Note 14: Stock-Based Compensation Plans:

On October 3, 2000, the shareholders of the Company approved the Bar Harbor Bankshares and Subsidiaries Incentive Stock Option Plan of 2000 (ISOP) for its officers and employees, which provided for the issuance of up to 450,000 shares of common stock. The purchase price of the stock covered by each option must be at least 100% of the trading value on the date such option was granted. Vesting terms ranged from three to seven years. According to the ISOP no option shall be granted after October 3, 2010, ten years after the effective date of the ISOP.

In May, 2009, the shareholders of the Company approved the adoption of the 2009 Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan (the 2009 Plan) for employees and directors of the Company and its subsidiaries. Subject to adjustment for stock splits, stock dividends, and similar events, the total number of shares of common stock that can be issued under the 2009 Plan over the 10 year period in which the plan will be in place is 262,500 shares of common stock, provided that no more than 112,500 shares of such stock can be awarded in the form of restricted stock or restricted stock units, as further described in the 2009 Plan. The 2009 Plan is to be administered by the Companys Compensation Committee. All employees and directors of the Company and it subsidiaries are eligible to participate in the 2009 Plan, subject to the discretion of the Administrator and the terms of the 2009 Plan. The maximum stock award granted to one individual may not exceed 30,000 shares of common stock (subject to adjustment for stock splits, and similar events) for any calendar year.

In April of 2013, the Board of Directors voted a Long Term Incentive Program for senior management members. The program is designed to be made up of three year rolling plans utilizing the shares made available through the 2009 Plan. Grants may be given in time vested restricted stock awards, performance vested restricted stock awards, or a combination of both.

Compensation expense recognized in connection with the stock based compensation plans are presented in the following table for the years ended December 31, 2014, 2013, and 2012:


		2014		2013		2012

Stock options and restricted stock awards	$	296	$	255	$	177
Long-term performance stock units		173		63	-	--
Long-term restricted stock units		61		80	-	--
Total compensation expense	$	530	$	398	$	177

For the years ended December 31, 2014, 2013, and 2012, the total anti-dilutive stock options amounted to 43, 90, and 54 thousand shares, respectively.

The fair value of options was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for stock option grants during the years ended December 31:


		2014			2013			2012

Risk free interest rate		1.24	%		1.55	%		1.13	%
Expected market volatility factor
for the Company's stock		29.38	%		26.44	%		26.08	%
Dividend yield		6.20	%		3.39	%		3.40	%
Expected life of the options (years)		6.2			7.0			6.9
Options granted		45,000			40,500			56,250
Estimated fair value of options granted	$	5.00		$	6.63		$	5.85

The expected market price volatility for the grants during 2014 was determined by using the Companys historical stock price volatility on a daily basis during the three to seven year periods ending December 31, 2014, consistent with the expected life of the 2014 options.

Stock Option and Restricted Stock Awards Activity: A summary combined status of the ISOP and the 2009 Plan as of December 31, 2014, and changes during the year then ended is presented below:


	Number of							Weighted				Aggregate
	Stock Options			Exercise				Average		Intrinsic		Intrinsic
	Outstanding			Price Range				Exercise Price		Value		Value
				From		To
Outstanding at January 1, 2014	235,010		$	14.55	$	27.08	$	21.15
Granted	45,000		$	24.93	$	27.81	$	25.79
Exercised	(31,760	)	$	15.44	$	25.07	$	19.71
Cancelled	(7,942	)	$	15.44	$	24.93	$	21.22
Outstanding at December 31, 2014	240,308		$	14.55	$	27.81	$	22.21	$	3.94	$	2,353

Ending vested and expected to
vest December 31, 2014	232,527		$	14.55	$	27.81	$	22.33	$	3.97	$	2,248

Exercisable at December 31, 2014	90,520		$	14.55	$	27.08	$	20.67	$	3.52	$	1,026


	Number of
	Restricted Stock				Weighted Average
	Awards				Grant Date
	Outstanding				Fair Value

Outstanding at January 1, 2014	0		$	-	--
Awarded	3,445		$		30.10
Released	(3,445	)	$		30.10
Forfeited	0		$	-	--
Outstanding at December 31, 2014	0		$	-	--

The intrinsic value of the options exercised and cash received by the Company for options exercised for the years ended December 31, 2014, 2013, and 2012, was approximately $390 and $626, $201and $453, $345 and $1,174, respectively.

The tax benefit received related to the exercise of options in 2014, 2013 and 2012, was $43, $19 and $35, respectively.

As of December 31, 2014, there was approximately $322 of unrecognized compensation cost related to unvested stock option awards, net of estimated forfeitures. This amount is expected to be recognized as expense over the next seven years, with a weighted average recognition period of 2.66 years.

Stock Options Outstanding: The following table summarizes stock options outstanding and exercisable by exercise price range at December 31, 2014:


					Options Outstanding			Options Exercisable
					Weighted				Weighted
				Number	Average		Weighted	Number	Average		Weighted
				Outstanding	Remaining		Average	Exercisable	Remaining		Average
	Range of Exercise			As of	Contractual		Exercise	As of	Contractual		Exercise
	Prices			12/31/14	Term(years)		Price	12/31/14	Term(years)		Price
$	14.55	$	27.81	240,308	6.48	$	22.21	90,520	4.24	$	20.67

Performance Stock Units: During 2014, performance stock unit awards were granted to certain executive officers providing the opportunity to earn shares of common stock of the Company ranging from zero to 8,340 shares. The performance shares granted were valued at between $27.81 and $27.86 the fair market value at the date of grant, and will be earned over a three year performance period. The current assumption based on the most recent peer group information results in the shares earned at 150% of the target, or 8,340 shares.

The following table summarizes performance units as of December 31, 2014:


			Weighted Average
	Number		Grant Date
	of Shares		Fair Value

Outstanding at January 1, 2014	10,444	$	23.86
Granted	8,340		27.96
Vested	0	-	--
Forfeited	889		23.76
Outstanding at December 31, 2014	17,895	$	25.77

Restricted Stock Units: During 2014, restricted stock unit awards were granted to certain

Restricted Stock Units: During 2014, restricted stock unit awards were granted to certain executive officers. The restricted shares granted were valued at between $27.81 and $27.86 the fair market value at the date of grant, and will be vested over a three year period.

The following table summarizes restricted stock units as of December 31, 2014:


			Weighted Average
	Number		Grant Date
	of Shares		Fair Value

Outstanding at January 1, 2014	8,386	$	23.83
Granted	8,266		27.95
Vested	2,878		23.80
Forfeited	596		23.76
Outstanding at December 31, 2014	13,178	$	26.42

As of December 31, 2014, there was $714 of total unrecognized compensation cost related to nonvested restricted stock units and performance stock units granted under the Plans. That cost is expected to be recognized over a weighted average period of 2.2 years.