The 2013 Stock Option and Incentive Plan (the “2013 Plan”) was approved by shareholders on April 23, 2013. Under the 2013 Plan, the maximum number of shares of the Bancorp’s common stock to be issued is 1,748,250. The 2013 Plan permits the granting of stock options and other equity incentives to officers, employees, directors and other key persons.

The 2003 Stock Incentive Plan (the “2003 Plan”) was amended and restated and approved by shareholders in April 2009. Under the 2003 Plan, as amended and restated, the maximum number of shares of Bancorp’s common stock to be issued was 1,200,000 shares and the number of shares that could be issued in the form of awards other than stock options or stock appreciation rights was 400,000. The 2003 Plan permitted the granting of stock options and other equity incentives to officers, employees, directors and other key persons until the 2003 Plan’s expiration on April 28, 2019.

The exercise price of each stock option may not be less than the fair market value of the Bancorp’s common stock on the date of grant, and options shall have a term of no more than ten years. Stock options are designated as either non-qualified or incentive stock options. In general, the stock option price is payable in cash, by the delivery of shares of common stock already owned by the grantee, or a combination thereof. With respect only to non-qualified stock option grants issued under the 2013 Plan, the exercise may also be accomplished by withholding the exercise price from the number of shares that would otherwise be delivered upon a cash exercise of the option.

Performance share awards are granted in order to provide certain key employees of the Corporation the opportunity to earn shares of common stock, the number of which is determined pursuant to, and subject to the attainment of, performance goals during a specified measurement period. The number of shares vested and earned will be contingent upon the Corporation’s attainment of certain performance measures as detailed in the performance share award agreements.

Vesting of stock options and share awards may accelerate or may be subject to proportional vesting if there is a change in control, disability, retirement or death (as defined in the 2013 Plan and the 2003 Plan).

The following table presents share-based compensation expense and the related income tax benefits recognized in the Consolidated Statements of Income for stock options, nonvested share units and nonvested performance share units:



(Dollars in thousands)
Years ended December 31,	2019		2018		2017
Share-based compensation expense		$3,124		$2,602		$2,577
Related income tax benefits (1)		$982		$1,108		$1,114

As of December 31, 2019, there was $5.0 million of total unrecognized compensation cost related to share-based compensation arrangements, including stock options, nonvested share units and performance share units granted under the Plans. That cost is expected to be recognized over a weighted average period of 2.01 years.

Washington Trust uses historical data to estimate stock option exercise and employee departure behavior in the option-pricing model. The expected term of options granted was derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. Expected volatility was based on historical volatility of Washington Trust shares. The risk-free rate for periods within the contractual life of the stock option was based on the U.S. Treasury yield curve in effect at the date of grant.

The following presents the assumptions used in determining the grant date fair value of the stock option awards granted to certain key employees:



	2019		2018		2017
Options granted	61,800		47,950		47,725
Cliff vesting period (years)	3		3		3
Expected term (years)	6.5		6.5		7.0
Expected dividend yield	3.40	%	3.39	%	3.57	%
Weighted average expected volatility	23.05	%	22.73	%	27.10	%
Weighted average risk-free interest rate	1.71	%	3.14	%	1.70	%
Weighted average grant-date fair value	$7.44		$9.74		$10.60

The following table presents a summary of the status of Washington Trust’s stock options outstanding as of and for the year ended December 31, 2019:



	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (000’s)
Beginning of period	222,615			$42.92
Granted	61,800		48.65
Exercised	(35,600	)	35.70
Forfeited or expired	—		—
End of period	248,815			$45.38	7.27		$2,308
At end of period:
Options exercisable	95,240			$33.57	4.71		$1,926
Options expected to vest in future periods	153,575			$52.70	8.85		$382

The total intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date.



	Options Outstanding				Options Exercisable
Exercise Price Ranges	Number of Shares	Weighted Average Remaining Life (Years)	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
$15.01 to $20.00	4,100	0.42		$17.52	4,100		$17.52
$20.01 to $25.00	22,015	2.14	22.89		22,015	22.89
$25.01 to $30.00	—	—	—		—	—
$30.01 to $35.00	19,775	4.16	32.76		19,775	32.76
$35.01 to $40.00	22,100	5.72	39.22		18,100	39.55
$40.01 to $45.00	31,250	6.80	40.25		31,250	40.25
$45.01 to $50.00	61,800	9.80	48.65		—	—
$50.01 to $55.00	47,950	8.80	54.74		—	—
$55.01 to $60.00	39,825	7.80	58.05		—	—
	248,815	7.27		$45.38	95,240		$33.57

The total intrinsic value of stock options exercised during the years ended December 31, 2019, 2018 and 2017 was $580 thousand, $833 thousand and $1.0 million, respectively.

In 2019, 2018 and 2017, the Corporation granted to directors and certain key employees 26,070, 13,430 and 15,900 nonvested share units, respectively, with 3- to 5-year cliff vesting.

The following table presents a summary of the status of Washington Trust’s nonvested share units as of and for the year ended December 31, 2019:



	Number of Shares		Weighted Average Grant Date Fair Value
Beginning of period	45,350			$48.73
Granted	26,070		49.81
Vested	(17,530	)	40.26
Forfeited	—		—
End of period	53,890			$52.01

The Corporation granted performance share units to certain key employees providing the opportunity to earn shares of common stock over a 3- to 5-year performance period.



		Grant Date Fair Value per Share	Weighted Average Current Performance Assumption	Expected Number of Shares
Performance share units awarded in:	2019	$52.84	138%	43,360
	2018	54.25	140%	41,454
	2017	51.85	150%	24,150
Total				108,964

The following table presents a summary of the status of Washington Trust’s performance share units as of and for the year ended December 31, 2019:



	Number of Shares		Weighted Average Grant Date Fair Value
Beginning of period	93,604			$48.20
Granted	43,360		52.84
Vested	(28,239	)	36.11
Forfeited	239		36.11
End of period	108,964			$53.16