NOTE 15 – STOCK COMPENSATION EXPENSE

From time to time the Company grants stock options to its employees. The Company estimates the fair value of the options at the time they are granted to employees and expenses that fair value over the vesting period of the option grant. In 2012, the Company registered 687,500 shares of its common stock to be reserved for stock based incentive programs over the subsequent 10 years (“the 2012 Long-term Incentive Plan”).

On March 20, 2019, 72,075 incentive stock options were granted out of the 2012 Long Term Incentive Plan at an exercise price of $15.57, the closing market price of Premier’s common stock on the grant date. These options vest in three equal annual installments ending on March 20, 2022. On March 21, 2018, 67,875 incentive stock options were granted out of the 2012 Long Term Incentive Plan at an exercise price of $15.12, the closing market price of Premier’s common stock on the grant date. These options vest in three equal annual installments ending on March 21, 2021. On March 15, 2017, 69,375 incentive stock options were granted out of the 2012 Long Term Incentive Plan at an exercise price of $15.21, the closing market price of Premier’s common stock on the grant date. These options vest in three equal annual installments ending on March 15, 2020.

The fair value of the Company's employee stock options granted is estimated at the date of grant using the Black-Scholes option-pricing model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. Additionally, there may be other factors that would otherwise have a significant effect on the value of employee stock options granted but are not considered by the model. The assumptions used in the Black-Scholes option-pricing model are as follows

	2019			2018			2017
Risk-free interest rate		2.34	%		2.69	%		2.02	%
Expected option life (yrs)		5.42			5.37			5.36
Expected stock price volatility		28.45	%		22.47	%		18.40	%
Dividend yield		3.85	%		3.17	%		3.16	%
Weighted average fair value of options granted during the year	$	2.91		$	2.49		$	2.32

The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield in effect at the time of the grant. The expected option life for the 2019, 2018, and 2017 grants were estimated based upon the weighted-average life of options exercised since January 1, 2012. The expected stock price volatility is based on historical volatilities of the Company’s common stock during the three-year period prior to the grant date. The dividend yield was estimated by annualizing the current quarterly dividend on the Company’s common stock at the time of the option grant.

On April 17, 2019, 7,500 shares of Premier’s common stock were granted to President and CEO, Robert W. Walker as stock-based bonus compensation under the 2012 Long-term Incentive Plan. The fair value of the stock at the time of the grant was $16.78 per share based upon the closing price of Premier’s stock on the date of grant and $126 of stock-based compensation was recorded as a result.

On April 25, 2018, 7,500 shares of Premier’s common stock were granted to President and CEO, Robert W. Walker as stock-based bonus compensation under the 2012 Long-term Incentive Plan. The fair value of the stock at the time of the grant was $15.82 per share based upon the closing price of Premier’s stock on the date of grant and $119 of stock-based compensation was recorded as a result.

On April 19, 2017, 7,500 shares of Premier’s common stock were granted to President and CEO, Robert W. Walker as stock-based bonus compensation under the 2012 Long-term Incentive Plan. The fair value of the stock at the time of the grant was $16.56 per share based upon the closing price of Premier’s stock on the date of grant and $124 of stock-based compensation was recorded as a result.

Compensation expense of $301, $252, and $217 was recorded for the years ended December 31, 2019, 2018, and 2017, respectively. Stock-based compensation expense is recognized ratably over the requisite service period for all awards. Unrecognized stock-based compensation expense related to stock options totaled $129 at December 31, 2019. This unrecognized expense is expected to be recognized over the next 26 months based on the vesting periods of the options.

During the year ending December 31, 2019, 26,979 options were exercised while 28,151 options were exercised during the year ending December 31, 2018 and 40,364 options were exercised during the year ending December 31, 2017.

A summary of the Company’s stock option activity is as follows:

	2019					2018					2017
				Weighted Average Exercise					Weighted Average Exercise					Weighted Average Exercise
	Options			Price		Options			Price		Options			Price
Outstanding at beginning of year		298,383		$	11.66		262,811		$	10.63		254,988		$	9.23
Grants		72,075			15.57		67,875			15.12		69,375			15.21
Exercises		(26,979	)		10.13		(28,151	)		10.12		(40,364	)		9.10
Forfeitures or expired		(10,838	)		14.21		(4,152	)		13.91		(21,188	)		11.71
Outstanding at year-end		332,641		$	12.54		298,383		$	11.66		262,811		$	10.63

Exercisable at year-end		200,123		$	10.67		172,577		$	9.55		145,134		$	8.53
Weighted average remaining life		5.0					5.2					4.3

Options outstanding at year-end are expected to fully vest.

Additional information regarding stock options outstanding and exercisable at December 31, 2019 is provided in the following table:

		Outstanding						Currently Exercisable
Range of Exercise Prices		Number		Weighted Average Exercise Price		Aggregate Intrinsic Value		Number		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Aggregate Intrinsic Value

$	4.00 to $6.00		32,276	$	5.28	$	415		32,276		1.8	$	5.28	$	415
$	6.01 to $8.00		4,814		6.47		56		4,814		0.2		6.47		56
$	8.01 to $10.00		15,715		8.28		155		15,715		3.2		8.28		155
$	10.01 to $12.00		96,595		10.70		719		96,595		5.3		10.70		719
$	12.01 to $16.00		183,241		15.32		517		50,723		8.3		15.18		150
Outstanding at Dec 31, 2019			332,641		12.54	$	1,862		200,123		6.5		10.67	$	1,495