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)

Share-Based Compensation

Share-based compensation is measured at the grant date based on the fair value of the award and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant).

The Company issues share-based awards through several plans that are described in detail in the notes to the consolidated financial statements for the year ended

December 31, 2018.

The compensation cost charged against income for those plans is included in selling, general & administrative expenses as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
Share-based compensation related to:	2019		2018		2019		2018
Common stock grants	$	100	$	205	$	200	$	305
Stock option grants		24		118		32		134
Restricted Stock Unit Awards ("RSUs")		277		130		464		252
Total share-based compensation	$	401	$	453	$	696	$	691

The total income tax benefit recognized in the condensed consolidated statements of income for share-based compensation arrangements was approximately

$188

thousand and

$155

thousand for the

three

-month periods ended

June 30, 2019

and

2018

, respectively, and approximately

$348

thousand and

$356

thousand for the

six

-month periods ended

June

30,

2019

and

2018

, respectively.

The following is a summary of stock option activity under all plans for the

six

-month period ended

June

2019

	Shares Under Options			Weighted Average Exercise Price (per share)		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2018		134,043		$	20.46
Granted		16,536			38.61
Exercised		(31,058	)		14.18
Outstanding at June 30, 2019		119,521		$	24.61		5.68	$	2,032
Exercisable at June 30, 2019		95,485		$	21.86		5.12	$	1,886
Vested and expected to vest at June 30, 2019		119,521		$	24.61		5.68	$	2,032

June 5, 2019,

the Company granted options to its directors for the purchase of

210,000

shares of common stock at that day’s closing price of

$38.61.

The compensation expense related to these grants was determined as the fair value of the options using the Black-Scholes option pricing model based on the following assumptions:

Expected volatility	28.9%
Expected dividends	None
Risk-free interest rate	2.3%
Exercise price	$38.61
Expected term	6.0 years
Weighted-average grant date fair value	$12.70

The stock volatility for each grant is determined based on a review of the experience of the weighted average of historical daily price changes of the Company’s common stock over the expected option term, and the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected term of the option. The expected term is estimated based on historical option exercise activity.

During the

six

-month periods ended

June 30, 2019

and

2018,

the total intrinsic value of all options exercised (i.e., the difference between the market price on the exercise date and the price paid by the employees to exercise the options) was approximately

$628

thousand and

$1.0

million, respectively, and the total amount of consideration received by the Company from the exercised options was approximately

$440

thousand and

$965

thousand, respectively. At its discretion, the Company allows option holders to surrender previously-owned common stock in lieu of paying the exercise price and withholding taxes. During the

six

-month periods ended

June 30, 2019

and

2018,

shares were surrendered for this purpose.

February 19, 2019,

the Company’s Compensation Committee approved

the award of

$400

thousand, payable in shares of common stock to the Company’s Chairman, Chief Executive Officer, and President under the

2003

Incentive Plan, subject to his continued employment and the terms of his employment agreement. The shares will be issued in

December 2019.

The following table summarizes information about RSU activity during the

six

-month period ended

June 30, 2019:

	Restricted Stock Units			Weighted Average Award Date Fair Value
Outstanding at December 31, 2018		72,176		$	23.60
Awarded		67,152			33.50
Shares vested		(19,860	)		23.53
Outstanding at June 30, 2019		119,468		$	27.64

At the Company’s discretion, RSU holders are given the option to net-share settle to cover the required minimum withholding tax and the remaining amount is converted into the equivalent number of common shares. During the

six

-month periods ended

June 30, 2019

and

2018,

8,132

and

5,238

shares were surrendered at an average market price of

$33.35

and

$27.60,

respectively.

As of

June 30, 2019,

the Company had approximately

$3.2

million of unrecognized compensation expense that is expected to be recognized over a period of

3.8

years