The Company maintains certain stock-based compensation plans, approved by the Company’s shareholders, that are administered by the Management Development and Compensation Committee (the “Compensation Committee”) of the Board. In May 2015, the Company’s shareholders approved the 2015 Long-Term Incentive Plan (the “2015 Plan”) to replace the 2009 Management Stock Incentive Plan and the 2009 Directors’ Stock Incentive Plan (collectively, the “2009 Plans”). A total of 438,076 shares transferred from the 2009 Plans were available for grant pursuant to the 2015 Plan. In addition, any shares subject to outstanding awards under the 2009 Plans that are canceled, expired, forfeited or otherwise not issued or are settled in cash will become available for future award grants under the 2015 Plan. As of December 31, 2020, there were approximately 156,000 shares available for grant under the 2015 Plan.

Under the Plan, the Compensation Committee may establish and prescribe grant guidelines including various terms and conditions for the granting of stock-based compensation. For stock options, the exercise price of each option equals the market price of the Company’s stock on the date of the grant. All options expire after a period of ten years from the date of grant and generally become fully exercisable over a period of 3 to 5 years from the grant date. When an option recipient exercises their options, the Company issues shares from treasury stock and records the proceeds as additions to capital. Shares of restricted stock granted to employees generally vest over 2 to 3 years from the grant date. Fifty percent of the shares of restricted stock granted to non-employee directors generally vests on the date of grant and the remaining fifty percent generally vests one year from the grant date. Vesting of the shares may be based on years of service, established performance measures or both. If restricted stock grants are forfeited before they vest, the shares are reacquired into treasury stock. Restricted stock units granted to employees generally fully vest on the third anniversary of the date of grant.

The share-based compensation plans were established to allow for the granting of compensation awards to attract, motivate and retain employees, executive officers and non-employee directors who contribute to the long-term growth and profitability of the Company and to give such persons a proprietary interest in the Company, thereby enhancing their personal interest in the Company’s success.

The Company awarded grants of restricted stock units to certain members of management during the year ended December 31, 2020. Fifty percent of the shares subject to each grant that ultimately vest are contingent on achieving specified return on average equity (“ROAE”) targets relative to the SNL Small Cap Bank & Thrift Index, a market index the Management Development & Compensation Committee has selected as a peer group for this purpose. These shares will be earned based on the Company’s achievement of a relative ROAE performance requirement, on a percentile basis, compared to the SNL Small Cap Bank & Thrift Index over a three-year performance period ending December 31, 2022. The shares earned based on the achievement of the ROAE performance requirement, if any, will vest on the third anniversary of the grant date assuming the recipient’s continuous service to the Company. The remaining fifty percent of the PSUs that ultimately vest are contingent upon achievement of an average return on average assets (“ROAA”) performance requirement over a three-year performance period ending December 31, 2022. The shares earned based on the achievement of the ROAA performance requirement, if any, will vest on the third anniversary of the grant date assuming the recipient’s continuous service to the Company. If earned at target level, members of management will receive up to 23,302 shares of our common stock in the aggregate.

The grant-date fair values for both the ROAE and the ROAA portions of PSUs granted during the year ended December 31, 2020 are equal to the closing market price of our common stock on the date of grant reduced by the present value of the dividends expected to be paid on the underlying shares.

The Company granted additional restricted stock units to management during the year ended December 31, 2020. These awards will vest after completion of a three-year service requirement. If earned, members of management will receive up to 58,806 shares of our common stock, in the aggregate. The average market price of the restricted stock units on the date of grant was $25.02.

During the year ended December 31, 2020, the Company granted a total of 12,798 restricted shares of common stock to non-employee directors, of which 6,399 shares vested immediately and 6,399 shares will vest after completion of a one-year service requirement. The weighted average market price of the restricted stock on the date of grant was $17.57. In addition, the Company issued a total of 8,439 shares of common stock in-lieu of cash for the annual retainer of four non-employee directors during the year ended December 31, 2020. The weighted average market price of the stock on the date of grant was $19.54.

The Company awarded grants of restricted stock units to certain members of management during the year ended December 31, 2019. Fifty percent of the shares subject to each grant will be earned upon achievement of an ROAA performance requirement for the Company’s fiscal year ending December 31, 2021. The remaining fifty percent of the shares will be earned based on the Company’s achievement of a relative total shareholder return (“TSR”) performance requirement, on a percentile basis, compared to the SNL Small Cap Bank & Thrifts Index over a three-year performance period ending December 31, 2021. If earned at target level, members of management will receive up to 21,970 shares of our common stock in the aggregate, which will vest on February 26, 2022 assuming the recipient’s continuous service to the Company.

