(13) 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 December 31, 2013, 145,860 shares were available for future grants. The BancFirst ISOP will terminate on December 31, 2014. The options vest and 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 December 31, 2013 will become exercisable through the year 2020. 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 205,000 shares in May 2009. At December 31, 2013, 5,000 shares were available for future grants. The options vest and 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 December 31, 2013 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 shares for stock option exercises, but reserves the right to use shares 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)
Year Ended December 31, 2013
Outstanding at December 31, 2012		1,216,981		$	31.98
Options granted		115,000			49.13
Options exercised		(153,664	)		25.03
Options canceled, forfeited, or expired		(20,000	)		40.83

Outstanding at December 31, 2013		1,158,317			34.45		8.84Yrs	$	25,034

Exercisable at December 31, 2013		561,167			27.95		6.70Yrs	$	15,774

Year Ended December 31, 2012
Outstanding at December 31, 2011		1,298,431		$	30.14
Options granted		49,000			40.93
Options exercised		(130,450	)		17.07
Options canceled, forfeited, or expired		—			—

Outstanding at December 31, 2012		1,216,981			31.98		8.63Yrs	$	12,637

Exercisable at December 31, 2012		620,281			25.72		5.22Yrs	$	10,324

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


	Year Ended December 31,
	2013		2012		2011
	(Dollars in thousands, except per share data)
Weighted average grant-date fair value per share of options granted	$	10.88	$	8.82	$	12.79
Total intrinsic value of options exercised		3,723		3,297		912
Cash received from options exercised		3,846		2,227		963
Tax benefit realized from options exercised		1,440		1,275		353

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:


	Year Ended December 31,
	2013		2012		2011
	(Dollars in thousands)
Stock-based compensation expense	$	1,360	$	1,530	$	1,375
Tax benefit		526		592		532

Stock-based compensation expense, net of tax	$	834	$	938	$	843

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:


	December 31, 2013
	(Dollars in thousands)
Fair value of stock options	$	5,132

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

Year Ended December 31,

2013

2012

2011

Risk-free interest rate

1.95% to 3.15%

1.74% to 1.95%

1.97% to 3.61%

Dividend yield

2.00%

Stock price volatility

18.35% to 20.21%

21.71% to 38.75%

25.26% to 38.43%

Expected term

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.

In May 1999, the Company adopted the BancFirst Corporation Directors’ Deferred Stock Compensation Plan (the “BancFirst Deferred Stock Compensation Plan”). The Company amended the BancFirst Deferred Stock Compensation Plan to increase the number of shares to be issued under the plan to 80,000 shares in May 2009. Under the plan, directors and members of the community advisory boards of the Company and its subsidiaries may defer up to 100% of their board fees. They are credited for each deferral with a number of stock units based on the current market price of the Company’s stock, which accumulate in an account until such time as the director or community board member terminates serving as a board member. Shares of common stock of the Company are then distributed to the terminating director or community board member based upon the number of stock units accumulated in his or her account. A summary of the accumulated stock units is as follows:


	December 31,
	2013		2012
Accumulated stock units		56,380		55,390
Average price	$	35.31	$	33.98