STOCK COMPENSATION

The Corporation has a stock incentive plan for key employees and independent directors. The stock incentive plan, which is administered by a committee of the Board of Directors, provides for aggregate grants of up to 500,000 shares of common stock in the form of non-qualified options or restricted stock. For key employees, the plan vesting is either one-third or one-fourth of the granted options or restricted stock per year, beginning one year after the grant date, with 100% vesting on the third or fourth anniversary of the grant date, respectively. Prior to 2018, for independent directors, the vesting schedule was one-third of the granted options or restricted stock per year beginning one year after the grant date, with 100% vested on the third anniversary of the grant date. Beginning in 2018, stock compensation received by independent directors vests immediately. At September 30, 2018, there was no unrecognized compensation cost related to nonvested stock options granted under this plan and no stock options were granted during the three and nine month periods ended September 30, 2018 and 2017.

In addition to the time-based restricted stock disclosed above, the Corporation’s Board of Directors grants performance-based restricted stock awards (“PBRSAs”) to key employees. The number of PBRSAs will depend on certain performance conditions and are also subject to service-based vesting. In 2018, awards with a maximum of 15,702 shares in aggregate were granted to key employees. In 2017, an award with a maximum of 10,000 shares was granted to a key employee.

Compensation expense for the restricted stock awards is recognized over the requisite service period noted above based on the fair value of the shares at the date of grant. Nonvested restricted stock awards are recorded as a reduction of additional paid-in-capital in shareholders’ equity until earned. Compensation expense resulting from these restricted stock awards was $268 and $1,219 for the three and nine months ended September 30, 2018, and $204 and $600 for the three and nine months ended September 30, 2017. As of September 30, 2018, there was $1,042 of total unrecognized compensation cost related to unvested restricted stock awards.

A summary of changes in time-based nonvested restricted stock awards for the three months ended September 30, 2018 follows:



	Shares		Per Share Weighted Average Grant Date Fair Value
Nonvested at beginning of period	76,045		$	23.09
Vested	(250	)	18.58
Nonvested at end of period	75,795		$	23.11

A summary of changes in time-based nonvested restricted stock awards for the nine months ended September 30, 2018 follows:



	Shares		Per Share Weighted Average Grant Date Fair Value
Nonvested at beginning of period	94,472		$	20.79
Granted	22,108		26.92
Forfeited	(130	)	26.29
Vested	(40,655	)	19.66
Nonvested at end of period	75,795		$	23.11

The above tables exclude 15,600 shares that were granted and immediately vested. Compensation expense resulting from the immediately vested shares was $0 and $385 for the three and nine months ended September 30, 2018, and is included in the previously disclosed $1,219 of stock-based compensation expense for the nine months ended September 30, 2018.

The fair value of shares vested was $8 and $1,479 during the three and nine months ended September 30, 2018, and $6 and $929 during the three and nine months ended September 30, 2017.