Stock-based Compensation Plan

The Company has a stock-based compensation plan that provides awards to certain full-time employees and directors of the Company. The 2005 Stock Incentive Plan permits the granting of stock options, share appreciation rights, restricted shares, restricted share units, and unrestricted shares, deferred share units, and performance awards. At December 31, 2014, the number of shares available to grant to employees and directors under this plan was 4,022,452.

Stock Options

The Company has granted stock options to certain full-time employees and directors of the Company under the 2005 Stock Incentive Plan. The plan contains provisions authorizing the grant of limited stock rights, which permit the optionee, upon a change in control of the Company, to surrender his or her stock options for cancellation and receive cash or common stock equal to the difference between the exercise price and the fair market value of the shares on the date of the grant. The option price at which the Company’s common stock may be purchased upon exercise of stock options granted under the plans must be at least equal to the per share market value of such stock at the date the option is granted. All stock option shares are adjusted for stock splits and stock dividends. The term of the stock options may not exceed five years from the date the options are granted.

The fair value of stock options granted is estimated at the date of grant using the Black Scholes option-pricing model. The Company uses historical data to estimate option exercise and termination within the valuation model. Employee and director awards, which have dissimilar historical exercise behavior, are considered separately for valuation purposes. The risk-free interest rate for periods within the contractual life of the stock option is based on the U.S. Treasury yield in effect at the time of the grant. The stock option grants generally vest upon six months or two years of service for directors and employees, respectively, and generally expire in five years. Expected volatilities are based on historical volatility and other factors. There were no stock options granted during 2014, 2013 or 2012.

Compensation expense and the recognized income tax benefit related to stock options for the years ended December 31, 2014, 2013 and 2012 was not significant. There was no unrecognized compensation cost related to stock options as of December 31, 2014.

The total intrinsic value of options exercised during the years ended December 31, 2014, 2013 and 2012 was $778,000, $1,907,000 and $3,000, respectively, and the income tax benefit related to these exercises was $302,000, $742,000 and $1,000. Total cash received from options exercised during the years ended December 31, 2014, 2013 and 2012 was $871,000, $4,327,000 and $81,000. Upon exercise of stock options, the shares are issued from the Company’s authorized stock balance.

Changes in shares granted for stock options for the year ended December 31, 2014 are summarized as follows:



	Options		Weighted- Average Exercise Price
Outstanding at December 31, 2013	58,810		$	15.47
Exercised	(56,360	)	15.45
Forfeited or expired	(1,450	)	15.37
Outstanding at December 31, 2014	1,000		16.73
Exercisable at December 31, 2014	1,000		16.73

The average remaining contractual term on stock options outstanding and exercisable at December 31, 2014 is six months. The aggregate intrinsic value of the outstanding and exercisable shares at December 31, 2014 was $11,000.

Restricted Stock Awards

The Company has awarded restricted stock to certain senior officers and directors under the 2005 Stock Incentive Plan. Common stock issued under restricted stock awards may be issued under the terms of a vesting schedule or with an immediate vest and may not be sold or otherwise transferred until restrictions have lapsed. The recipient does not have voting rights until the restricted stock award has vested. The fair value of the restricted stock awarded is the closing price of the Company’s common stock on the award date.

Compensation expense related to restricted stock awards for the years ended December 31, 2014, 2013 and 2012 was $1,603,000, $768,000 and $243,000, respectively, and the recognized income tax benefit related to this expense was $622,000, $299,000 and $96,000. As of December 31, 2014, total unrecognized compensation expense of $2,276,000 related to restricted stock awards is expected to be recognized over a weighted-average period of 1.9 years.

Note 12. Stock-based Compensation Plan (continued)

The fair value of restricted stock awards that vested during the years ended December 31, 2014, 2013 and 2012 was $953,000, $197,000 and $243,000, respectively, and the income tax benefit related to these awards was $532,000, $77,000 and $96,000, respectively. Upon vesting of restricted stock awards, the shares are issued from the Company’s authorized stock balance.

The following table summarizes the restricted stock award activity for the year ended December 31, 2014:



	Restricted Stock		Weighted- Average Grant Date Fair Value
Non-vested at December 31, 2013	117,442		$	16.76
Granted	97,367		26.63
Vested	(51,068	)	18.66
Forfeited	(1,688	)	21.76
Non-vested at December 31, 2014	162,053		22.04