6.Stock-Based Compensation

The Company maintains a stock incentive plan which authorizes the issuance of up to 442,750 shares of common stock. Of those shares, 18,000 were subject to outstanding options and 102,157 were reserved for future grants at June 30, 2018. The plan provides for granting eligible participants stock options or other stock awards, as described by the plan, at option prices ranging from 85% to 110% of fair market value at the date of grant. Options granted expire up to seven years after the date of grant. Such options generally become exercisable over a one- to three-year period.

The Company charged compensation cost of approximately $3,600 against income for the three months ended June 30, 2018 and approximately $6,000 for the three months ended June 30, 2017. For the first six months of 2018, the Company charged compensation cost of approximately $6,500 and approximately $11,500 for the same period in 2017. As of June 30, 2018, there was approximately $19,800 of unrecognized compensation cost related to unvested share-based compensation awards. That cost is expected to be recognized over the next three years.

The Company receives a tax deduction for certain stock option exercises during the period in which the options are exercised, generally for the excess of the market price at the time the stock options are exercised over the exercise price of the options.

Proceeds from the exercise of 250 stock options were approximately $2,000 for the six months ended

June 30, 2017. There were no options exercised during the six months ended June 30, 2018.

The fair value of options granted during the six months ended June 30, 2018 and 2017 was estimated using the Black-Scholes option pricing model with the following assumptions:


	2018	2017
Dividend yield	0%	0%
Expected volatility	40.0%	41.3%
Expected life of option	Five Years	Five Years
Risk-free interest rate	2.8%	1.8%
Fair value of each option on grant date	$ 3.38	$ 3.43

There were 2,750 and 2,250 options granted during each of the six months ended June 30, 2018 and 2017, respectively while 2,918 options expired during the six months ended June 30, 2018.

Stock option activity during the six months ended June 30, 2018 was as follows:



		Weighted
		Average
		Exercise
	Shares	Price
Outstanding at January 1, 2018	18,168	$	13.81
Granted	2,750		8.63
Exercised	—		—
Expired and forfeited	(2,918)		12.56
Outstanding at June 30, 2018	18,000	$	13.22
Exercisable at June 30, 2018	12,247	$	15.09

The aggregate intrinsic value of all options outstanding and for those exercisable at June 30, 2018 was approximately $1,400 and $100, respectively.