The Company's stock based plans include the Second Amended and Restated 2005 Employee Stock Plan (“2005 Plan”) and the 2010 Nonemployee Director Stock Plan (“2010 Plan”) both of which have been approved by the Company’s Board of Directors and shareholders.

The following table presents the amount of cumulatively granted stock options and restricted stock awards, net of forfeitures, through December 31, 2015:



	Authorized Stock Option Awards	Authorized Restricted Stock Awards	Total	Cumulative Granted, Net of Forfeitures		Total	Authorized but Unissued
				Stock Option Awards	Restricted Stock Awards
				Stock Option Awards	Restricted Stock Awards
2005 Plan	(1)	(1)	1,650,000	537,941	593,297	1,131,238	518,762
2010 Plan	(2)	(2)	314,600	27,000	76,820	103,820	210,780


(1)	The Company may award up to a total of 1,650,000 shares as stock options or restricted stock awards.


(2)	The Company may award up to a total of 314,600 shares as stock options or restricted stock awards, inclusive of 14,600 shares which were transferred from the previous 2006 Nonemployee Director Stock Plan.

The Company issues shares for stock option exercises and restricted stock awards from its pool of authorized but unissued shares.

The following table presents the pre-tax expense associated with stock option and restricted stock awards and the related tax benefits recognized for the years presented:



	Years Ended December 31
	2015		2014		2013
	(Dollars in thousands)
Stock based compensation expense
Stock options	$	—	$	36	$	241
Restricted stock awards(1)	2,295		2,135		1,906
Directors’ fee expense
Stock options	—		14		27
Restricted stock awards	194		527		288
Total stock based award expense	$	2,489	$	2,712	$	2,462
Related tax benefits recognized in earnings	$	1,122	$	945	$	832


(1)	Inclusive of compensation expense associated with time-vested and performance-based restricted stock awards.

Expense related to awards issued to directors are recognized as directors’ fees within other noninterest expense.

The Company has standard form agreements used for stock option and restricted stock awards. The standard form agreements used for the Chief Executive Officer and all other Executive Officers have previously been disclosed in Securities and Exchange Commission filings and generally provide that: (1) any unvested options or unvested restricted stock vest upon a Change of Control; and, that (2) any stock options which vest pursuant to a Change of Control, which is an event described in Section 280G of the Internal Revenue Code of 1986, will be cashed out at the difference between the acquisition price and the exercise price of the stock option.

Stock Options

The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model with the following assumptions used for grants under the identified plans:


•	Expected volatility is based on the standard deviation of the historical volatility of the weekly adjusted closing price of the Company’s shares for a period equivalent to the expected life of the option.


•	Expected life represents the period of time that the option is expected to be outstanding, taking into account the contractual term, historical exercise/forfeiture behavior, and the vesting period, if any.


•	Expected dividend yield is an annualized rate calculated using the most recent dividend payment at time of grant and the Company’s average trailing twelve-month daily closing stock price.


•	The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for a period equivalent to the expected life of the option.

•

The stock based compensation expense recognized in earnings should be based on the amount of awards ultimately expected to vest, therefore a forfeiture assumption is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock based compensation expense recognized has been reduced for annualized estimated forfeitures of 4.5% in 2015 and by 3.5% in 2014 and 2013 based on historical experience.

The Company made the following awards of nonqualified options to purchase shares of common stock in 2013. There were no such awards made in 2015 or 2014.



	Year Ended December 31
	2013
Date of grant	11/9/2013
Plan	2010
Options granted	5,000
Vesting period (1)	13 months
Expiration date	11/9/2023
Expected volatility	31.23		%
Expected life (years)	5.5
Expected dividend yield	2.64		%
Risk free interest rate	1.56		%
Fair value per option	$	8.13


(1)	Vesting periods begin on the grant date.

Under all of the Company’s stock based plans, the option exercise price is based upon the average of the high and low trading value of the stock on the date of grant. Stock option awards granted to date under all plans expire through 2023.

The following table presents relevant information relating to the Company’s stock options for the periods indicated:



	Years Ended December 31
	2015		2014		2013
	(Dollars in thousands)
Fair value of stock options vested based on grant date fair value	$	14	$	211	$	430
Intrinsic value of stock options exercised	$	3,362	$	1,210	$	1,051
Cash received from stock option exercises	$	6,105	$	6,285	$	2,475
Tax benefit realized on stock option exercises/repurchase	$	1,362	$	442	$	322
Weighted average grant date fair value of options granted (per share)	$	—	$	—	$	8.13

A summary of stock option activity of the Company’s Stock Option Grants for the year ended December 31, 2015 is presented in the table below:



