SHARE-BASED COMPENSATION

Under the 2014 Long-Term Incentive Plan (“2014 LTIP”), SARs have generally been granted with an exercise price equal to the fair value of Summit's common stock on the grant date. We periodically grant employee stock options to individual employees. During first quarter 2019, we granted 109,819 SARs that become exercisable ratably over five years (20% per year) and expire ten years after the grant date and granted 28,306 SARS that become exercisable ratably over seven years (14.29% per year) and expire ten years after the grant date.

The fair value of our employee stock options and SARs granted under the Plans is estimated at the date of grant using the Black-Scholes option-pricing model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. Additionally, there may be other factors that would otherwise have a significant effect on the value of employee stock options and SARs granted but are not considered by the model. Because our employee stock options and SARs have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options and SARs at the time of grant. The assumptions used to value SARs granted during 2019 were as follows:



	5-year vesting SARs		7-year vesting SARs
Risk-free interest rate	2.43	%	2.51	%
Expected dividend yield	2.30	%	2.30	%
Expected common stock volatility	35.71	%	40.84	%
Expected life	6.5 years		7.0 years

We recognize compensation expense based on the estimated number of stock awards expected to actually vest, exclusive of the awards expected to be forfeited. During the first nine months of 2019 and 2018, our share-based compensation expense was $430,000 and $292,000 and the related deferred tax benefits were approximately $103,000 and $70,000.

A summary of activity in our Plans during the first nine months of 2019 and 2018 is as follows:



	For the Nine Months Ended September 30,
	2019
	Options/SARs		Aggregate Intrinsic Value (in thousands)		Remaining Contractual Term (Yrs.)	Weighted-Average Exercise Price
Outstanding, January 1	232,091					$	17.36
Granted	138,125					23.94
Exercised	(31,413	)				11.83
Forfeited	—					—
Expired	—					—
Outstanding, September 30	338,803		$	1,745	7.41	$	20.56

Exercisable, September 30	112,989		$	1,063	5.59	$	16.32



	For the Nine Months Ended September 30,
	2018
	Options/SARs		Aggregate Intrinsic Value (in thousands)		Remaining Contractual Term (Yrs.)	Weighted-Average Exercise Price
Outstanding, January 1	250,291					$	17.75
Granted	—					—
Exercised	(1,600	)				17.79
Forfeited	(3,200	)				25.5
Expired	—					—
Outstanding, September 30	245,491		$	1,645	6.62	$	17.65

Exercisable, September 30	109,324		$	898	5.55	$	15.77