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Stock Based Compensation
 12 Months Ended
Dec. 31, 2016
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 2016, 2015, or 2014 was $71,000 in 2016 and $0 in 2015 and 2014. 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, 2016, there were 40,750 shares available for future grants.

 

    2016     2015     2014  
          Weighted           Weighted           Weighted  
          average           average           average  
          exercise           exercise           exercise  
    Shares     price     Shares     price     Shares     price  
                                     
Options outstanding, beginning of year     40,750     $ 21.69       20,250     $ 16.65       38,625     $ 17.29  
Options granted     —       —       30,000       23.30       —       —  
Options exercised     8,000       17.95       9,500       16.03       14,550       18.87  
Options forfeited or expired     750       18.85       —       —       3,825       18.51  
Options outstanding, end of year     32,000     $ 22.69       40,750     $ 21.69       20,250     $ 16.65  
                                                 
Options exercisable at December 31     22,000     $ 22.69       18,250     $ 19.70       20,250     $ 16.65  

 

The exercise prices for options outstanding and exercisable at the end of 2016 ranged from $13.50 to $23.30 per share. The weighted average remaining contractual life of options outstanding and exercisable at the end of 2016 was approximately 8.4 years.

 

The intrinsic value of all outstanding in-the-money stock options and exercisable in-the-money stock options was $34,000 and $29,000 respectively, at December 31, 2016. The aggregate intrinsic values of outstanding and exercisable options at December 31, 2016 were calculated based on the closing market price of the Company’s common stock on December 31, 2016 of $23.75 per share less the exercise price.

 

Information pertaining to options outstanding at December 31, 2016 is as follows:

 

Exercise price of stock options:     Number of
options
outstanding
at year-end		     Number of
options
exercisable at
year-end		     Average
remaining
contractual
life (in years)		  
$ 13.50     2,000     2,000     1.08  
$ 23.30     30,000     20,000     9.09  

 

 

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. No options were granted in 2016 or 2014. As of December 31, 2016 there was $35,000 in unrecognized compensation expense related to stock options issued in 2015.

 

The fair value of stock options granted during 2015 was $106,000; 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 $207,000 and $103,000 in 2016 and 2015, respectively, in connection with restricted stock units for current participants during these years. At December 31, 2016, there were 14,933 restricted stock units outstanding with an approximate stock value of $355,000 based on ChoiceOne’s December 31, 2016 stock price. At December 31, 2015, there were 17,850 restricted stock units outstanding with an approximate stock value of $425,000. Unrecognized compensation expense as of December 31, 2016, and based on the stock price at time of award was approximately $241,000 and will be allocated $139,000 to 2017, $79,000 to 2018 and $23,000 in 2019.