12. STOCK-BASED COMPENSATION

The Company applies the provisions of FASB ASC 718, “Compensation – Stock Compensation,” to account for the Company’s share-based compensation. Share-based compensation cost is measured at the grant date based on the calculated fair value of the award and is recognized over the employees’ requisite service period. The Company recorded stock compensation expense of $604 and $437 for the three-month periods ended September 30, 2014 and 2013, respectively, related to restricted stock awards and performance unit awards. Stock compensation expense of $2,403 and $1,528 was recorded for the nine-month periods ended September 30, 2014 and 2013, respectively. As of September 30, 2014, unrecognized compensation expense for awards the Company expects to vest approximated $3,469. The Company will recognize this expense over the upcoming 3.4 year period through February 2018.

Shares issued as a result of vested stock-based compensation generally will be from previously issued shares which have been reacquired by the Company and held as Treasury shares or authorized but previously unissued common stock.

The excess income tax benefit realized for the tax deduction from stock-based compensation approximated $283 and $192 for the nine months ended September 30, 2014 and 2013, respectively. This excess income tax benefit is included in cash flows from financing activities in the Condensed Consolidated Statements of Cash Flows.

Stock Option Awards

A summary of the current year option activity as of September 30, 2014 is presented below.



				Weighted		Aggregate
			Weighted	Average		Intrinsic
			Average	Remaining		Value
			Exercise	Contractual		(Dollars in
	Shares		Price	Term		thousands)
Outstanding and Exercisable at January 1, 2014	18,750	$	10.64	1.3
Granted	-		-	-
Canceled	-		-	-
Exercised	(11,250)		11.67	-
Outstanding and Exercisable at September 30, 2014	7,500	$	9.08	0.6	$	276

At September 30, 2014, common stock options outstanding and exercisable under the Company’s equity plans had option prices ranging from $8.97 to $9.29, with a weighted average exercise price of $9.08. At September 30, 2013, common stock options outstanding and exercisable under the Company’s equity plans had option prices ranging from $7.81 to $14.77, with a weighted average exercise price of $10.64 per share.

The total intrinsic value of stock options outstanding and exercisable at September 30, 2013 was $658.

The weighted average remaining contractual life of the stock options outstanding at September 30, 2014 and 2013 was 0.6 and 1.5 years, respectively.

There were no stock options exercised during the three-month period ended September 30, 2014. There were 11,250 stock options with a weighted average exercise price per share of $11.67 exercised during the nine-month period ended September 30, 2014. There were 3,750 stock options exercised during the three and nine-month periods ending September 30, 2013 with an average exercise price of $9.30.

Restricted Stock Awards and Performance Unit Awards

Under the amended and restated 2006 Omnibus Plan, the Company grants eligible employees Restricted Stock and Performance Unit Awards. The forfeitable Restricted Stock Awards generally time-vest after a four year holding period, unless indicated otherwise by the underlying Restricted Stock Agreement. Performance Unit Awards are offered annually under separate three-year long-term incentive programs. Performance units are subject to forfeiture and will be converted into common stock of the Company based upon the Company’s performance relative to performance measures and conversion multiples as defined in the underlying program. If the Company’s estimate of the number of Performance Stock Awards expected to vest changes in a subsequent accounting period, cumulative compensation expense could increase or decrease. The change will be recognized in the current period for the vested shares and would change future expense over the remaining vesting period.

The following table summarizes the Restricted Stock Award and Performance Unit Award activity for the period ended September 30, 2014:



				Weighted
				Average
	Restricted	Performance		Grant
	Stock	Stock		Date
	Units	Units		Fair Value
Outstanding at January 1, 2014	129,726	61,651	$	34.00
Granted	19,051	34,652		44.07
Vested	(36,302)	(13,588)		33.96
Adjustment for incentive awards expected to vest	-	(7,845)		43.59
Canceled	-	(2,880)		44.13
Outstanding at September 30, 2014	112,475	71,990	$	36.38