9. STOCK BASED COMPENSATION

The Company established the 2015 Award and Option Plan (the “2015 Plan”) for the purpose of attracting and retaining the Company’s executive officers and other key employees. There are 841,500 shares authorized for issuance under the 2015 Plan. The exercise price for qualified incentive stock options must be at least equal to the fair market value of the common shares at the date of grant. As of December 31, 2021, there were no options outstanding under the 2015 Plan and options for 170,111 shares of common stock were available for future issuance. The Company may also grant other stock-based awards under the 2015 Plan, including restricted stock and performance-based awards.

The Company also established the 2009 Outside Directors’ Stock Option and Award Plan (the “2009 Directors’ Plan”) for the purpose of attracting and retaining the services of experienced and knowledgeable outside directors. Prior to April 1, 2016, the 2009 Directors’ Plan provided for the granting of options to purchase shares of common stock to eligible directors. The issuance of stock options to directors was discontinued in 2016. In addition, each outside director received non-vested shares annually equal to 80% of the annual fees paid to them. As of December 31, 2021, options for 24,750 common shares were outstanding under the 2009 Directors’ Plan.

The 2009 Directors’ Plan expired on May 21, 2020 and was replaced by the 2020 Outside Directors’ Stock Award Plan (the “2020 Directors’ Plan”) which provides for the issuance of shares of restricted stock to eligible directors. Such non-vested shares vest over a one-year period. Dividends payable with respect to the restricted stock are accumulated during the vesting period and paid to the respective directors only upon vesting of the restricted stock. There are 150,000 shares authorized for issuance under the 2020 Directors’ Plan. During 2021, 4,416 non-vested shares were issued to outside directors, of which certain directors elected to defer a total of 3,054 shares, and as of December 31, 2021, 131,810 shares of common stock were available for future issuance. As of December 31, 2021, 15,137 of non-vested shares were outstanding under the 2020 Directors’ Plan.

The intrinsic value of stock options exercised during the year ended December 31, 2019 was $0.1 million.

Proceeds from stock options exercised during the year ended December 31, 2019 totaled $0.5 million.

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock at December 31, 2021, or the price on the date of exercise for those exercised during the year. The weighted average remaining contractual life of all outstanding options, which are all exercisable, is 2.4 years.

Non-vested stock

The Company has also issued shares of non-vested stock to employees which vest over two- to eight-year periods. During the restriction period, the non-vested shares may not be sold, transferred, or otherwise encumbered. The holder of the non-vested shares has all rights of a holder of common shares, including the right to vote and receive dividends. For issuances of non-vested stock during the year ended December 31, 2021, the fair market value of the non-vested stock on the date of grant ranged from $84.06 to $144.63. During 2021, 55,433 shares of non-vested stock were issued to employees and directors with an aggregate fair value of $6.4 million. The Company charges the fair value ratably to expense over the vesting period. The Company uses the average of the high and low price of its common stock on the date the award is granted as the fair value for non-vested stock awards that do not have a market condition.

Compensation expense of $6.6 million, $4.6 million, and $4.2 million was recognized for the vested portion of non-vested stock grants in 2021, 2020, and 2019, respectively. The fair value of non-vested stock that vested during 2021, 2020, and 2019 was $4.1 million, $2.9 million, and $3.2 million, respectively. The total unrecognized compensation cost related to non-vested stock was $11.2 million at December 31, 2021, and the remaining weighted-average period over which this expense will be recognized was 4.0 years.

Performance-based awards

During 2021, 2020 and 2019, the Company granted performance-based awards that entitle the recipients to earn up to 53,034, 70,272 and 59,634 shares, respectively, if certain performance criteria are achieved over a three-year period. The actual number of shares to be issued will be determined at the end of the three-year period. The Company issued 53,680, 53,541, and 22,331 performance-based shares in 2021, 2020, and 2019, respectively. The performance-based shares issued are based upon the Company’s performance over a three-year period depending on the Company’s total shareholder return relative to a group of peer companies. Performance-based awards are recognized as compensation expense based on the fair value of the awards on the date of grant, the number of shares ultimately expected to vest and the vesting period of the awards. For accounting purposes, the performance shares are considered to have a market condition. The effect of the market condition is reflected in the grant date fair value of the award and thus, compensation expense is recognized on this type of award provided that the requisite service is rendered (regardless of whether the market condition is achieved). The Company estimated the fair value of each performance-based award granted under the Plans on the date of grant using a Monte Carlo simulation that uses the assumptions discussed in Note 2.

During 2021, compensation expense of $2.3 million (included in the $6.6 million discussed above) was recognized for performance awards granted in 2021 and prior. The total unrecognized compensation cost related to non-vested performance awards was $5.5 million at December 31, 2021 and the weighted-average period over which this expense will be recognized is 2.3 years.

Deferred compensation plan for Directors

Under the Deferred Compensation Plan for Directors, non-employee Directors may defer all or part of their Directors’ fees that are otherwise payable in cash. Directors’ fees that are deferred under this plan are credited to each Directors’ account under the plan in the form of Units. The number of Units credited is determined by dividing the amount of Directors’ fees deferred by the closing price of the Company’s Common Stock on the New York Stock Exchange on the day immediately preceding the day upon which Directors’ fees otherwise would be paid by the Company. A Director is credited with additional Units for dividends on the shares of Common Stock represented by Units in such Directors’ account. A Director may elect to receive the shares in a lump sum on a date specified by the Director or in quarterly or annual installments over a specified period and commencing on a specified date. The Directors may not elect to receive cash in lieu of shares. Under this plan there were a total of 35,135 units outstanding at December 31, 2021. During 2021, non-employee directors elected to defer fees totaling $117,000. No fees were elected to be deferred by any non-employee Directors in 2020 or 2019.