STOCK BASED COMPENSATION

LCNB established an Ownership Incentive Plan (the "2002 Plan") during 2002 that allowed for stock-based awards to eligible employees, as determined by the Board of Directors. The awards were in the form of stock options, share awards, and/or appreciation rights. The 2002 Plan provided for the issuance of up to 200,000 shares. The 2002 Plan expired on April 16, 2012. Any outstanding unexercized options, however, continue to be exercisable in accordance with their terms.

The 2015 Ownership Incentive Plan (the "2015 Plan") was ratified by LCNB's shareholders at the annual meeting on April 28, 2015 and allows for stock-based awards to eligible employees, as determined by the Compensation Committee of the Board of Directors. Awards may be made in the form of stock options, appreciation rights, restricted shares, and/or restricted share units. The 2015 Plan provides for the issuance of up to 450,000 shares. The 2015 Plan will terminate on April 28, 2025 and is subject to earlier termination by the Compensation Committee.

Stock-based awards may be in the form of treasury shares or new shares.

LCNB has not granted stock options since 2012. Option awards granted to date under the 2002 Plan vest ratably over a five year period and expire ten years after the date of grant. Stock options outstanding at December 31, 2015 were as follows:



	Outstanding Stock Options				Exercisable Stock Options
Exercise Price Range	Number	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Number	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
$9.00 - 10.99	17,633	$	9.00	3.1	17,633	$	9.00	3.1
$11.00 - 12.99	53,266	12.04		4.6	44,477	12.00		4.4
$17.00 - 18.99	12,962	18.41		0.6	12,962	18.41		0.6
	83,861	12.39		3.7	75,072	12.40		3.4

The following table summarizes stock option activity for the years indicated:



	2015			2014				2013
	Options		Weighted Average Exercise Price	Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price
Outstanding at January 1,	99,810		12.16	104,966		$	12.43	110,586		$	12.42
Granted	—		—	—		—		—		—
Exercised	(13,449	)	11.31	—		—		(5,620	)	12.32
Expired	(2,500	)	9.00	(5,156	)	17.66		—		—
Outstanding at December 31,	83,861		12.39	99,810		12.16		104,966		12.43
Exercisable at December 31,	75,072		12.40	79,909		12.18		67,899		12.86

The following table provides information related to stock options exercised during the years indicated (in thousands):



	2015		2014	2013
Intrinsic value of options exercised	$	67	—	41
Cash received from options exercised	152		—	70
Tax benefit realized from options exercised	13		—	12

The aggregate intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) for options outstanding at December 31, 2015 that were “in the money” (market price greater than exercise price) was $360,000. The aggregate intrinsic value at that date for only the options that were exercisable was $324,000. The aggregate intrinsic value for options outstanding at December 31, 2014 that were in the money was $334,000 and the aggregate intrinsic value at that date for only the options that were exercisable was $274,000.The intrinsic value changes based on changes in the market value of the Company’s stock.

Total expense related to options included in salaries and wages in the consolidated statements of income for the years ended December 31, 2015, 2014, and 2013 was $19,000, $24,000, and $37,000, respectively. The related tax benefit for 2015, 2014, and 2013 was $6,000, $8,000, and $13,000, respectively. Total compensation cost related to option awards to be recognized through the first quarter of 2017 is approximately $6,000.

Restricted stock awards granted under the 2015 Plan were as follows:



	2015
	Shares	Weighted Average Grant Date Fair Value
Outstanding at January 1,	—	$	—
Granted	16,038	15.47
Vested	—	—
Forfeited	—	—
Outstanding at December 31,	16,038	$	15.47

Total expense related to restricted stock awards included in salaries and wages in the consolidated statements of income for the year ended December 31, 2015 was $90,000 and the related tax benefit was $31,000. Unrecognized compensation expense for restricted stock awards was $158,000 at December 31, 2015 and is expected to be recognized over a period of five years.