SHARE-BASED PAYMENTS

3 Months Ended

Mar. 31, 2020

The Company has two share based compensation plans as described below. Total compensation cost that has been charged against income for those plans was $1,512, for the three months ended March 31, 2020 and $1,329 for the three months ended March 31, 2019. The total income tax benefit, which is shown on the Consolidated Statements of Income as a reduction of income tax expense, was $210 for the three months ended March 31, 2020 and was $113 for the three months ended March 31, 2019, respectively.

Stock Options: The Company’s 2007 Omnibus Equity Incentive Plan (the “2007 Plan”), as amended and shareholder-approved, provided for authorized shares up to 4,000,000. The 2007 Plan provided that no options intended to be ISOs may be granted after April 9, 2017. As a result, the Company’s board of directors approved, and recommended to its shareholders for approval, an equity incentive plan, the 2017 Omnibus Equity Incentive Plan which the Company’s shareholders approved at the 2017 annual meeting of shareholders. On April 12, 2018, the Company’s Board of Directors approved the Amended and Restated 2017 Omnibus Equity Incentive Plan (the “Amended and Restated 2017 Plan”) to make certain changes in response to feedback received from the Company's shareholders. The terms of the Amended and Restated 2017 Plan are substantially similar to the terms of the 2007 Plan it was intended to replace. The Amended and Restated 2017 Plan provides for authorized shares up to 3,500,000. At March 31, 2020, there were 2,410,364 authorized shares available for issuance under the Amended and Restated 2017 Plan.

Employee, organizer and director stock option awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant; those option awards have a 10 year contractual term with varying vesting requirements. The Company assigns discretion to its Compensation Committee to make grants either as qualified incentive stock options or as non-qualified stock options. All employee grants are intended to be treated as qualified incentive stock options, if allowable. All other grants are expected to be treated as non-qualified.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected stock price volatility is based on historical volatilities of the Company. The Company uses historical data to estimate option exercise and post-vesting termination behavior.

The expected term of options granted represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

There were no options granted during the three months ended March 31, 2020. The fair value of options granted during the three months ended March 31, 2019, was determined using the following weighted-average assumptions as of grant date.


	March 31, 2019
Risk-free interest rate	2.31	%
Expected term	7 years
Expected stock price volatility	30.44	%
Dividend yield	0.50	%

The weighted average fair value of options granted for the three months ended March 31, 2019 was $10.01.

A summary of the activity in the plans for the three months ended March 31, 2020 follows:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2020	1,502,070	$	22.39
Granted	—	—
Exercised	(37,416)	11.19
Forfeited, expired, or cancelled	(6,274)	25.24
Outstanding at period end	1,458,380	$	26.24	6.30	$	2,921
Vested or expected to vest	1,385,461	$	26.24	5.77	$	2,775
Exercisable at period end	335,225	$	11.68	5.77	$	2,921


	For the Three Months Ended March 31,
	2020		2019
Stock options exercised:
Intrinsic value of options exercised	$	943	$	623
Cash received from options exercised	417		524
Tax benefit realized from option exercises	210		113

As of March 31, 2020, there was $2,768 of total unrecognized compensation cost related to non-vested stock options granted under the plans. The cost is expected to be recognized over a weighted-average period of 1.36 years.

Restricted Stock and Restricted Stock Units: Additionally, the 2007 Plan and the Amended and Restated 2017 Plan each provides for the granting of restricted share awards and other performance related incentives. When the restricted shares are awarded, a participant receives voting and dividend rights with respect to the shares, but is not able to transfer the shares until the restrictions have lapsed. In April 2019, the Company began awarding restricted stock units which participants do not have voting rights or dividend rights until the restrictions have lapsed. These awards typically have a vesting period of three to five years and vest in equal annual installments on the anniversary date of the grant.

A summary of activity for non-vested restricted share awards for the three months ended March 31, 2020 is as follows:


Non-vested Shares	Shares	Weighted- Average Grant- Date Fair Value
Non-vested at January 1, 2020	90,992	$	32.54
Granted	—	—
Vested	(468)	28.52
Forfeited	(122)	31.18
Non-vested at March 31, 2020	90,402

Compensation expense associated with the restricted share awards is recognized on a straight-line basis over the time period that the restrictions associated with the awards lapse based on the total cost of the award at the grant date. As of March 31, 2020, there was $595 of total unrecognized compensation cost related to non-vested shares granted under the 2007 Plan and Amended and Restated 2017 Plan. The cost is expected to be recognized over a weighted-average period of 1.13 years.

The Company began granting restricted stock units in 2019. The following table outlines restricted stock units that were outstanding, grouped by similar vesting criteria, as of March 31, 2020:


Grant year	Units Awarded	Service period in years	Period in which units to be settled into shares of common stock
2019	2,870	5.0	2024
2019	152,048	3.0	2022
2020	120,824	3.0	2023

Stock compensation expense related with the restricted stock units for the three months ended March 31, 2020 was $678. There was no expense related to restricted stock units in 2019. This stock compensation is recognized on a straight-line basis over the time period that the restrictions associated with the awards lapse based on the total cost of the award at the grant date. As of March 31, 2020, there was $7,943 of total unrecognized compensation cost related to non-vested restricted stock units granted under the Amended and Restated 2017 Plan. The cost is expected to be recognized over a weighted-average period of 2.25 years.