Stock-Based Compensation

The Company's 2008 Stock Incentive Plan ("2008 Plan") was adopted by the Board of Directors of the Company on February 19, 2008 and approved by shareholders on April 22, 2008 at the Company's 2008 Annual Meeting of Shareholders. Until its expiration date on February 18, 2018, the 2008 Plan provided for the granting of restricted stock awards, incentive and non-statutory options to employees and directors on a periodic basis, at the discretion of the Board of Directors or a Board designated committee. The 2008 Plan authorized the issuance of up to 500,000 shares of common stock. The 2008 Plan replaced the Company's stock option plan that was approved by the shareholders at the 1997 Annual Meeting, which terminated in 2006. The 2008 Plan terminated in February 2018. The Board will be proposing a 2018 Equity Compensation Plan for shareholder approval at the upcoming Annual Meeting.

Stock Options

Accounting guidance requires that compensation cost relating to share-based payment transactions be recognized in the financial statements with measurement based upon the fair value of the equity or liability instruments issued.

A summary of stock option transactions for the year ended December 31, 2017 is as follows:



	Option Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value ($000)
Outstanding at December 31, 2016	58,411		$	24.37
Replacement stock options	—		—
Granted	—		—
Exercised	(4,950	)	22.93
Forfeited	(578	)	23.33
Expired	(1,898	)	36.08
Outstanding at December 31, 2017	50,985		$	24.09	0.79 years	$	725
Exercisable at December 31, 2017	50,985		$	24.09	0.79 years	$	725

The aggregate intrinsic value of stock options in the table above represents the total pre-tax intrinsic value (the amount by which the current fair value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on December 31, 2017. This amount changes based on changes in the fair value of the Company's common stock.

The total proceeds of the in-the-money options exercised during the year ended December 31, 2017, 2016, and 2015 were $113,000, $142,000, and $789,000, respectively. Total intrinsic value of options exercised during years ended December 31, 2017, 2016, and 2015 was $287,000, $11,000, and $220,000, respectively.

As of December 31, 2017, 2016, and 2015, there was no recognized or unrecognized compensation expense attributable to the outstanding stock options.

The following table summarizes information related to stock options outstanding on December 31, 2017:



Options Outstanding and Exercisable
Range of Exercise Prices	Number of Outstanding Options	Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price
$20.00 to $25.00	27,060	1.04 years	$	22.10
$25.01 to $30.00	22,275	0.55	25.82
$30.01 to $41.67	1,650	0.01	33.33
	50,985	0.79 years	$	24.09

No stock options were granted in 2017, 2016 and 2015.

Restricted Stock

The Company from time-to-time grants shares of restricted stock to key employees and non-employee directors. These awards help align the interests of these employees and directors with the interests of the shareholders of the Company by providing economic value directly related to increases in the value of the Company's common stock. The value of the stock awarded is established as the fair market value of the stock at the time of the grant. The Company recognizes expense, equal to the total value of such awards, ratably over the vesting period of the stock grants. Restricted stock granted in 2017 cliff vests at the end of a 36-month period beginning on the date of grant. Nonvested restricted stock activity for the year ended December 31, 2017 is summarized in the following table:



Restricted Stock	Shares		Weighted Average Grant Date Value
Nonvested at December 31, 2016	50,822		$	23.21
Granted	14,453		34.74
Vested	(18,774	)	24.49
Forfeited	—		—
Nonvested at December 31, 2017	46,501		26.28

As of December 31, 2017, 2016, and 2015, there was $538,000, $568,000, and $340,000, respectively, in unrecognized compensation cost related to nonvested restricted stock granted under the 2008 Plan. This cost is expected to be recognized over the next 12 to 36 months. The share based compensation expense for nonvested restricted stock was $532,000, $444,000, and $322,000 during 2017, 2016, and 2015, respectively.

Starting in 2010, the Company began offering its outside directors alternatives with respect to director compensation. The regular monthly board retainer can be received quarterly in the form of either (i) $5,800 in cash or (ii) shares of immediately vested, but restricted stock, with a market value of $6,250. Monthly meeting fees can also be received as $725 per meeting in cash or $900 in immediately vested, but restricted stock. For 2017, 11 of the 13 outside directors elected to receive stock in lieu of cash for either all of part of their retainer or meeting fees. Only outside directors receive board fees. The Company issued 13,093, 13,166 and 11,228 shares and recognized share based compensation expense of $484,000, $380,000, and $275,000 during 2017, 2016 and 2015, respectively.

During 2015, 4,158 shares with a market value of $95,000 were issued to a retired director as payment for cumulative deferred director compensation.