Stock Based Compensation

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Based Compensation

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 made 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 unexercised 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 option awards since 2012. Options 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 June 30, 2016 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	2.6	17,633	$	9.00	2.6
$11.00 - $12.99	53,266	12.04		4.1	51,521	12.03		4.0
$17.00 - $18.99	5,160	17.88		0.6	5,160	17.88		0.6
	76,059	11.73		3.5	74,314	11.71		3.4

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

	2016				2015
	Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price
Outstanding, January 1,	83,861		$	12.39	99,810		$	12.16
Granted	—		—		—		—
Exercised	—		—		(13,449	)	11.31
Expired	(7,802	)	18.76		(2,500	)	9.00
Outstanding, June 30,	76,059		11.73		83,861		12.39
Exercisable, June 30,	74,314		11.71		75,072		12.40

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 June 30, 2016 that were "in the money" (market price greater than exercise price) was $320,000.  The aggregate intrinsic value at that date for only the options that were exercisable was $314,000.  The aggregate intrinsic value for options outstanding at June 30, 2015 that were in the money was $349,000 and the aggregate intrinsic value at that date for only the options that were exercisable was $314,000.  The intrinsic value changes based upon fluctuations in the market value of LCNB's common stock.

Total expense related to options included in salaries and employee benefits for the three and six months ended June 30, 2016 was $1,000 and $2,000, respectively. The related tax benefit for the three and six months ended June 30, 2016 was $0 and $1,000, respectively. Total expense related to options included in salaries and employee benefits for the three and six months ended June 30, 2015 was $3,000 and $10,000, respectively. The related tax benefit for the three and six months ended June 30, 2015 was $1,000 and $3,000, respectively. Unrecognized compensation cost related to option awards to be recognized through the first quarter of 2017 is approximately $4,000.

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

	2016				2015
	Shares		Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Outstanding, January 1,	16,038		$	15.47	—	$	—
Granted	—		—		—	—
Vested	(5,255	)	15.47		—	—
Forfeited	—		—		—	—
Outstanding, June 30,	10,783		$	15.47	—	$	—

Total expense related to restricted stock awards included in salaries and wages in the consolidated condensed statements of income for the three and six months ended June 30, 2016 was $23,000 and $45,000, respectively. The related tax benefit for the three and six months end June 30, 2016 was $7,000 and $15,000, respectively. Unrecognized compensation expense for restricted stock awards was $113,000 at June 30, 2016 and is expected to be recognized over a period of 4.5 years.