6 - STOCK-BASED COMPENSATION

On April 22, 2014, the stockholders of the Corporation approved the 2014 Equity Incentive Plan (“2014 Plan”). Upon approval of the 2014 Plan, no further awards could be made under the 2006 Stock Compensation Plan (“2006 Plan”).

2014 Plan. Under the 2014 Plan, awards may be granted to employees and non-employee directors as non-qualified stock options (“NQSOs”), stock appreciation rights (“SARs”), restricted stock awards, RSUs, or any combination thereof, any of which may be subject to performance-based vesting conditions. Awards may also be granted to employees as incentive stock options (“ISOs”). The exercise price of stock options and SARs granted under the 2014 Plan may not be less than the fair market value of the Corporation’s common stock on the date the stock option or SAR is granted. The 2014 Plan is administered by the Compensation Committee of the Board of Directors. Almost all of the awards granted to date under the 2014 Plan are RSUs. All awards granted under the 2014 Plan will immediately vest upon an involuntary termination following a change in control, total and permanent disability, as defined, or death, and with certain exceptions, will immediately vest in the event of retirement, as defined.

The Corporation has 2,250,000 shares of common stock reserved for awards under the 2014 Plan. Awards granted under the 2006 Plan that expire or are forfeited after April 22, 2014 will be added to the number of shares of common stock reserved for issuance of awards under the 2014 Plan. All of the 2,250,000 shares may be issued upon the exercise of stock options or SARs. A maximum of 787,500 shares may be issued as restricted stock awards or upon the conversion of RSUs. At March 31, 2019, 1,751,778 equity awards remain available to be granted under the 2014 Plan of which 298,633 may be granted as restricted stock awards or RSUs.

Details of RSUs. The following table summarizes the vesting schedule of RSUs outstanding at March 31, 2019 by the year they were originally granted.



		Granted During the Year Ended December 31,
	Total	2019	2018	2017	2016
Number of RSUs:
Granted during the year	379,435	107,144	70,688	94,329	107,274
Outstanding at March 31, 2019	220,890	107,144	44,338	66,408	3,000

Scheduled to vest during:
2019	94,126	23,535	14,359	53,232	3,000
2020	54,414	35,706	8,782	9,926	—
2021	36,632	12,185	21,197	3,250	—
2022	35,718	35,718	—	—	—
	220,890	107,144	44,338	66,408	3,000

The RSUs in the table above include performance-based RSUs with vesting based on the financial performance of the Corporation in 2019 and 2020 and service-based RSUs with various service-based vesting periods. The grant date fair value of RSUs awarded in 2016 is equal to the market price of the shares underlying the awards on the grant date. The grant date fair value of RSUs awarded in 2017, 2018 and 2019 is equal to the market price of the shares underlying the awards on the grant date, discounted for dividends that are not paid on these RSUs.

The following table presents a summary of RSUs outstanding at March 31, 2019 and changes during the three month period then ended.



				Weighted-
		Weighted-		Average		Aggregate
		Average		Remaining		Intrinsic
	Number of	Grant-Date		Contractual		Value
	RSUs	Fair Value		Term (yrs.)		(in thousands)
Outstanding at January 1, 2019	215,084	$	23.79
Granted	107,144		19.48
Converted	(101,338)		20.79
Outstanding at March 31, 2019	220,890	$	23.08		1.41	$	4,844
Vested and Convertible at March 31, 2019	—	$	—		—	$	—

The performance-based RSUs granted in 2019 and 2018 have a maximum payout potential of 1.50 shares of the Corporation’s common stock for each RSU awarded. Performance-based RSU’s granted in 2017 have a maximum payout potential of 1.25 shares for each RSU awarded. All other RSUs outstanding at March 31, 2019 have a maximum payout potential of one share of the Corporation’s common stock for each RSU awarded. All of the RSUs outstanding at March 31, 2019 are currently expected to vest and become convertible in the future. The total intrinsic value of RSUs converted during the first three months of 2019 and 2018 was $2,107,000 and $2,884,000, respectively.

2006 Plan. The 2006 Plan was approved by the stockholders of the Corporation on April 18, 2006. The 2006 Plan permitted the granting of stock options, SARs, restricted stock awards and RSUs to employees and non-employee directors. Through December 31, 2011, equity grants to executive officers and directors under the 2006 Plan consisted of a combination of NQSOs and RSUs, while equity grants to other officers consisted solely of NQSOs. Beginning in 2012, equity grants under the 2006 Plan consisted solely of RSUs. Stock options granted under the 2006 Plan have a five year vesting period and a ten year term.

Fair Value of Stock Options. The grant date fair value of options was estimated on the date of grant using the Black-Scholes option pricing model. Substantially all outstanding stock options were expensed in prior years.

Stock Option Activity. The following table presents a summary of options outstanding at March 31, 2019, and changes during the three month period then ended.



				Weighted-
		Weighted-		Average		Aggregate
		Average		Remaining		Intrinsic
	Number of	Exercise		Contractual		Value
	Options	Price		Term (yrs.)		(in thousands)
Outstanding at January 1, 2019	96,112	$	11.80
Exercised	(19,656)		10.32
Forfeited or expired	—		—
Outstanding at March 31, 2019	76,456	$	12.18		1.43	$	745
Exercisable at March 31, 2019	76,156	$	12.16		1.42	$	744

All options outstanding at March 31, 2019 are either fully vested or expected to vest. The total intrinsic value of options exercised during the first three months of 2019 and 2018 was $203,000 and $205,000, respectively. Cash received from option exercises in the first three months of 2019 and 2018 was $203,000 and $96,000, respectively. Tax benefits from stock option exercises for the three months ended March 31, 2019 and 2018 were $61,000 and $62,000, respectively.

Compensation Expense. The Corporation recorded compensation expense for share-based payments of $1,295,000 and $1,128,000 and recorded related income tax benefits of $390,000 and $340,000 for the three months ended March 31, 2019 and 2018, respectively.

Unrecognized Compensation Cost. As of March 31, 2019, there was $1,797,000 of total unrecognized compensation cost related to non-vested equity awards comprised of $1,000 for stock options and $1,796,000 for RSUs. The total cost is expected to be recognized over a weighted-average period of 1.3 years, which is based on weighted-average periods of 1.2 years and 1.3 years for stock options and RSUs, respectively.

Other. No cash was used to settle stock options during the first three months of 2019 or 2018. The Corporation uses newly issued shares to settle stock option exercises and for the conversion of RSUs. During the three months ended March 31, 2019 and 2018, 1,462 and 557 shares, respectively, of the Corporation’s common stock were issued to members of the Board of Directors in payment of director fees.