Stock-Based Compensation

The Company's 2018 Stock Incentive Plan (the "2018 Plan") was adopted by the Board of Directors of the Company on February 20, 2018 and approved by shareholders on May 15, 2018 at the Company's 2018 Annual Meeting of Shareholders. The 2018 Plan provides for the granting of restricted stock awards, incentive and non-statutory options, and other equity-based awards to employees and directors at the discretion of the Compensation Committee of the Board of Directors. The 2018 Plan authorizes the issuance of up to 675,000 shares of common stock. The 2018 Plan replaced the Company's stock incentive plan that was approved by the shareholders at the 2008 Annual Meeting that expired in February 2018 (the "2008 Plan").

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, 2018 is as follows:



	Option Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value ($000)
Outstanding at December 31, 2017	50,985		$	24.09
Granted	—		—
Exercised	(35,310	)	24.37
Forfeited	—		—
Expired	(2,475	)	31.31
Outstanding at December 31, 2018	13,200		$	21.97	0.05 years	$	97
Exercisable at December 31, 2018	13,200		$	21.97	0.05 years	$	97

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, 2018. 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 years ended December 31, 2018, 2017, and 2016 were $861,000, $113,000, and $142,000, respectively. Total intrinsic value of options exercised during the years ended December 31, 2018, 2017, and 2016 was $732,000, $287,000, and $11,000, respectively.

As of December 31, 2018, 2017, and 2016, 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, 2018:



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	13,200	0.05 years	$	21.97

No stock options were granted in 2018, 2017 and 2016.

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 2018 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, 2018 is summarized in the following table:



Restricted Stock	Shares		Weighted Average Grant Date Value
Nonvested at December 31, 2017	46,501		$	26.28
Granted	19,492		39.38
Vested	(12,712	)	23.50
Forfeited	(483	)	34.70
Nonvested at December 31, 2018	52,798		31.71

As of December 31, 2018, 2017, and 2016, there was $647,000, $538,000, and $568,000, respectively, in unrecognized compensation cost related to nonvested restricted stock granted under the 2008 Plan and the 2018 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 $610,000, $532,000, and $444,000 during 2018, 2017, and 2016, 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 immediately vested, but restricted stock, with a market value of $7,500. Monthly meeting fees can be received as $725 per meeting in cash or $900 in immediately vested, but restricted stock. For 2018, 12 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 15,471, 13,093 and 13,166 shares and recognized share based compensation expense of $586,000, $484,000, and $380,000 during 2018, 2017 and 2016, respectively.