NOTE 13. DEFERRED COMPENSATION

The Shore Bancshares, Inc. Executive Deferred Compensation Plan (the “Plan”) is for members of management and highly compensated employees of Shore Bancshares, Inc. and its subsidiaries. The Plan permits a participant to elect, each year, to defer receipt of up to 100% of his or her salary and bonus to be earned in the following year. The Plan also permits the participant to defer the receipt of performance-based compensation not later than six months before the end of the period for which it is to be earned. The deferred amounts are credited to an account maintained on behalf of the participant and are invested at the discretion of each participant in certain deemed investment options selected from time to time by the Compensation Committee of the Board of Shore Bancshares, Inc. Shore Bancshares, Inc. may also make matching, mandatory and discretionary contributions for certain participants. A participant is fully vested at all times in the amounts that he or she elects to defer. Any contributions by Shore Bancshares, Inc. will vest over a five-year period. There were no elective deferrals made by plan participants during 2013, 2012 or 2011.

The following table provides information on Shore Bancshares, Inc.’s contributions to the Plan for 2013, 2012 and 2011 and the related deferred compensation liability at December 31, 2013 and 2012.

(Dollars in thousands)		2013			2012			2011
Deferred compensation contribution		$	9		$	20		$	65

	December 31,
(Dollars in thousands)	2013		2012
Deferred compensation liability	$	404	$	632

CNB has agreements with certain of its directors under which they have deferred part of their fees and compensation. The amounts deferred are invested in insurance policies, owned by CNB, on the lives of the respective individuals. Amounts available under the policies are to be paid to the individuals as retirement benefits over future years. The following table includes information on the cash surrender value and the accrued benefit obligation included in other assets and other liabilities at December 31, 2013 and 2012.

(Dollars in thousands)	2013		2012
Cash surrender value	$	3,256	$	3,143
Accrued benefit obligation		1,101		1,171