The Company issues stock options and restricted stock in exchange for employee and director services. In accordance with current accounting standards, the calculated cost of its equity-based compensation awards is recognized in the Company’s consolidated statements of operations over the period in which an employee or director is required to provide the services for the award. Compensation cost will not be recognized for employees or directors that do not render the requisite services. The Company recognizes the expense for equity-based compensation in its consolidated income statements on a straight-line basis based upon the number of awards that are ultimately expected to vest.

Equity-based compensation expense, the corresponding tax benefit and net equity-based compensation expense for 2018, 2017, and 2016 are as follows:

On May 12, 2010, the shareholders approved the Company’s 2010 Equity Award Plan (2010 Plan). Under the provisions of the 2010 Plan, stock options, restricted stock, stock appreciation rights, and other awards may be granted or awarded to employees and directors of the Company, as well as non-employees. The compensation committee of the Board of Directors determines the nature, amount, pricing and vesting of the grants or awards. All options and awards remain in effect until the earliest of the expiration, exercise, or surrender date. Options generally become exercisable in three or four equal installments, typically beginning one year from the date of grant, and expire no more than 15 years from the date of grant. A total of 3,750,000 shares may be granted or awarded under the 2010 plan, 1,700,000 of which are available for grant as of December 31, 2018.

On April 26, 2000, the shareholders approved the Company’s 2000 Equity Award Plan (Equity Plan). Under the provisions of the Equity Plan, stock options, restricted stock, stock appreciation rights, and other awards could previously be granted or awarded to employees and directors of the Company. The compensation committee of the Board of Directors determined the nature, amount, pricing, and vesting of the grants or awards. All options and awards remain in effect until the earlier of the expiration, exercise, or surrender date. Options generally become exercisable in three or four equal annual installments, typically beginning one year from the date of grant, and expire no more than 15 years from the date of grant. In certain limited instances, options granted at fair market value were expected to vest nine and one-half years from the date of grant. There are no shares or options available for grant under this plan as of December 31, 2018.

Under the Company’s 1991 Restricted Stock Plan, a total of 800,000 shares of restricted stock may be granted to certain key employees, 7,000 of which are available for grant as of December 31, 2018.

The Company granted 13,100 stock options during the 2018 first quarter. The options have a fair value of $1.91 per share using a Black-Scholes valuation model. The assumptions used to calculate that fair value include the price on date of grant of $6.45, an expected life of 3.7 years, expected volatility of 34.9%, an expected dividend yield of zero, and a risk free rate of 2.4%. The options vest ratably over three years, and are being expensed over that period. The option grant was granted from the 2010 Equity Award Plan. There were no other options granted during 2018.

The Company utilizes the Black-Scholes option-pricing model to estimate the fair value of stock options granted on the date of grant. The per-option weighted-average fair value on the date of grant of stock options granted in 2018, 2017, and 2016 was $1.91, $1.64, and $0.96, respectively.

The fair value of the options at the date of grant was estimated using the following weighted-average assumptions for the years ended December 31, 2018, 2017, and 2016:

The Company used historical volatility calculated using daily closing prices for its common stock over periods that equal the expected term of the options granted to estimate the expected volatility for the grants made in 2018, 2017, and 2016. The risk-free interest rate assumption was based upon U.S. Treasury yields appropriate for the expected term of the Company’s stock options based upon the date of grant. The expected term of the stock options granted was based upon the options expected vesting schedule and historical exercise patterns. The Company did not pay a dividend in 2018 or 2017 and does not anticipate paying a dividend in the future. The expected dividend yield in 2016 was based upon the Company’s recent history of paying dividends since 2013, and the expectation of paying dividends in the foreseeable future at the time of the grant.

During 2018, 2017, and 2016, the Company issued restricted stock to certain employees. The stock vests over a period of four years, with 25% of the stock issued vesting one year from the date of grant, and another 25% vesting each year thereafter until the stock is fully vested. The Company is recognizing compensation expense for these shares ratably over the expected term of the restricted stock, or four years. In the event the Company issued stock to its independent directors, the stock vests at retirement. As the directors are eligible for retirement from the Company’s Board of Directors at any point in time, the Company will recognize the expense associated with these shares on the date of grant. The shares of restricted stock issued are considered outstanding, can be voted, and are eligible to receive dividends, if any are paid. However, the restricted shares do not include a non-forfeitable right for the holder to receive dividends and none will be paid in the event the awards do not vest. Accordingly, only vested shares of outstanding restricted stock are included in the calculation of basic earnings per share.

During 2018, the Company granted 216,600 shares with a market condition to senior management. The closing price of the Company’s stock on that day was $8.18 per share. Under these grant agreements, the Company’s stock price must increase 50% to $12.27 for a 30-day period within a three-year period from the date of grant for 50% of the grants to vest. The Company’s stock price must increase 100% to $16.36 for a 30-day period within a three-year period from the date of grant for the remaining 50% of the grants to vest.

For these performance grants, the price on the date of grants was $8.18 per share, the expected volatility was 34.5%, the expected dividend yield is zero, and the risk-free rate of return was 2.47%. Given these assumptions, the tranche of the grants that will vest with a 50% increase in the stock price have a value using a binomial model of $2.30 per share, and a derived service period of 1.26 years. For the tranche of the grants that will vest with a 100% increase in the stock price, the value of the shares is $1.30 per share and have a derived service period of 1.85 years. The Company is expensing these grants over the derived service period as noted for each tranche of a grant. Of the 216,600 performance shares granted during 2018, zero shares were canceled during 2018, and 216,600 shares were outstanding as of December 31, 2018.

