Share Based Compensation

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Share Based Compensation

SHARE-BASED COMPENSATION

Under the 2014 Long-Term Incentive Plan (“2014 LTIP”), stock options, SARs and RSUs 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	5.5 years		7.0 years

A summary of our SAR and stock option activity the first six months of 2020 and 2019 is as follows:

	For the Six Months Ended June 30,
	2020
	Options/SARs	Aggregate Intrinsic Value (in thousands)		Remaining Contractual Term (Yrs.)	Weighted-Average Exercise Price
Outstanding, January 1	330,703				$	20.44
Granted	—				—
Exercised	—				—
Forfeited	—				—
Expired	—				—
Outstanding, June 30	330,703	$	529	6.83	$	20.44
Exercisable, June 30	179,375	$	529	5.77	$	17.03

	For the Six Months Ended June 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, June 30	338,803		$	2,132	7.66	$	20.56
Exercisable, June 30	112,989		$	1,189	5.84	$	16.32

Grants of RSUs include time-based vesting conditions that generally vest ratably over a period of 3 to 5 years. During second quarter 2020, we granted 10,995 RSUs which will vest ratably over 4 years. During first quarter 2020, we granted 1,846 RSUs which will fully vest on the 2 anniversary of the grant date. During 2019, we granted 2,892 RSUs which will vest ratably over 3 years. A summary of our RSU activity and related information is as follows.

Dollars in thousands, except per share amounts	RSUs		Weighted Average Grant Date Fair Value
Nonvested, December 31, 2019	2,892		25.93
Granted	12,841		18.19
Forfeited	—		—
Vested	(651	)	25.60
Nonvested, June 30, 2020	15,082		20.45

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 six months of 2020 and 2019, total stock compensation expense for all share-based arrangements was $323,000 and $281,000 and the related deferred tax benefits were approximately $78,000 and $67,000.