The grant-date fair value of the TSR performance award granted on February 26, 2019 was determined using the Monte Carlo simulation model on the date of grant, assuming the following (i) expected term of 2.84 years, (ii) risk free interest rate of 2.43%, (iii) expected dividend yield of 3.20% and (iv) expected stock price volatility over the expected term of the TSR performance award of 21.3%. The grant-date fair value of the TSR performance award granted on May 22, 2019 was determined using the Monte Carlo simulation model on the date of grant, assuming the following (i) expected term of 2.61 years, (ii) risk free interest rate of 2.18%, (iii) expected dividend yield of 3.60% and (iv) expected stock price volatility over the expected term of the TSR performance award of 22.0%. The grant-date fair value of all other restricted stock awards is equal to the closing market price of the Company’s common stock on the date of grant.

The Company granted additional restricted stock units to management during the year ended December 31, 2019. These awards will vest after completion of a three-year service requirement. If earned, members of management will receive up to 54,476 shares of our common stock, in the aggregate. The average market price of the restricted stock units on the date of grant was $25.60.

During the year ended December 31, 2019, the Company granted a total of 8,226 restricted shares of common stock to non-employee directors, of which 4,113 shares vested immediately and 4,113 shares will vest after completion of a one-year service requirement. The weighted average market price of the restricted stock on the date of grant was $27.33. In addition, the Company issued a total of 4,192 shares of common stock in-lieu of cash for the annual retainer of three non-employee directors during the year ended December 31, 2019. The weighted average market price of the stock on the date of grant was $29.78.

The Company awarded grants of restricted stock units to certain members of management during the year ended December 31, 2018. The awards will be earned based on the Company’s achievement of a TSR performance requirement, on a percentile basis, compared to the SNL Small Cap Bank & Thrifts Index over a one-year performance period ended December 31, 2020. If earned at target level, members of management will receive up to 14,877 shares of our common stock in the aggregate, which will vest on February 27, 2021 assuming the recipient’s continuous service to the Company.

The grant-date fair value of the TSR performance award granted during the year ended December 31, 2018 was determined using the Monte Carlo simulation model on the date of grant, assuming the following (i) expected term of 2.84 years, (ii) risk free interest rate of 2.39%, (iii) expected dividend yield of 2.83% and (iv) expected stock price volatility over the expected term of the TSR performance award of 21.2%. The grant-date fair value of all other restricted stock awards is equal to the closing market price of the Company’s common stock on the date of grant.

The Company granted additional restricted stock units to management during the year ended December 31, 2018. These awards will vest after completion of a three-year service requirement. If earned, members of management will receive up to 37,676 shares of our common stock, in the aggregate. The average market price of the restricted stock units on the date of grant was $27.76.

During the year ended December 31, 2018, the Company granted a total of 7,370 restricted shares of common stock to non-employee directors, of which 3,690 shares vested immediately and 3,680 shares will vest after completion of a one-year service requirement. The weighted average market price of the restricted stock on the date of grant was $33.90. In addition, the Company issued a total of 6,363 shares of common stock in-lieu of cash for the annual retainer of five non-employee directors during the year ended December 31, 2018. The weighted average market price of the stock on the date of grant was $29.03.

The restricted stock awards granted to the directors and the restricted stock units granted to management in 2020, 2019 and 2018 do not have rights to dividends or dividend equivalents.

The Company uses the Black-Scholes valuation method to estimate the fair value of its stock option awards. There were no stock options awarded during 2020, 2019 or 2018. There was no unrecognized compensation expense related to unvested stock options as of December 31, 2020. There was no stock option activity for the year ended December 31, 2020.

The aggregate intrinsic value (the amount by which the market price of the stock on the date of exercise exceeded the market price of the stock on the date of grant) of option exercises for the years ended December 31, 2018 was $236 thousand. The total cash received as a result of option exercises under stock compensation plans for the years ended December 31, 2018 was $320 thousand. The tax benefits realized in connection with these stock option exercises were not significant.

The following is a summary of restricted stock award and restricted stock units activity for the year ended December 31, 2020:

				Weighted
				Average
				Market
	Number of			Price at
	Shares			Grant Date
Outstanding at beginning of year		151,808		$	27.80
Granted		94,906			24.36
Vested		(35,433	)		28.84
Forfeited		(42,768	)		27.78
Outstanding at end of period		168,513		$	25.65

As of December 31, 2020, there was $2.0 million of unrecognized compensation expense related to unvested restricted stock awards and restricted stock units that is expected to be recognized over a weighted average period of 1.8 years.

The Company amortizes the expense related to share-based compensation over the vesting period. Share-based compensation expense is recorded as a component of salaries and employee benefits in the consolidated statements of income for awards granted to management and as a component of other noninterest expense for awards granted to directors. The share-based compensation expense included in the statements on income for the years ended December 31 was as follows (in thousands):

	2020		2019		2018
Salaries and employee benefits	$	1,107	$	1,175	$	1,045
Other noninterest expense		226		231		256
Total share-based compensation expense	$	1,333	$	1,406	$	1,301