Note 12: 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 175,000 shares of common stock, provided that no more than 75,000 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 Company's 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 20,000 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, 2013, 2012, and 2011:


		2013		2012		2011

Stock options and restricted stock awards granted	$	265	$	216	$	99
Long term performance stock		63		--		--
Long term restricted stock		80		--		--
Total compensation expense	$	408	$	216	$	99

For the years ended December 31, 2013, 2012, and 2011, the total anti-dilutive stock options amounted to 60, 36, and 117 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:


		2013			2012			2011

Risk free interest rate		1.55	%		1.13	%		2.04	%
Expected market volatility factor
for the Company's stock		26.44	%		26.08	%		26.28	%
Dividend yield		3.39	%		3.40	%		3.79	%
Expected life of the options (years)		7.0			6.9			6.8
Options granted		27,000			37,500			30,500
Estimated fair value of options granted	$	6.63		$	5.85		$	4.99

The expected market price volatility for the grants during 2013 was determined by using the Company's historical stock price volatility on a daily basis during the three to seven year periods ending December 31, 2013, consistent with the expected life of the 2013 options.

Stock Option and Restricted Stock Activity: A summary combined status of the ISOP and the 2009 Plan as of December 31, 2013, 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, 2013	153,418		$	18.37	$	37.60	$	30.31
Granted	27,000		$	35.46	$	40.62	$	36.75
Exercised	(16,361	)	$	18.37	$	37.60	$	27.72
Cancelled	(7,388	)	$	26.99	$	36.75	$	29.74
Outstanding at December 31, 2013	156,669		$	21.82	$	40.62	$	31.72	$	5.56	$	1,296

Ending vested and expected to
vest December 31, 2013	149,084		$	21.82	$	40.62	$	31.91	$	5.60	$	1,206

Exercisable at December 31, 2013	63,090		$	21.82	$	37.60	$	30.28	$	5.38	$	613


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

Outstanding at January 1, 2013	0		$	--
Awarded	3,370		$	35.80
Released	(3,370	)	$	35.80
Forfeited	0		$	--
Outstanding at December 31, 2013	0		$	--

The intrinsic value of the options exercised and cash received by the Company for options exercised for the years ended December 31, 2013, 2012, and 2011, was approximately $201 and $453, $345 and $1,174, and $977 and $1,363, respectively.

The tax benefit received related to the exercise of options in 2013, 2012 and 2011, was $19, $35 and $248, respectively.

As of December 31, 2013, there was approximately $298 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 3.48 years.

Stock Options Outstanding: The following table summarizes stock options outstanding and exercisable by exercise price range at December 31, 2013:

Options Outstanding

Options Exercisable

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

12/31/13

Term(years)

Price

12/31/13

Term(years)

Price

21.82

40.62

156,669

6.4

31.72

63,090

4.0

30.28

During 2013, performance share awards were granted to certain executive officers providing the opportunity to earn shares of common stock of the Company ranging from zero to 10,448 shares. The performance shares granted were valued at between $35.64 and $36.00 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 134% of the target, or 6,964 shares.

Nonvested Performance Shares: The following table summarizes nonvested performance shares as of December 31, 2013:


			Weighted Average
	Number		Grant Date
	of Shares		Fair Value

Outstanding at January 1, 2013	0	$	---
Granted	6,964		35.78
Vested	0		--
Forfeited	0		--
Outstanding at December 31, 2013	6,964	$	35.78

Nonvested Restricted Shares: The following table summarizes nonvested performance shares as of December 31, 2013:


			Weighted Average
			Grant Date
	Number of Shares		Fair Value

Outstanding at January 1, 2013	0	$	---
Granted	5,605		35.74
Vested	0		---
Forfeited	0		---
Outstanding at December 31, 2013	5,605	$	35.74

As of December 31, 2013, there was $355 of total unrecognized compensation cost related to nonvested restricted share awards and performance share awards granted under the Plans. That cost is expected to be recognized over a weighted average period of 2.1 years.