Stock-Based Compensation

Pursuant to the Company’s

2005

Incentive Plan, as amended and restated, the Company

may

grant incentive stock options (employees only), non-statutory stock options, common stock awards, restricted stock, RSUs, stock appreciation rights and cash awards to non-employee directors and eligible employees.

There were

35,880

stock option shares exercised in the

three

months ended

March 31, 2018

with

stock options outstanding thereafter. The Company received

$838

thousand from the exercise of stock options for

35,880

shares at

$23.37

per share which had an aggregate intrinsic value of

$718

thousand in the

three

months ended

March 31, 2018.

RSUs are granted at

cost to the recipient. RSUs generally vest ratably over

three

years or cliff vest after

one

three

years of continued employment from the date of the grant. While a portion of RSUs are time-vesting awards, others vest subject to the attainment of specified performance goals and are referred to as “performance-based RSUs.” All RSUs are subject to forfeiture until vested.

Performance-based RSUs are granted at the target amount of awards. Based on the Company’s attainment of specified performance goals and consideration of market conditions, the number of shares that vest can be adjusted to a minimum of

zero

and to a maximum of

150%

of the target. The amount of performance-based RSUs that are eligible to vest is determined at the end of each performance period and is then added together to determine the total number of performance shares that are eligible to vest. Performance-based RSUs generally cliff vest

three

years from the date of grant.

Compensation costs for the time-based awards are based on the quoted market price of the Company’s stock at the grant date. Compensation costs associated with performance-based RSUs are based on grant date fair value, which considers both market and performance conditions. Compensation costs of both time-based and performance-based awards are recognized on a straight-line basis from the grant date until the vesting date of each grant.

The following table presents RSU activity during the

three

months ended

March 31, 2019:

	Time-Based RSUs					Performance-Based RSUs
				Weighted-Average					Weighted-Average
				Grant Date					Grant Date
	Shares			Fair Value		Shares			Fair Value
Balance at December 31, 2018		284,493		$	35.79		265,659		$	32.90
Granted		18,818			38.36		—			—
Vested		(21,040	)		36.03		(57,409	)		38.36
Forfeited		(8,923	)		37.12		—			—
Balance at March 31, 2019		273,348		$	35.91		208,250		$	31.39

The compensation expense recorded for RSUs was

$1.5

million for the

three

months ended

March 31, 2019

and

2018,

respectively. Unrecognized stock-based compensation expense related to RSUs was

$8.6

million and

$15.1

million as of

March 31, 2019

and

2018,

respectively. As of

March 31, 2019,

these costs are expected to be recognized over the next

1.6

years for time-based and performance-based RSU’s.

As of

March 31, 2019,

2,605,454

shares were available under the Company’s

2005

Incentive Plan, as amended and restated, for future grants.

Tax benefit from share-based payment arrangements reduced income tax expense by

$0.5

million and

$0.7

million in the

three

months ended

March 31, 2019

and

2018,

respectively.