10. 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 August 31, 2016, 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 601,308 shares of unissued common stock reserved under the Plan for issuance as of August 31, 2016. 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 August 31, 2016 and August 31, 2015, the Company included compensation expense related to share-based compensation of $0.4 million ($0.2 million net of tax), and $0.4 million ($0.2 million net of tax), respectively, in selling, general, and administrative expenses. For the six months ended August 31, 2016 and August 31, 2015, the Company included compensation expense related to share-based compensation of $0.7 million ($0.4 million net of tax), and $0.7 million ($0.4 million net of tax), respectively, in selling, general, and administrative expenses.

Stock Options

The Company had the following stock option activity for the six months ended August 31, 2016:


	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, 2016		370,949		$	15.38		5.9	$	1,616
Granted		—			—
Terminated		—			—
Exercised		(193,453	)		15.04

Outstanding at August 31, 2016		177,496		$	15.76		4.7	$	279

Exercisable at August 31, 2016		172,423		$	15.79		4.6	$	268

(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.

No stock options were granted during the six months ended August 31, 2016. The following is a summary of the assumptions used and the weighted average grant-date fair value of the stock options granted during the six months ended August 31, 2015:


	August 31, 2015
Expected volatility		24.06	%
Expected term (years)		3
Risk free interest rate		0.89	%
Dividend yield		4.92	%

Weighted average grant-date fair value	$	2.24

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


	Three months ended August 31,				Six months ended August 31,
	2016		2015		2016		2015
Total cash received	$	—	$	—	$	2,910	$	—
Income tax benefits		—		—		—		—
Total grant-date fair value		—		—		532		—
Intrinsic value		—		—		969		—

A summary of the Company’s unvested stock options at August 31, 2016 and the changes during the six months ended August 31, 2016 are presented below:


	Number of Options			Weighted Average Grant Date Fair Value
Unvested at March 1, 2016		76,425		$	2.32
New grants		—			—
Vested		(71,352	)		2.32
Forfeited		—			—

Unvested at August 31, 2016		5,073		$	2.41

As of August 31, 2016, there was $7,000 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 1.3 years.

Restricted Stock

The Company had the following restricted stock grant activity for the six months ended August 31, 2016:


	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at March 1, 2016		189,396		$	14.36
Granted		64,685			19.63
Terminated		—			—
Vested		(89,535	)		14.46

Outstanding at August 31, 2016		164,546		$	16.37

As of August 31, 2016, the total remaining unrecognized compensation cost related to unvested restricted stock granted under the Plan was approximately $2.2 million. The weighted average remaining requisite service period of the unvested restricted stock awards was 1.9 years.