11. STOCK PLANS AND STOCK BASED COMPENSATION

On January 15, 2015, the Company’s Board of Directors adopted the Republic Bancorp, Inc. 2015 Stock Incentive Plan (the “2015 Plan”), which became effective April 23, 2015 when the Company’s shareholders approved the 2015 Plan. The 2015 Plan replaced the Company’s 2005 Stock Incentive Plan, which expired on March 15, 2015.

The number of authorized shares under the 2015 Plan is fixed at 3,000,000, with such number subject to adjustment in the event of certain events, such as stock dividends, stock splits or the like. There is a minimum three-year vesting period for awards granted to employees under the 2015 Plan that vest based solely on the completion of a specified period of service, with options and restricted stock awards generally exercisable five to six years after the issue date. Stock options generally must be exercised within one year from the date the options become exercisable and have an exercise price that is at least equal to the fair market value of the Company’s stock on the date the options were granted.

All shares issued under the above mentioned plans through September 30, 2015 were from authorized and reserved unissued shares. The Company has a sufficient number of authorized and reserved unissued shares to satisfy all anticipated option exercises. There are no Class B stock options outstanding or available for exercise under the Company’s plans.

The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes based stock option valuation model. This model requires the input of subjective assumptions that will usually have a significant impact on the fair value estimate. Expected volatilities are based on historical volatility of Republic’s stock and other factors. Expected dividends are based on dividend trends and the market price of Republic’s stock price at grant. Republic uses historical data to estimate option exercises and employee terminations within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve at the time of grant.

All share-based payments to employees, including grants of employee stock options, are recognized as compensation expense over the service period (generally the vesting period) in the consolidated financial statements based on their fair values.

The following table summarizes stock option activity from January 1, 2014 through September 30, 2015:


				Weighted
		Weighted		Average
	Options	Average		Remaining	Aggregate
	Class A	Exercise		Contractual	Intrinsic
	Shares	Price		Term	Value

Outstanding, January 1, 2014	327,500	$	20.03
Granted	1,000		23.50
Exercised	(90,500)		19.78
Forfeited or expired	(83,000)		20.09
Outstanding, December 31, 2014	155,000	$	20.15	1.14	$	709,933

Granted	320,900		24.50
Exercised	(17,000)		19.60
Forfeited or expired	(18,050)		22.95
Outstanding, September 30, 2015	440,850		23.23	3.74		549,305

Fully vested and expected to vest	440,850	$	23.23	3.74	$	549,305
Exercisable (vested) at September 30, 2015	116,750	$	19.84	0.17	$	529,230

Information related to stock options for the three and nine months ended September 30, 2015 follows:


(in thousands)	2015		2014		2015		2014

Intrinsic value of options exercised	$	26	$	125	$	81	$	151
Cash received from options exercised, net of shares redeemed		125		326		244		443
Total fair value of options granted		11		5		1,150		5

The following table summarizes restricted stock activity from January 1, 2014 through September 30, 2015:


		Weighted-average
	Restricted	grant date fair
	Stock Awards	value per share
Outstanding, January 1, 2014	87,000	$	19.85
Granted	—		—
Forfeited or expired	(1,500)		19.85
Earned and issued	(5,000)		19.85
Outstanding, December 31, 2014	80,500		19.85

Granted	2,500		25.19
Forfeited or expired	(2,000)		19.85
Earned and issued	—		—
Outstanding, September 30, 2015	81,000	$	20.01

The Company recorded expense related to stock options and restricted stock awards for the three and nine months ended September 30, 2015 as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2015		2014		2015		2014

Stock option expense	$	48	$	25	$	104	$	38
Restricted stock award expense	$	60	$	73	$	207	$	328

Unrecognized stock option and restricted stock award expense related to unvested options and awards (net of estimated forfeitures) are estimated as follows:


	Restricted
(in thousands)	Stock Awards		Options		Total

2015	$	74	$	68	$	142
2016		297		267		564
2017		271		264		535
2018		120		262		382
2019		12		145		157
2020 and after		10		30		40

Total	$	784	$	1,036	$	1,820