Stock Incentive Plans

The Company maintains two shareholder-approved Company Stock Incentive Plans allowing for the grant of equity based incentive compensation to essentially all employees. The 2005 Plan authorized grants of up to 2,880,000 shares over a ten-year period beginning in 2005. The term of the 2005 Plan expired in February 2014; outstanding awards will continue to vest and options may continue to be exercised, but no additional awards will be granted under the 2005 Plan. The 2014 Plan authorizes grants of up to an additional 3,000,000 shares over a ten-year period beginning in 2014. Under these Plans, grants may take the form of stock awards, awards of options to acquire stock, stock appreciation rights, and other forms of equity based compensation; both options to acquire stock and stock awards were granted. The option price for all grants has been the current market price at the time of the grant.

Option Awards

The Company did not grant stock options during 2016, 2015, or 2014.

A summary of outstanding options at December 31, 2016, 2015 and 2014, and changes during the years ended on those dates, is as follows:



	Number of Options		Weighted Average Grant Price Per Option

Outstanding December 31, 2013	1,101,014		$	8.35

Granted	—		—
Cancelled	(2,146	)	12.63
Exercised	(101,516	)	11.21
Outstanding December 31, 2014	997,352		$	8.05

Granted	—		—
Cancelled	(6,252	)	12.63
Exercised	(86,942	)	11.46
Outstanding December 31, 2015	904,158		$	7.70

Granted	—
Cancelled	(8,126	)	12.63
Exercised	(371,390	)	9.04
Outstanding December 31, 2016	524,642		$	6.67

There were options for 524,642 shares outstanding at December 31, 2016 at a weighted average price of $6.67 per share, an aggregate intrinsic value of $10.8 million and a weighted-average remaining contractual life of 5.35 years. There were options for 428,112 shares exercisable at December 31, 2016 at a weighted average exercise price of $6.61 per share, an aggregate intrinsic value of $8.9 million and a weighted-average remaining contractual life of 5.18 years. The aggregate intrinsic value represents the total pretax intrinsic value of in-the-money options, based on the Company’s closing stock price of $27.30 as of December 31, 2016.

During 2016, the total fair value of options vested was $0.3 million; the total intrinsic value of options exercised was $6.8 million. The total cash received as a result of employee stock option exercises was $3.4 million. The tax benefit realized from these exercises was $1.7 million.

Management recognizes compensation costs only for those awards expected to vest. Compensation cost recognized in 2016, 2015 and 2014 totaled $58 thousand, $142 thousand and $452 thousand, respectively, and the income tax benefit for option-based compensation arrangements recognized in 2016, 2015 and 2014 was $23 thousand, $29 thousand and $78 thousand, respectively. The total compensation cost related to non-vested options not yet recognized is $24 thousand, which will be recognized over a weighted-average period of less than two years.

Stock Awards

In February 2014, 2015 and 2016, the Company made grants of 135,562, 79,946 and 71,936 non-vested shares to 22, 21 and 23 management employees, respectively. The shares vest 25% annually; however, if an employee reaches the age of 55, has achieved 10 years of service with the Company and retires, the unvested shares are not forfeited. The awards were valued at the market price of the Company’s common stock on the date of grant ($13.00, $15.01 and $21.70 per share, respectively). In May 2016, following the acquisition, the Company made additional grants of 12,210 non-vested shares to six former nTelos employees valued at $30.27, the market price on the date of the grant. The Company also made grants of non-vested shares to the non-employee members of the Company’s Board of Directors. The Company granted 12,304, 31,984 and 26,790 shares in 2014, 2015 and 2016, respectively, valued at the market price of the Company’s common stock on the grant date ($13.00, $15.01 and $21.70 per share, respectively). The 2014 shares vest 33% annually, while the 2015 and 2016 shares fully vest after one year.

In April 2016, retirement provisions were added to the director grants that all directors at that time met, eliminating the future service requirement for vesting in the outstanding grants. All unrecognized stock compensation was fully recognized at that time.

In February 2015 and 2016, the Company made grants of 48,576 and 44,326, respectively, of non-vested share units to eight management employees. These grants were made under a Relative Total Shareholder Return (“RTSR”) plan structure. Under this structure, the Company’s stock performance over an approximate three year period ending on December 31 in the third year following the grant, will be compared to a group of peer companies, and a payout will be determined based upon the Company’s performance relative to the performance of the peer groups. The payout could range anywhere from zero shares awarded, up to 150% of the granted share units, or 72,864 and 66,489 shares for 2015 and 2016. The fair value of the grants for 2015 and 2016, ($15.66 and $24.10) were determined as of the grant dates using a Monte Carlo simulation. The following assumptions were utilized in the valuations:



	2015	2016
Stock price (closing price on issue date)	$15.01	$21.70
Risk-free interest rate (interpolated rate between 2-year and 3-year U.S. treasury rates)	0.95%	0.89%
Dividend yield	1.57%	1.11%
Performance period	2.87 years	2.87 years

In May 2014, 2015 and 2016, the Company made grants of non-vested shares to select other employees. In May 2014, the Company granted 33,664 shares, of which 9,390 were vested and distributed immediately. In May 2015, the Company granted 29,752 shares, of which 10,180 were vested and distributed immediately. In May 2016, the Company granted 17,258 shares, of which 6,984 were vested and distributed immediately. The remaining shares in each award vest in various schedules over four years. Beginning with the 2015 shares, if an employee reaches the age of 55, has achieved 10 years of service with the Company and retires, the unvested shares are not forfeited. The awards were valued at the market price of the Company’s common stock on the date of grant ($12.83, $17.23 and $31.33 per share in 2014, 2015 and 2016, respectively).

A summary of outstanding share grants at December 31, 2016, 2015, and 2014, and changes during the years ended on those dates, is as follows:



	Shares

Outstanding December 31, 2013	426,180

Granted	181,530
Cancelled	(10,764	)
Vested and issued	(161,674	)
Outstanding December 31, 2014	435,272

Granted	190,258
Cancelled	(6,736	)
Vested and issued	(211,498	)
Outstanding December 31, 2015	407,296

Granted	172,520
Cancelled	(3,537	)
Vested and issued	(190,254	)
Outstanding December 31, 2016	386,025

Compensation cost recognized for share awards during 2016, 2015 and 2014, was $3.4 million, $2.6 million and $2.2 million, respectively. The income tax benefit for share-based compensation arrangements was $1.4 million, $1.3 million, and $0.9 million for 2016, 2015 and 2014, respectively.

As of December 31, 2016, the total compensation cost related to non-vested share awards not yet recognized is $2.1 million which will be recognized over a weighted-average period of 2.0 years.