(12) Equity Incentive Plan

At the Company’s 2014 annual meeting, the shareholders adopted the Company’s 2014 Incentive Plan (“2014 Incentive Plan”). The 2014 Incentive Plan authorizes the Company to grant options, stock awards, stock units and other awards for up to 375,000 common shares of the Company. There were 299,382 shares available for future grants under this plan at March 31, 2017.

During each of the last three years, the Board of Directors has awarded restricted common shares to senior officers of the Company. The restricted shares vest ratably over a three-year period following the grant date. The product of the number of restricted shares granted and the grant date market price of the Company’s common shares determines the fair value of restricted shares under the Company’s 2014 Incentive Plan. Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period for the entire award.

On March 17, 2015, certain officers were awarded an aggregate of 16,983 restricted common shares, of which 5,657 shares vested on January 2, 2016 and 5,519 shares vested on January 2, 2017. In addition, 284 shares were forfeited on May 13, 2016. The remaining 5,523 of the restricted common shares are scheduled to vest on January 2, 2018.

On January 4, 2016, directors of the Company’s banking subsidiary, Civista, were paid a retainer in the form of non-restricted common shares of the Company. The aggregate of 2,730 common shares were issued to Civista directors as payment of their retainer for their service on the Civista Board of Directors covering the period up to the 2016 Annual Meeting. This issuance was expensed in its entirety when the shares were issued in the amount of $32.

On January 15, 2016, certain of the Company’s lending officers were awarded an aggregate of 12,734 restricted common shares under the 2014 Incentive Plan. These restricted shares vest over a 5-year service period, with 20% each vesting on January 2 of 2017, 2018, 2019, 2020 and 2021. A total of 2,474 of the restricted shares granted, but unvested, were forfeited during 2016 as a result of two lending officers leaving the Company. As a result, a total of 1,558 restricted shares granted, but unvested, were forfeited. On January 2, 2017, 2,048 shares vested.

On March 11, 2016, senior officers were awarded an aggregate of 16,130 restricted common shares, which vest over a three-year service period, with one-third each vesting on January 2 of 2017, 2018 and 2019. On May 13, 2016, 382 shares were forfeited. In addition, on January 2, 2017, 5,243 shares vested.

On May 17, 2016, directors of the Company’s banking subsidiary, Civista, were paid a retainer in the form of non-restricted common shares of the Company. The aggregate of 12,285 common shares were issued to Civista directors as payment of their retainer for their service on the Civista Board of Directors covering the period up to the 2017 Annual Meeting. This issuance was expensed in its entirety when the shares were issued in the amount of $130.

On March 20, 2017, certain of the Company’s lending officers were awarded an aggregate of 6,185 restricted common shares under the 2014 Incentive Plan. These restricted shares vest over a 5-year service period, with 20% each vesting on January 2 of 2018, 2019, 2020, 2021 and 2022.

Finally, on March 20, 2017, senior officers were awarded an aggregate of 11,713 restricted common shares, which vest over a three-year service period, with one-third each vesting on January 2 of 2018, 2019 and 2020.

No options had been granted under the 2014 Incentive Plan as of March 31, 2017 and 2016.

The Company classifies share-based compensation for employees with “Salaries, wages and benefits” in the consolidated statements of operations. Additionally, generally accepted accounting principles require the Company to report: (1) the expense associated with the grants as an adjustment to operating cash flows, and (2) any benefits of realized tax deductions in excess of previously recognized tax benefits on compensation expense as an operating cash flow.

The following is a summary of the status of the Company’s restricted shares as of March 31, 2017, and changes therein during the three months ended:


	Three months ended
	March 31, 2017
	Number of Restricted Shares			Weighted Average Grant Date Fair Value
Nonvested at beginning of period		37,050		$	10.77
Granted		17,898			22.15
Vested		(12,810	)		10.76
Forfeited		—			—

Nonvested at March 31, 2017		42,138			15.60

During the three months ended March 31, 2017, the Company recorded $121 of share-based compensation expense for shares granted under the 2014 Incentive Plan. At March 31, 2017, the expected future compensation expense relating to the 16,983 restricted shares awarded in 2015 is $27 over the remaining vesting period of 0.75 years. The expected future compensation expense relating to the 16,130 restricted shares awarded in 2016 to the officers and Civista directors is $59 over the remaining vesting period of 1.75 years. The expected future compensation expense relating to the 11,713 restricted shares awarded in 2017 to the officers and Civista directors is $165 over the remaining vesting period of 2.75 years. The expected future compensation expense relating to the 12,734 restricted common shares awarded to lending officers of the Company in 2016 is $83 over the remaining vesting period of 3.75 years. The expected future compensation expense relating to the 6,185 restricted common shares awarded to lending officers of the Company in 2017 is $134 over the remaining vesting period of 4.75 years.