9. Stock Option Plan and Stock Based Compensation

The Company grants stock options and restricted stock to key executives and managerial employees and non-employee directors. At May 31, 2015, the Company had one stock option plan, the 2004 Long-Term Incentive Plan of Ennis, Inc., as amended and restated as of June 30, 2011, formerly the 1998 Option and Restricted Stock Plan amended and restated as of May 14, 2008 (the “Plan”). The Company has 638,693 shares of unissued common stock reserved under the Plan for issuance as of May 31, 2015. The exercise price of each stock option granted under the Plan equals a referenced price of the Company’s common stock as reported on the New York Stock Exchange on the date of grant, and an option’s maximum term is ten years. Stock options and restricted stock may be granted at different times during the year and vest ratably over various periods, from grant date up to five years. The Company uses treasury stock to satisfy option exercises and restricted stock awards.

The Company recognizes compensation expense for stock options and restricted stock grants on a straight-line basis over the requisite service period. For the three months ended May 31, 2015 and May 31, 2014, the Company included in selling, general and administrative expenses, compensation expense related to share based compensation of $0.3 million ($0.2 million net of tax), and $0.4 million ($0.2 million net of tax), respectively.

Stock Options

The Company had the following stock option activity for the three months ended May 31, 2015:


	Number of Shares *(exact quantity)*			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life *(in years)*		Aggregate Intrinsic Value(a) *(in thousands)*
Outstanding at March 1, 2015		374,823		$	15.95		5.7	$	210
Granted		43,426			13.69
Terminated		(20,000	)		16.42
Exercised		—			—

Outstanding at May 31, 2015		398,249		$	15.68		6.2	$	697

Exercisable at May 31, 2015		321,824		$	16.00		5.5	$	506

(a)	Intrinsic value is measured as the excess fair market value of the Company’s common stock as reported on the New York Stock Exchange over the applicable exercise price.

The following is a summary of the assumptions used and the weighted average grant-date fair value of the stock options granted during the three months ended May 31, 2015 and May 31, 2014:


	May 31,
	2015			2014
Expected volatility		24.06	%		29.25	%
Expected term (years)		3			3
Risk free interest rate		0.89	%		0.91	%
Dividend yield		4.92	%		4.11	%

Weighted average grant-date fair value	$	2.24		$	2.70

A summary of the stock options exercised and tax benefits realized from stock based compensation is presented below (in thousands):


	Three months ended May 31,
	2015		2014
Total cash received	$	—	$	54
Income tax benefits		—		—
Total grant-date fair value		—		9
Intrinsic value		—		36

A summary of the status of the Company’s unvested stock options at May 31, 2015 and the changes during the three months ended May 31, 2015 are presented below:


	Number of Options			Weighted Average Grant Date Fair Value
Unvested at March 1, 2015		79,760		$	2.51
New grants		43,426			2.24
Vested		(46,761	)		2.58
Forfeited		—			—

Unvested at May 31, 2015		76,425		$	1.86

As of May 31, 2015, there was $0.1 million of unrecognized compensation cost related to unvested stock options granted under the Plan. The weighted average remaining requisite service period of the unvested stock options was 2.3 years. The total fair value of shares underlying the options vested during the three months ended May 31, 2015 was $0.8 million.

Restricted Stock

The Company had the following restricted stock grant activity for the three months ended May 31, 2015:


	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at March 1, 2015		153,648		$	15.30
Granted		113,648			13.69
Terminated		—			—
Vested		(77,900	)		15.24

Outstanding at May 31, 2015		189,396		$	14.36

As of May 31, 2015, the total remaining unrecognized compensation cost related to unvested restricted stock granted under the Plan was approximately $2.6 million. The weighted average remaining requisite service period of the unvested restricted stock awards was 2.4 years. As of May 31, 2015, the Company’s outstanding restricted stock had an underlying fair value at date of grant of $2.7 million.