant date fair value of $5.96 per share. We granted 29,464 stock options during the nine-month period ended September 30, 2018, which had a weighted-average grant date fair value of $8.01 per share.

The following table presents certain information related to the activity of our non-vested stock option grants:



	Number of Stock Options	Weighted Average Exercise Prices		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2018	107,888	$	20.94	—	$	—
Granted	99,181	16.25		—	—
Less: Forfeited	—	—		—	—
Less: Exercised	—	—		—	—
Outstanding as of September 30, 2019	207,069	$	18.69	9.25	$	—

Vested as of September 30, 2019	9,822	$	20.44	8.98	$	—
Exercisable as of September 30, 2019	9,822	$	20.44	8.98	$	—