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Stock Based Compensation
 12 Months Ended
Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Based Compensation

Note 14 - Stock Based Compensation

 

Options to buy stock have been granted to key employees under an incentive stock option plan to provide them with additional equity interests in ChoiceOne. Compensation expense in connection with stock options granted during 2015, 2014, or 2013 was considered to be insignificant. The Amended and Restated Executive Stock Incentive Plan under which the stock options were granted expired in 2012. The Stock Incentive Plan of 2012 was approved by the Company’s shareholders at the Annual Meeting held on April 25, 2012. The new plan provides for the issuance of up to 100,000 shares of common stock. At December 31, 2015, there were 51,150 shares available for future grants.

 

A summary of stock options activity is as follows:

                                       
    2015   2014   2013  
    Shares   Weighted
average
exercise
price		   Shares   Weighted
average
exercise
price		   Shares   Weighted
average
exercise
price		  
                                       
Options outstanding, beginning of year     20,250   $ 16.65     38,625   $ 17.29     40,725   $ 16.99  
Options granted     30,000     23.30     —     —     —     —  
Options exercised     9,500     16.03     14,550     18.87     2,100     13.70  
Options forfeited or expired     —     —     3,825     18.51     —     —  
Options outstanding, end of year     40,750   $ 21.69     20,250   $ 16.65     38,625   $ 17.29  
                                       
Options exercisable at December 31     18,250   $ 19.70     20,250   $ 16.65     38,625   $ 17.29  

 

The exercise prices for options outstanding and exercisable at the end of 2015 ranged from $13.50 to $23.30 per share. The weighted average remaining contractual life of options outstanding and exercisable at the end of 2015 was approximately 4.79 years.

 

The intrinsic value of all outstanding in-the-money stock options and exercisable in-the-money stock options was $86,000 and $75,000, respectively, at December 31, 2015. The aggregate intrinsic values of outstanding and exercisable options at December 31, 2015 were calculated based on the closing market price of the Company’s common stock on December 31, 2015 of $23.80 per share less the exercise price. 

 

Information pertaining to options outstanding at December 31, 2015 is as follows:

 

          Number of     Number of     Average  
          options     options     remaining  
          outstanding     exercisable at     contractual  
Exercise price of stock options:       at year-end     year-end     life (in years)  
$ 13.50       2,000     2,000     2.07  
$ 17.95       8,000     8,000     1.05  
$ 18.85       750     750     0.05  
$ 23.30       30,000     7,500     9.97  

 

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. ChoiceOne uses historical data to estimate the volatility of the market price of ChoiceOne stock and employee terminations within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. A total of 30,000 options were granted in 2015 with an exercise price of $23.30 and vest over 3 years. No options were granted in 2014 or 2013.

 

The fair value of stock options granted during 2015 was determined using the following weighted-average assumptions as of the grant date.

 

    2015  
Risk-free interest rate     2.28 %
Expected option life     5.75 years  
Expected stock price volatility     22.95 %
Dividend yield     3.64 %
Fair value of options granted   $ 3.54  

 

ChoiceOne has granted restricted stock units to a select group of employees under the Stock Incentive Plan of 2012. Restricted stock units vest in three annual installments on each of the next three anniversaries of the grant date. Certain additional vesting provisions apply. Each restricted stock unit, once vested, is settled by delivery of one share of ChoiceOne common stock. ChoiceOne recognized compensation expense of $103,000 and $53,000 in 2015 and 2014, respectively, in connection with restricted stock units for current participants during these years. At December 31, 2015 there were 17,850 restricted stock units outstanding with an approximate stock value of $425,000. At December 31, 2014 there were 7,750 restricted stock units outstanding with an approximate stock value of $178,000. Unrecognized compensation expense as of December 31, 2015 is approximately $234,000 and will be allocated $119,000 to 2016, $93,000 to 2017, and $22,000 to 2018.