(6) STOCK-BASED COMPENSATION

The Company adopted a nonqualified incentive stock option plan (the “BancFirst ISOP”) in May 1986. The Company amended the BancFirst ISOP to increase the number of shares to be issued under the plan to 3,000,000 shares in May 2013. At June 30, 2014, 135,860 shares were available for future grants. The BancFirst ISOP will terminate on December 31, 2019. The options are exercisable beginning four years from the date of grant at the rate of 25% per year for four years. Options expire at the end of fifteen years from the date of grant. Options outstanding as of June 30, 2014 will become exercisable through the year 2021. The option price must be no less than 100% of the fair value of the stock relating to such option at the date of grant.

In June 1999, the Company adopted the BancFirst Corporation Non-Employee Directors’ Stock Option Plan (the “BancFirst Directors’ Stock Option Plan”). Each non-employee director is granted an option for 10,000 shares. The Company amended the BancFirst Directors’ Stock Option Plan to increase the number of shares to be issued under the plan to 230,000 shares in May 2014. At June 30, 2014, 30,000 shares were available for future grants. The options are exercisable beginning one year from the date of grant at the rate of 25% per year for four years, and expire at the end of fifteen years from the date of grant. Options outstanding as of June 30, 2014 will become exercisable through the year 2017. The option price must be no less than 100% of the fair value of the stock relating to such option at the date of grant.

The Company currently uses newly issued stock to satisfy stock-based exercises, but reserves the right to use treasury stock purchased under the Company’s Stock Repurchase Program (the “SRP”) in the future.

The following table is a summary of the activity under both the BancFirst ISOP and the BancFirst Directors’ Stock Option Plan:


	Options			Wgtd. Avg. Exercise Price		Wgtd. Avg. Remaining Contractual Term		Aggregate Intrinsic Value
	(Dollars in thousands, except per share data)
Six Months Ended June 30, 2014
Outstanding at December 31, 2013		1,158,317		$	34.45
Options granted		10,000			58.61
Options exercised		(63,625	)		25.80
Options canceled, forfeited, or expired		—			—

Outstanding at June 30, 2014		1,104,692			35.16		8.62Yr	$	29,667

Exercisable at June 30, 2014		516,042			28.77		4.98Yr	$	17,094

The following table has additional information regarding options granted and options exercised under both the BancFirst ISOP and the BancFirst Directors’ Stock Option Plan:


	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(Dollars in thousands, except per share data)
Weighted average grant-date fair value per share of options granted	$	12.33	$	8.74	$	12.33	$	8.74
Total intrinsic value of options exercised		1,301		1,024		2,046		1,230
Cash received from options exercised		776		1,059		1,642		1,201
Tax benefit realized from options exercised		503		396		791		476

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model and is based on certain assumptions including risk-free rate of return, dividend yield, stock price volatility and the expected term. The fair value of each option is expensed over its vesting period.

The following table is a summary of the Company’s recorded stock-based compensation expense:


	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Stock-based compensation expense	$	429		$	321		$	776		$	695
Tax benefit		(166	)		(124	)		(300	)		(269	)

Stock-based compensation expense, net of tax	$	263		$	197		$	476		$	426

The Company will continue to amortize the remaining fair value of stock options over the remaining vesting period of approximately seven years. The following table shows the remaining fair value of stock options:


	June 30, 2014
	(Dollars in thousands)
Fair value of stock options	$	4,549

The following table shows the assumptions used for computing stock-based compensation expense under the fair value method:


	Six Months Ended June 30,
	2014			2013
Risk-free interest rate		2.54	%		2.53	%
Dividend yield		2.00	%		2.00	%
Stock price volatility		18.98	%		18.36	%
Expected term		10Yrs			10Yrs

The risk-free interest rate is determined by reference to the spot zero-coupon rate for the U.S. Treasury security with a maturity similar to the expected term of the options. The dividend yield is the expected yield for the expected term. The stock price volatility is estimated from the recent historical volatility of the Company’s stock. The expected term is estimated from the historical option exercise experience.