CHFC 2018 Annual Report

A summary of activity for the Corporation's stock options as of and during the years ended December 31, 2018, 2017 and 2016 is presented below: Non-vested 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, 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 Exercised — — — (302,796) 24.00 Vested (78,533) 37.16 6.94 — — Forfeited/expired (30,679) 37.20 6.97 (30,679) 37.20 Outstanding at December 31, 2018 221,658 $ 38.37 $ 7.16 777,443 $ 31.42 Exercisable/vested at December 31, 2018 555,785 $ 28.65 Total cash received from option exercises during the years ended December 31, 2018, 2017 and 2016 was $2.6 million, $3.2 million and $2.7 million, respectively, resulting in the issuance of 179,887 shares, 621,355 shares and 229,055 shares, respectively. At December 31, 2018, unrecognized compensation expense related to stock options totaled $1.2 million and is expected to be recognized over a remaining weighted average period of 2.6 years. The fair value of the stock options granted during the years ended December 31, 2017 and 2016 were estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions. The Corporation did not grant any stock options during the year ended December 31, 2018. 2017 2016 Expected dividend yield 3.31% 3.30% Risk-free interest rate 2.05% 1.39% Expected stock price volatility 26.7% 27.9% Expected life of options — in years 6.0 6.5 Weighted average fair value of options granted $ 9.94 $ 6.15 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. Because of the unpredictability of the assumptions required, the Black-Scholes (or any other valuation) model is incapable of accurately predicting the Corporation's common stock price or of placing an accurate present value on options to purchase its Chemical Financial Corporation Notes to Consolidated Financial Statements December 31, 2018 151