STOCK BASED COMPENSATION
 12 Months Ended
Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION
 
During 2008, the Company’s Board of Directors and shareholders approved the 2008 Stock Awards and Incentive Plan (the “Plan”) covering certain key employees to purchase shares of the Company’s stock. The Plan was amended in 2015 as the shareholders authorized a maximum aggregate number of shares of stock to be issued of 1,460,000, any or all of which may be issued through incentive stock options. The Company accounts for stock based employee compensation plans using the fair value-based method of accounting.  The Company recognized total stock based compensation expense of $1.5 million, $1.4 million and $731 thousand for the years ended December 31, 2016, 2015 and 2014, respectively.
 
Stock Options
 
Options to purchase a total of 1,240,431 shares of Company stock have been granted as of December 31, 2016. Under the Plan, options are exercisable up to 10 years from the date of the grant, unless otherwise provided by the Board of Directors and are fully vested 4 years after the date of grant. The fair value of stock options granted is estimated at the date of grant using the Black-Scholes option-pricing model. The expected volatility was determined based on historical volatilities of Allegiance's common stock. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding and takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

The Black-Scholes pricing model utilizes certain assumptions noted in the table below.
 
2016
 
2015
 
2014
Risk-free interest rate
1.76
%
 
1.99
%
 
2.70
%
Expected term
10.00

 
10.00

 
10.00

Expected stock price volatility
34.60
%
 
18.06
%
 
17.72
%
Dividend yield
—

 
—

 
—


 
A summary of the activity in the stock option plan during the years ended December 31, 2016 and 2015 is set forth below:  
 
Number of
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual Term
 
Aggregate
Intrinsic
Value
 
(In thousands)
 
 
 
(In years)
 
(In thousands)
Options outstanding, January 1, 2015
694

 
$
15.60

 
6.57
 
$
4,437

Options granted
299

 
22.09

 
 
 
 

Options exercised
—

 
 N/A

 
 
 
 

Options forfeited
(24
)
 
22.00

 
 
 
 

Options outstanding, December 31, 2015
969

 
$
17.45

 
6.62
 
$
6,006

Options granted
107

 
22.83

 
 
 
 

Options exercised
(116
)
 
15.42

 
 
 
 

Options forfeited
(25
)
 
21.56

 
 
 
 

Options outstanding, December 31, 2016
935

 
$
18.21

 
6.23
 
$
16,773

Options vested and exercisable, December 31, 2016
525

 
$
15.45

 
4.66
 
$
10,863



The Company expects all outstanding options at December 31, 2016 to vest.
 
Information related to the stock option plan during each year is as follows:
 
2016
 
2015
 
2014
 
(In thousands)
Intrinsic value of options exercised
$
1,128

 
$
—

 
$
202

Cash received from option exercises
1,782

 
—

 
407

Weighted average fair value of options granted
$
10.51

 
$
6.78

 
$
6.79



As of December 31, 2016, there was $2.2 million of total unrecognized compensation cost related to nonvested stock options granted under the Plan. The cost is expected to be recognized over a weighted-average period of 1.99 years.
 
Restricted Stock Awards
 
The Company has issued 76,356 restricted stock awards under the Plan as of December 31, 2016. During 2014, the Company issued 8,385 shares of restricted stock with a grant date fair value of $20.34 per share. During 2015, the Company awarded 3,983 shares of restricted stock with a grant date fair value of $22.00. During 2016, the Company awarded 15,401 shares of restricted stock with a weighted average grant date fair value of $17.52. The restricted stock shares will vest over a period of 4 years but are considered outstanding at the date of issuance. The Company accounts for restricted stock grants by recording the fair value of the grant as compensation expense over the vesting period.
 









A summary of the activity of the nonvested shares of restricted stock as of December 31, 2016 and 2015 including changes during the years then ended is as follows:
 
Number of
Shares
 
Weighted
Average Grant
Date Fair
Value
 
(Shares in thousands)
Nonvested share awards outstanding, January 1, 2015
27

 
$
18.23

Share awards granted
4

 
22.00

Share awards vested
(13
)
 
17.34

Unvested share awards forfeited
—

 
—

Nonvested share awards outstanding, December 31, 2015
18

 
19.68

Share awards granted
15

 
17.52

Share awards vested
(9
)
 
19.45

Unvested share awards forfeited
—

 
—

Nonvested share awards outstanding, December 31, 2016
24

 
$
18.31



At December 31, 2016, there was $258 thousand of unrecognized compensation expense related to the restricted stock awards which is expected to be recognized over a remaining period of 2.85 years. The total fair value of restricted stock awards that fully vested during the years ended December 31, 2016, 2015 and 2014 was approximately $172 thousand, $220 thousand and $200 thousand, respectively.