CHFC 2017 Annual Report

Note 17: Share-Based Compensation The Corporation maintains share-based compensation plans under which it periodically grants share-based awards for a fixed number of shares to certain officers of the Corporation. The fair value of share-based awards is recognized as compensation expense over the requisite service or performance period. During the years ended December 31, 2017, 2016 and 2015, share-based compensation expense related to share-based awards totaled $17.3 million, $14.7 million and $3.7 million, respectively. The excess tax benefit realized from shared-based compensation transactions during the years ended December 31, 2017, 2016 and 2015 was $6.1 million, $2.2 million and $0.5 million, respectively. During the year ended December 31, 2017, the Corporation granted options to purchase 132,414 shares of common stock, 169,252 restricted stock units and 72,537 shares of common stock to certain officers of the Corporation. On April 26, 2017, the shareholders of the Corporation approved the Stock Incentive Plan of 2017, which provides for 1,750,000 shares of the Corporation's common stock to be made available for future equity-based awards and canceled the amount of shares available for future grant under prior share-based compensation plans. At December 31, 2017, there were 1,681,101 shares of common stock available for future grants under the Stock Incentive Plan of 2017. Stock Options The Corporation issues stock options to certain officers from time to time. The exercise price on stock options equals the current market price of the Corporation's common stock on the date of grant and stock options expire ten years from the date of grant. Stock options granted after 2012 vest ratably over a five-year period. Stock options granted prior to 2013 generally vest ratably over a three-year period. Stock options granted prior to 2016 fully vested upon completion of the merger with Talmer. Stock options assumed by the Corporation in the merger with Talmer were fully vested prior to assumption. The following summarizes information about stock options outstanding and exercisable at December 31, 2017: Options outstanding Options exercisable Range of exercise prices per share Number outstanding Weighted average exercise price per share Weighted average contractual term (in years) Number exercisable Weighted average exercise price per share Weighted average contractual term (in years) $11.09 - 12.80 32,691 $ 12.37 2.93 32,691 $ 12.37 2.93 $13.20 - 16.24 136,604 15.94 4.92 136,604 15.94 4.92 $19.97 - 21.10 49,546 20.36 2.62 49,546 20.36 2.62 $23.78 - 25.14 232,582 24.56 4.33 232,582 24.56 4.33 $29.45 - 32.81 537,893 31.68 7.62 290,534 30.72 7.15 $46.95 - 53.72 121,602 53.40 9.25 38,091 53.72 9.23 $11.09 - 53.72 1,110,918 $ 29.56 6.42 780,048 $ 25.99 5.56 The intrinsic value of all outstanding in-the-money stock options and exercisable in-the-money stock options was $26.6 million and $21.4 million, respectively, at December 31, 2017. The aggregate intrinsic values of outstanding and exercisable options at December 31, 2017 were calculated based on the closing market price of the Corporation's common stock on December 31, 2017 of $53.47 per share less the exercise price. Options with intrinsic values less than zero, or "out-of-the-money" options, are not included in the aggregate intrinsic value reported. The total intrinsic value of stock options for the years ended December 31, 2016 and 2015 was $80.4 million and $7.6 million, respectively. Chemical Financial Corporation Notes to Consolidated Financial Statements December 31, 2017 143