The Corporation’s 2007 Stock Incentive Plan and Trust (the Plan), which is shareholder-approved, permits the grant of restricted stock awards and options to its directors, officers and employees for up to 177,496 shares of common stock.  Incentive stock options, non-incentive or compensatory stock options and share awards may be granted under the Plan.  The exercise price of each option shall at least equal the market price of a share of common stock on the date of grant and have a contractual term of ten years.  Options shall vest and become exercisable at the rate, to the extent and subject to such limitations as may be specified by the Corporation.  Compensation expense related to share-based payment transactions must be recognized in the financial statements with measurement based upon the fair value of the equity instruments issued. 

 

During 2013 and 2012, the Corporation granted restricted stock awards of 7,900 and 9,900 shares, respectively, with a face value of $201,000 and $196,000, respectively, based on the weighted-average grant date stock prices of $25.50 and $19.79, respectively.  These restricted stock awards are 100% vested on the third anniversary of the date of grant.  It is the Corporation’s policy to issue shares on the vesting date for restricted stock awards.  There were no stock options granted during 2013 or 2012.  For the year ended December 31, 2013 and 2012 the Corporation recognized $172,000 and $113,000, respectively, in stock compensation expense.

A summary of the status of the Corporation’s nonvested restricted stock awards as of December 31, 2013, and changes during the period then ended is presented below:

 

				Weighted-Average
		Shares		Grant-date Fair Value
Nonvested at January 1, 2013		25,650		$	17.30
Granted		7,900			25.50
Vested		(7,750)			16.33
Forfeited		-			-
Nonvested as of December 31, 2013		25,800		$	20.11

 

A summary of option activity under the Plan as of December 31, 2013, and changes during the period then ended is presented below:

 

										Weighted-Average
				Weighted-Average			Aggregate			Remaining Term
		Options		Exercise Price			Intrinsic Value			(in years)
Outstanding as of January 1, 2013		86,250		$	24.79		$	-		4.9
Granted		-			-			-		-
Exercised		(1,500)			13.50			-		-
Forfeited		(5,500)			25.28			-		-
Outstanding as of December 31, 2013		79,250		$	24.97		$	62,204		3.8
Exercisable as of December 31, 2013		78,750		$	25.03		$	57,510		3.8

 

As of December 31, 2013, there was $353,000 of total unrecognized compensation expense related to nonvested share-based compensation arrangements granted under the Plan.  That expense is expected to be recognized over the next three years.