SHARE-BASED COMPENSATION

The Corporation maintains a share-based compensation plan, under which it periodically grants share-based awards for a fixed number of shares to certain officers of the Corporation. The fair value of share-based awards is recognized as compensation expense over the requisite service or performance period. During the years ended December 31, 2015, 2014 and 2013, share-based compensation expense related to stock options, restricted stock units and other share-based awards totaled $3.7 million, $2.9 million and $2.9 million, respectively.

During the year ended December 31, 2015, the Corporation granted options to purchase 244,165 shares of common stock, 85,645 restricted stock units and 12,059 shares of common stock to certain officers of the Corporation. On April 20, 2015, the shareholders of the Corporation approved the Stock Incentive Plan of 2015, which provides for 1,300,000 shares of the Corporation's common stock to be made available for future equity-based awards and canceled the amount of shares available for future grant under prior share-based compensation plans. At December 31, 2015, there were 1,274,477 shares of common stock available for future grants under the Corporation's share-based compensation plan.

Stock Options

The Corporation issues stock options to certain officers. Stock options are issued at the current market price of the Corporation's common stock on the date of grant and expire ten years from the date of grant. Stock options granted after 2012 vest ratably over a five-year period. Stock options granted prior to 2013 generally vest ratably over a three-year period.

The following summarizes information about stock options outstanding at December 31, 2015:



	Options Outstanding				Options Exercisable
Range of Exercise Prices Per Share	Number Outstanding	Weighted Average Exercise Price Per Share		Weighted Average Contractual Term (In Years)	Number Exercisable	Weighted Average Exercise Price Per Share		Weighted Average Contractual Term (In Years)
$10.56 - 15.84	84,775	$	13.31	4.73	84,775	$	13.31	4.73
19.97 - 21.10	74,189	20.47		4.40	74,189	20.47		4.40
23.78 - 25.14	502,845	24.63		5.08	384,912	24.47		4.44
29.45 - 30.18	392,930	29.88		8.76	31,108	29.45		8.17
$10.56 - 30.18	1,054,739	$	25.38	6.38	574,984	$	22.58	4.68

The intrinsic value of all outstanding in-the-money stock options and exercisable in-the-money stock options was $7.6 million and $4.9 million, respectively, at December 31, 2015. The aggregate intrinsic values of outstanding and exercisable options at December 31, 2015 were calculated based on the closing market price of the Corporation's common stock on December 31, 2015 of $34.27 per share less the exercise price. Options with intrinsic values less than zero, or "out-of-the-money" options, were not included in the aggregate intrinsic value reported.

At December 31, 2015, unrecognized compensation cost related to stock options totaled $3.3 million. This cost is expected to be recognized over a remaining weighted average period of approximately 3.5 years.

A summary of activity for the Corporation's stock options as of and during the three years ended December 31, 2015 is presented below:



	Non-Vested Stock Options Outstanding						Stock Options Outstanding
	Number of Options		Weighted- Average Exercise Price Per Share		Weighted- Average Grant Date Fair Value Per Share		Number of Options		Weighted- Average Exercise Price Per Share
Outstanding at December 31, 2012	314,765		$	23.03	$	6.92	997,222		$	27.24
Activity during 2013:
Granted	244,719		25.14		7.40		244,719		25.14
Exercised	—		—		—		(100,145	)	22.87
Vested	(127,443	)	22.94		6.92		—		—
Expired or forfeited	(17,961	)	23.34		6.98		(67,806	)	32.27
Outstanding at December 31, 2013	414,080		24.29		7.19		1,073,990		26.84
Activity during 2014:
Granted	190,011		29.45		9.64		190,011		29.45
Exercised	—		—		—		(72,936	)	24.67
Vested	(148,016	)	23.43		6.98		—		—
Expired or forfeited	(23,876	)	25.67		7.79		(153,754	)	37.50
Outstanding at December 31, 2014	432,199		26.75		8.30		1,037,311		25.90
Activity during 2015:
Granted	244,165		30.18		8.40		244,165		30.18
Lake Michigan converted options	—		—		—		132,883		12.93
Exercised	—		—		—		(310,985	)	25.10
Vested	(150,224	)	25.57		7.80		—		—
Expired or forfeited	(46,385	)	27.99		8.50		(48,635	)	28.18
Outstanding at December 31, 2015	479,755		$	28.75	$	8.49	1,054,739		$	25.38
Exercisable/vested at December 31, 2015							574,984		$	22.58

The fair value of the stock options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions.



	2015		2014		2013
Expected dividend yield	3.50	%	3.00	%	3.50	%
Risk-free interest rate	1.78	%	2.16	%	1.34	%
Expected stock price volatility	39.1	%	42.2	%	42.1	%
Expected life of options — in years	7.0		7.0		7.0
Weighted average fair value per share	$8.40		$9.64		$7.40

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant and the expected life of the options granted. Expected stock volatility was based on historical volatility of the Corporation's common stock over a seven-year period. The expected life of options represents the period of time that options granted are expected to be outstanding and is based primarily upon historical experience, including option exercise behavior.

Because of the unpredictability of the assumptions required, the Black-Scholes (or any other valuation) model is incapable of accurately predicting the Corporation's common stock price or of placing an accurate present value on options to purchase its stock. In addition, the Black-Scholes model was designed to approximate value for types of options that are very different from those issued by the Corporation. In spite of any theoretical value that may be placed on a stock option grant, no value is possible under options issued by the Corporation without an increase in the market price per share of the Corporation's common stock over the market price per share of the Corporation's common stock at the date of grant.

Restricted Stock Units

In addition to stock options, the Corporation also grants restricted stock performance units and restricted stock service-based units (collectively referred to as restricted stock units) to certain officers. The restricted stock performance units vest based on the Corporation achieving certain performance target levels and the grantee completing the requisite service period. The restricted stock performance units are eligible to vest from 0.25x to 1.5x the number of units originally granted depending on which, if any, of the performance target levels are met. However, if the minimum performance target levels are not achieved, no shares will become vested or be issued for that respective year's restricted stock performance units. The restricted stock service-based units vest upon satisfaction of a service condition. Upon achievement of the performance target level and/or satisfaction of a service condition, if applicable, the restricted stock units are converted into shares of the Corporation's common stock on a one-to-one basis. Compensation expense related to restricted stock units is recognized over the expected requisite performance or service period, as applicable.

A summary of the activity for restricted stock units during the three years ended December 31, 2015 is presented below:



	Number of Units		Weighted Average Grant Date Fair Value Per Unit
Outstanding at December 31, 2012	156,510		$	20.83
Activity during 2013:
Granted	71,768		23.42
Converted into shares of common stock	(36,416	)	22.44
Forfeited/expired	(3,330	)	21.67
Outstanding at December 31, 2013	188,532		21.49
Activity during 2014:
Granted	73,468		27.49
Converted into shares of common stock	(52,008	)	19.23
Forfeited/expired	(5,673	)	24.31
Outstanding at December 31, 2014	204,319		24.14
Activity during 2015:
Granted	85,645		28.52
Converted into shares of common stock	(70,166	)	22.51
Forfeited/expired	(11,809	)	25.61
Outstanding at December 31, 2015	207,989		$	26.41

At December 31, 2015, unrecognized compensation cost related to restricted stock unit awards totaled $3.2 million and is expected to be recognized over approximately 2.4 years.