The Company also granted performance share units to one executive during the 2018 first quarter. The performance share units vest over three years and will convert to shares upon vesting. The total number of shares granted to the recipient will be determined based upon the Company’s achievement of certain revenue targets. The performance share units have a fair value of less than $0.1 million and are being expensed ratably over the three-year vesting period.

As of December 31, 2018, total remaining stock-based compensation expense for non-vested equity-based compensation was approximately $2.0 million, which is expected to be recognized on a weighted-average basis over the next 13 months. Historically, the Company has issued shares out of treasury stock or the SECT to fulfill the share requirements from stock option exercises and restricted stock grants.

A summary of stock option activity under the 2010 Plan and Equity Plan is as follows:

	2010 Plan Options			Weighted- Average Exercise Price		Equity Plan Options			Weighted- Average Exercise Price
Outstanding at December 31, 2015		820,471		$	13.21		1,356,375		$	4.89
Granted		180,384		$	4.95		—		$	—
Exercised		—		$	—		(182,500	)	$	4.27
Canceled or forfeited		—		$	—		—		$	—
Expired		—		$	—		(2,950	)	$	5.79
Outstanding at December 31, 2016		1,000,855		$	11.72		1,170,925		$	4.98
Granted		48,500		$	5.38		—		$	—
Exercised		—		$	—		(232,750	)	$	4.09
Canceled or forfeited		(17,350	)	$	9.73		—		$	—
Expired		(144,950	)	$	9.73		(203,750	)	$	5.48
Outstanding at December 31, 2017		887,055		$	11.74		734,425		$	5.13
Granted		13,100		$	6.45		—		$	—
Exercised		(100,000	)	$	7.52		(286,875	)	$	4.67
Canceled or forfeited		—		$	—		—		$	—
Expired		—		$	—		—		$	—
Outstanding at December 31, 2018		800,155		$	12.18		447,550		$	5.42
Options Exercisable at December 31, 2018		639,130		$	13.85		447,550		$	5.42

There were 100,000 shares exercised in 2018 under the 2010 plan and there were no shares exercised under the 2010 plan in 2017 and 2016. For 2018, 2017, and 2016, the intrinsic value of the options exercised under the Equity Plan was $1.1 million, $0.3 million, and $0.3 million, respectively.

A summary of restricted stock activity under the 2010 Plan, the Equity Plan and the 1991 Restricted Stock Plan is as follows:

	2010 Plan Restricted Stock			Weighted- Average Fair Value		Equity Plan Restricted Stock			Weighted- Average Fair Value		1991 Restricted Stock Plan			Weighted- Average Fair Value
Outstanding at Dec. 31, 2015		77,624		$	8.44		141,500		$	5.04		189,525		$	11.48
Granted		537,160		$	4.74		—		$	—		16,371		$	4.95
Released		(19,130	)	$	8.82		(80,000	)	$	4.97		(66,269	)	$	13.05
Canceled or forfeited		(188,736	)	$	4.97		—		$	—		(55,275	)	$	8.45
Outstanding at Dec. 31, 2016		406,918		$	5.14		61,500		$	5.13		84,352		$	10.96
Granted		292,342		$	5.66		—			—		57,900		$	5.75
Released		(101,960	)	$	5.39		(21,500	)	$	5.44		(32,823	)	$	14.41
Canceled or forfeited		(90,264	)	$	5.11		—			—		(18,975	)	$	9.10
Outstanding at Dec. 31, 2017		507,036		$	5.40		40,000		$	4.97		90,454		$	6.76
Granted		483,800		$	7.61		—			—		—		$	—
Released		(104,516	)	$	5.52		—			—		(31,937	)	$	8.41
Canceled or forfeited		(35,393	)	$	5.11		—			—		(2,400	)	$	5.75
Outstanding at Dec. 31, 2018		850,927		$	6.65		40,000		$	4.97		56,117		$	5.87

A summary of stock options that were outstanding at December 31, 2018 for the 2010 Plan and the Equity Plan is as follows:

Range of Exercise Prices:	Number of Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value
2010 Plan
$4.95 - $7.48		304,684	$	5.60		8.6	$	—
$12.16 - $13.75		242,375	$	13.37		7.9		—
$15.04 - $16.93		105,096	$	15.83		5.6		—
$20.68 - $21.41		148,000	$	21.17		8.7		—
		800,155	$	12.18		8.0	$	—
Equity Plan
$3.25 - $4.90		236,300	$	4.34		3.6	$	49,800
$5.25 - $7.18		211,250	$	6.63		5.2		—
		447,550	$	5.42		4.3	$	49,800

A summary of stock options that are exercisable at December 31, 2018 for the 2010 Plan and the Equity Plan is as follows:

Range of Exercise Prices:	Number of Options Exercisable		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value
2010 Plan
$4.95 - $7.48		143,659	$	5.68		8.5	$	—
$12.16 - $13.75		242,375	$	13.37		7.9		—
$15.04 - $16.93		105,096	$	15.83		5.6		—
$20.68 - $21.41		148,000	$	21.17		8.7		—
		639,130	$	13.85		7.8	$	—
Equity Plan
$3.25 - $4.90		236,300	$	4.34		3.6	$	49,800
$5.25 - $7.18		211,250	$	6.63		5.2		—
		447,550	$	5.42		4.3	$	49,800

The aggregate intrinsic values as calculated in the above charts detailing options that are outstanding and those that are exercisable, respectively, are based upon the Company’s closing stock price on December 31, 2018 of $4.08 per share.