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SHARE-BASED COMPENSATION PLANS
 12 Months Ended
Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
SHARE-BASED COMPENSATION PLANS
SHARE-BASED COMPENSATION PLANS
The Company maintains share-based compensation plans under the shareholder-approved 2011 Orrstown Financial Services, Inc. Incentive Stock Plan (the "Plan"). The purpose of the share-based compensation plans is to provide officers, employees, and non-employee members of the Board of Directors of the Company with additional incentive to further the success of the Company. Under the Plan, 381,920 shares of the common stock of the Company were reserved to be issued. At December 31, 2016, 136,951 shares were available to be issued.
Plan incentive awards may consist of grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, deferred stock units and performance shares. All employees of the Company and its present or future subsidiaries, and members of the Board of Directors of the Company or any subsidiary of the Company, are eligible to participate in the Plan. The Plan allows for the Compensation Committee of the Board of Directors to determine the type of incentive to be awarded, its term, manner of exercise, vesting of awards and restrictions on shares. Generally, awards are nonqualified under the IRS code, unless the awards are deemed to be incentive awards to employees at the Compensation Committee’s discretion.
The following table presents a summary of nonvested restricted shares activity for 2016.
 
Shares
 
Weighted Average Grant Date
Fair Value
 
 
 
 
Nonvested shares, beginning of year
197,381

 
$
16.17

Granted
60,545

 
18.81

Forfeited
(18,089
)
 
16.19

Vested
(12,500
)
 
15.97

Nonvested shares, at end of year
227,337

 
$
16.88


Compensation expense recognized for restricted stock awards totaled $941,000, $732,000, and $178,000 in 2016, 2015 and 2014, with tax benefits $320,000, $256,000, and $62,000 recorded for the respective year. The total fair value of shares vested during 2016 and 2015 totaled $237,000 and $43,000. No shares vested during 2014. At December 31, 2016 and 2015, unrecognized compensation expense related to restricted stock awards totaled $2,169,000, and $2,293,000. Unrecognized compensation expense is expected to be recognized over a weighted-average period of 2.4 years.
The following table presents a summary of outstanding stock options activity for 2016.
 
 
Shares
 
Weighted Average
Exercise Price
 
 
 
 
Outstanding at beginning of year
101,460

 
$
28.72

Forfeited
(2,825
)
 
25.61

Expired
(18,265
)
 
35.11

Options outstanding and exercisable, at year end
80,370

 
$
27.37


The exercise price of each option equals the market price of the Company’s stock on the grant date. An option’s maximum term is ten years. All options are fully vested upon issuance. The following table presents information pertaining to options outstanding and exercisable at December 31, 2016.
 
Range of
Exercise Prices
 
Number
Outstanding and Exercisable
 
Weighted Average
Remaining Contractual
Life (Years)
 
Weighted
Average
Exercise Price
 
 
 
 
 
 
 
$21.14 - $24.99
 
34,999

 
3.41
 
$
21.47

$25.00 - $29.99
 
2,792

 
3.25
 
25.76

$30.00 - $34.99
 
35,231

 
0.92
 
31.34

$35.00 - $37.59
 
7,348

 
2.56
 
37.08

$21.14 - $37.59
 
80,370

 
2.23
 
$
27.37


Outstanding and exercisable options had an intrinsic value of $39,000 at December 31, 2016 and had no intrinsic value at December 31, 2015 as the exercise price then exceeded the market value.
The Company maintains an employee stock purchase plan to provide employees of the Company an opportunity to purchase Company common stock. Eligible employees may purchase shares in an amount that does not exceed 10% of their annual salary at the lower of 95% (85% prior to August 31, 2014) of the fair market value of the shares on the semi-annual offering date, or related purchase date. The Company reserved 350,000 shares of its common stock to be issued under the employee stock purchase plan and, at December 31, 2016, 186,004 shares were available to be issued. Employees purchased 6,334, 6,305 and 6,707 shares at a weighted average price of $16.64, $15.83 and $14.88 per share in 2016, 2015 and 2014. Compensation expense recognized for this plan totaled $17,000, $8,000, and $12,000 for 2016, 2015 and 2014, with tax benefits of $6,000, $3,000, and $4,000 recorded for the respective year.
The Company uses a combination of issuing new shares or treasury shares, depending on market conditions, to meet share compensation exercises.