	Outstanding								Nonvested
	Stock Option Awards			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (1)		Stock Option Awards		Weighted Average Grant Date Fair Value
	(Dollars in thousands, except per share data)
Balance at January 1, 2015	330,751			$	29.36				1,666		$	8.13
Granted	—			—					—		—
Exercised	(205,516	)		29.71					n/a		n/a
Vested	n/a			n/a					(1,666	)	8.13
Forfeited	—			—					—		—
Expired	(3,335	)		30.16					—		—
Balance at December 31, 2015	121,900		(2)	$	28.76	3.11 years	$	2,216	—		$	—
Options outstanding and expected to vest at December 31, 2015	121,900		(2)	$	28.76	3.11 years	$	2,216
Options exercisable at December 31, 2015	121,900		(2)	$	28.76	3.11 years	$	2,216
Unrecognized compensation cost, including forfeiture estimate													$	—
Weighted average remaining recognition period (years)													n/a


(1)	The aggregate intrinsic value in the preceding tables represents the total pre-tax intrinsic value, based on the average of the high price and low price at which the Company’s common stock traded on December 31, 2015 of $46.94, which would have been received by the option holders had they all exercised their options as of that date.


(2)	Inclusive of 24,000 stock options outstanding and expected to vest to Directors.

Restricted Stock

The Company grants both time-vested restricted stock awards as well as performance-based restricted stock awards. During the years ended December 31, 2015, 2014, and 2013 the Company has made the following restricted stock award grants:



	Shares Granted	Plan	Fair Value (1)		Vesting Period
Time-vested
2015
2/11/2015	31,500	2005	$	39.42	Ratably over 5 years from grant date
2/12/2015	25,910	2005	$	40.03	Ratably over 5 years from grant date
3/19/2015	3,800	2005	$	43.56	Ratably over 5 years from grant date
4/27/2015	625	2005	$	41.61	At the end of 3 years from grant date
4/27/2015	1,875	2005	$	41.61	At the end of 5 years from grant date
5/27/2015	8,800	2010	$	45.02	At the end of 5 years from grant date (2)
7/14/2015	800	2010	$	47.82	Once on May 27, 2020 (3)
10/13/2015	1,000	2005	$	46.09	Ratably over 5 years from grant date
10/20/2015	2,000	2005	$	46.47	Ratably over 5 years from grant date
2014
3/20/2014	65,950	2005	$	39.82	Ratably over 5 years from grant date
3/31/2014	3,000	2005	$	39.00	Ratably over 3 years from grant date
5/20/2014	10,920	2010	$	35.08	At the end of 5 years from grant date (2)
11/20/2014	2,000	2005	$	39.11	Ratably over 5 years from grant date
12/11/2014	2,000	2005	$	40.89	Ratably over 5 years from grant date
2013
1/16/2013	2,000	2005	$	30.48	Ratably over 3 years from grant date
2/14/2013	93,800	2005	$	31.51	Ratably over 5 years from grant date
5/21/2013	14,700	2010	$	33.17	At the end of 5 years from grant date (2)

Performance-based
2015
2/12/2015	21,780	2005	$	40.03	On February 12, 2018, if performance conditions are met
2014
3/20/2014	20,700	2005	$	39.82	On March 20, 2017, if performance conditions are met

(1)

The fair value of the restricted stock awards are based upon the average of the high and low prices at which the Company’s common stock traded on the date of grant. The holders of time-vested restricted stock awards participate fully in the rewards of stock ownership of the Company, including voting and dividend rights. The holders of performance-based restricted stock awards do not participate in the rewards of stock ownership of the Company until vested. The holders of all restricted stock awards are not required to pay any consideration to the Company for the awards.

(2)

These restricted stock grants will vest at the end of a five year period, or earlier if the director ceases to be a director for any reason other than cause, such as, for example, by retirement. If a non-employee director is removed from the Board for cause, the Company has ninety (90) days within which to exercise a right to repurchase any unvested portion of any restricted stock award from the non-employee director for the aggregate price of one dollar ($1.00).

(3)

These restricted stock grants will vest on May 27, 2020, or earlier if the director ceases to be a director for any reason other than cause, such as, for example, by retirement. If a non-employee director is removed from the Board for cause, the Company has ninety (90) days within which to exercise a right to repurchase any unvested portion of any restricted stock award from the non-employee director for the aggregate price of one dollar ($1.00).

The following table presents the fair value of restricted stock awards vesting during the periods presented:



	Years Ended December 31
	2015		2014		2013
	(Dollars in thousands)
Fair value of restricted stock awards upon vesting	$	2,610	$	3,293	$	3,289

A summary of the status of the Company’s Restricted Stock Award Grants for the year ended December 31, 2015 is presented in the table below:



	Outstanding Restricted Stock Awards			Weighted Average Grant Price ($)
	(Dollars in thousands, except per share data)
Balance at January 1, 2015	276,527			$	33.15
Granted	98,090			40.71
Vested/released	(63,437	)		31.47
Forfeited	(46,236	)		35.02
Balance at December 31, 2015	264,944		(1)	$	36.03
Unrecognized compensation cost (inclusive of directors’ fees), including forfeiture estimate						$	6,351
Weighted average remaining recognition period (years)						2.97


(1)	Inclusive of 44,200 restricted stock awards outstanding to Directors.