CHFC 2017 Annual Report

A summary of activity for the Corporation's stock options as of and during the years ended December 31, 2017, 2016 and 2015 is presented below: stock options outstanding Stock options outstanding Number of options Weighted- average exercise price per share Weighted- average grant date fair value per share Number of options Weighted- average exercise price per share Outstanding at December 31, 2014 432,199 $ 26.75 $ 8.30 1,037,311 $ 25.90 Granted 244,165 30.18 8.40 244,165 30.18 Acquired — — — 132,883 12.93 Exercised — — — (310,985) 25.10 Vested (150,224) 25.57 7.80 — — Forfeited/expired (46,385) 27.99 8.50 (48,635) 28.18 Outstanding at December 31, 2015 479,755 $ 28.75 $ 8.49 1,054,739 $ 25.38 Granted 441,167 32.81 6.15 441,167 32.81 Acquired — — — 1,466,408 15.08 Exercised — — — (450,296) 20.02 Vested (454,360) 28.74 8.49 — — Forfeited/expired (58,623) 31.10 7.17 (58,623) 31.10 Outstanding at December 31, 2016 407,939 $ 32.81 $ 6.15 2,453,395 $ 21.41 Granted 132,414 53.43 9.94 132,414 53.43 Exercised — — — (1,427,159) 17.50 Vested (161,751) 37.73 7.07 — — Forfeited/expired (47,732) 37.55 7.03 (47,732) 37.55 Outstanding at December 31, 2017 330,870 $ 37.97 $ 7.09 1,110,918 $ 29.56 Exercisable/vested at December 31, 2017 780,048 $ 25.99 Total cash received from option exercises during the years ended December 31, 2017, 2016 and 2015 was $3.2 million, $2.7 million and $2.3 million, respectively, resulting in the issuance of 621,355 shares, 229,055 shares and 134,659 shares, respectively. At December 31, 2017, unrecognized compensation expense related to stock options totaled $1.9 million and is expected to be recognized over a remaining weighted average period of 3.5 years. The fair value of the stock options granted during the years ended December 31, 2017, 2016 and 2015 were estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions. 2017 2016 2015 Expected dividend yield 3.31% 3.30% 3.50% Risk-free interest rate 2.05% 1.39% 1.78% Expected stock price volatility 26.7% 27.9% 39.1% Expected life of options — in years 6.0 6.5 7.0 Weighted average fair value of options granted $9.94 $6.15 $8.40 The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant and the expected life of the options granted. Expected stock volatilitywas based on historical volatility of the Corporation's common stock over the expected life of the option. The expected life of options represents the period of time that options granted are expected to be outstanding and is based primarily upon historical experience, including option exercise behavior. Chemical Financial Corporation Notes to Consolidated Financial Statements December 31, 2017 144