STOCK-BASED COMPENSATION

The Company has equity awards outstanding under two stock-based compensation plans; the 2015 Equity Incentive Plan (the “2015 Plan”) and the 2006 Equity Compensation Plan, as amended and restated (the “2006 Plan”). These plans were primarily established to enhance the Company’s ability to attract, retain and motivate employees. The Company’s Board of Directors or, upon delegation, the Compensation Committee of the Board of Directors (“Compensation Committee”) has exclusive authority to select employees, advisors and others, including directors, to receive awards and to establish the terms and conditions of each award made pursuant to the Company’s stock-based compensation plans.

The 2015 Plan, approved by the Company’s shareholders in May 2015, was established to provide the Company with flexibility to select from various equity-based performance compensation methods, and to be able to address changing accounting and tax rules and corporate governance practices by optimally utilizing performance based compensation. The 2015 Plan did not increase the number of shares of common stock available for awards under the 2006 Plan.

The 2006 Plan, approved by the Company’s shareholders in May 2006 and May 2014, was established to consolidate into one plan the benefits available under all other than existing share-based award plans. The 2006 Plan continues with respect to awards made prior to June 2015. All shares of common stock available for future grant under the 2006 Plan were transferred into the 2015 Plan. At December 31, 2018, there were 1,727,765 common shares available for future grant under the 2015 Plan.

Stock Options. All options granted have an exercise price equal to fair market value, which is currently defined as the closing sales price for the stock as quoted on the NASDAQ Stock Market for the last market trading day preceding the date that the Company’s Board of Directors awards the benefit. Options may be subject to vesting as determined by the Company’s Board of Directors or Compensation Committee, and can be exercised for periods of up to ten years from the date of grant.

No stock option awards were granted in 2018 or 2017. All outstanding stock option awards were fully vested as of December 31, 2016. As such, there was no compensation expense or related income tax benefits recognized related to stock option awards in 2018 or 2017. Compensation expense related to stock option awards and the related income tax benefits for the year ended December 31, 2016 were not considered material.

The following table summarizes stock option activity under the Company’s active stock option plans:



Year Ended December 31, 2018	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contract Life
Outstanding options, beginning of year	642,255		$	16.13
Granted	—		—
Exercised	(199,667	)	17.12
Forfeited	(14,412	)	20.87
Expired	—		—
Outstanding options, end of year	428,176		$	15.61	1.56 years
Outstanding options exercisable, end of year	428,176		$	15.61	1.56 years

The total intrinsic value of fully-vested stock options outstanding as of December 31, 2018 was $9.0 million. The total intrinsic value of options exercised was $4.9 million, $6.3 million and $5.6 million during the years ended December 31, 2018, 2017 and 2016, respectively. The actual tax benefit realized for the tax deduction from option exercises totaled $0.9 million, $2.0 million and $2.1 million for the years ended December 31, 2018, 2017 and 2016, respectively. The Company received cash of $1.8 million, $2.4 million and $4.7 million from stock option exercises during the years ended December 31, 2018, 2017 and 2016, respectively. The Company redeemed common stock with aggregate values of $1.6 million, $2.8 million and $3.1 million tendered in payment for stock option exercises during the years ended December 31, 2018, 2017 and 2016, respectively.

Restricted Stock Awards. Common stock issued under the Company’s restricted stock plan may not be sold or otherwise transferred until restrictions have lapsed or performance objectives have been obtained. During the vesting periods, participants have voting rights and receive dividends on all time restricted shares and vesting performance restricted shares. Upon termination of employment, common shares upon which restrictions have not lapsed must be returned to the Company.

All restricted share awards are classified as equity awards. The fair value of equity-classified restricted stock awards is amortized as compensation expense on a straight-line basis over the period restrictions lapse or performance goals are met. Compensation expense related to restricted stock awards of $5.6 million, $3.3 million and $3.9 million was included in benefits on the Company’s consolidated statements of income for the years ended December 31, 2018, 2017 and 2016, respectively. Related income tax benefits recognized for the years ended December 31, 2018, 2017 and 2016 were $0.2 million, $0.6 million and $1.5 million, respectively.

The following table presents information regarding the Company’s restricted stock:



As of December 31, 2018	Number of Shares		Weighted-Average Measurement Date Fair Value
Restricted stock, beginning of year	292,506		$	33.24
Granted	214,893		40.97
Vested	(83,736	)	32.42
Forfeited	(43,079	)	36.64
Canceled	—		—
Restricted stock, end of year	380,584		$	37.46

During 2018, the Company issued 214,893 restricted common shares. The 2018 restricted share awards included 59,464 performance restricted shares, of which 29,732 vest in varying percentages upon achievement of defined return on equity performance goals, and 29,732 vest in varying percentages upon achievement of defined total return to shareholder goals. Vesting of the performance restricted shares is also contingent on employment as of December 31, 2020. Additionally, 155,429 time-restricted shares were issued during 2018 that vest one-third on each annual anniversary of the grant date through February 15, 2021, contingent on continued employment through the vesting date.

As of December 31, 2018, there was $7.9 million of unrecognized compensation cost related to non-vested, restricted stock awards expected to be recognized over a period of 1.91 years.