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 March 31,
	2020		2019
Employee stock-based compensation expense
Pre-tax	$	526	$	530
Post-tax ⁽¹⁾	416		419
Director stock-based compensation expense
Pre-tax	174		371
Post-tax ⁽¹⁾	137		293

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

We had approximately $3,037,000 of unrecognized stock compensation expense at March 31, 2020 related to non-vested stock-based compensation granted, which we expect to recognize over a weighted-average period of approximately 1.7 years. We had approximately $72,000 of unrecognized director stock-based compensation expense at March 31, 2020 related to non-vested director stock-based compensation granted, which we expect to recognize over a weighted-average period of approximately 0.1 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, which 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 1,175 shares of restricted common stock during the three-month period ended March 31, 2020, which had a weighted-average grant date fair value of $8.75 per share. We granted 22,052 shares of restricted common stock during the three-month period ended March 31, 2019, which had a weighted-average grant date fair value of $16.54 per share.

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, 2019	214,495	$	17.49
Granted	1,175	8.75
Less: Forfeited	400	16.54
Less: Vested	25,753	16.67
Outstanding as of March 31, 2020	189,517	$	17.55

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:



	2020
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.

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, 2019	207,069	$	18.69	9.00	$	—
Granted	—	—		—	—
Less: Forfeited	—	—		—	—
Less: Exercised	—	—		—	—
Outstanding as of March 31, 2020	207,069	$	18.69	8.75	$	—

Vested as of March 31, 2020	35,965	$	20.94	8.51	$	—
Exercisable as of March 31, 2020	35,965	$	20.94	8.51	$	—