14.	E MPLOYEE BENEFITS

Retirement Plan

The Bank maintain

s section

401

(k) employee savings and investment plans for all full-time employees and officers of the Bank who are at least

years of age. The Bank’s contributions to the plans are discretionary, and were based on

50%

matching of voluntary contributions up to

of compensation for the year ended

December 31, 2017.

Employee contributions are vested at all times, and MBC contributions are fully vested after

six

years beginning at the

second

year in

20%

increments. Special vesting provisions are in place for legacy Liberty employees with

or more years of service. Contributions for

2017,

2016,

and

2015

to these plans amounted to

$258,000,

$156,000,

and

$156,000,

respectively.

Supplemental Retirement Plan

Until

2001,

MBC maintained a Directors’ Retirement Plan to provide postretirement payments over a

ten

-year period to members of the Board of Directors who had completed

five

or more years of service. The plan required payment of

25%

of the final average annual board fees paid to a director in the

three

years preceding the director’s retirement.

The following table illustrates the components of the

projected payments for the Directors’ Retirement Plan for the years ended:

	Projected Payments

2018	$	18,000
2019		12,000
2020		10,000
2021		2,000
Total	$	42,000

The retirement plan is available solely for nonemployee directors of M

BC, but MBC has

not

entered into any additional retirement arrangements for nonemployee directors since

2001.

All director participants have retired.

Executive Deferred Compensation Plan

The Company maintains an Executive Deferred Compensation Plan (the “Plan”) to provide post-retirement payments to members of senior man

agement. The Plan agreements are noncontributory, defined contribution arrangements that provide supplemental retirement income benefits to several officers, with contributions made solely by the Bank. During

2017,

2016,

and

2015,

the Company contributed

$110,000,

$99,000,

and

$65,000,

respectively, to the Plan.

Stock Opt

ion and Restricted Stock Plan

2007

, the Company adopted the

2007

Omnibus Equity Plan (the

“2007

Plan”) for granting incentive stock options, nonqualified stock options, and restricted stock to key officers and employees and nonemployee directors of the Company. A total of

160,000

shares of authorized and unissued or issued common stock were reserved for issuance under the

2007

Plan, which expires

ten

years from the date of board approval of the plan. Although the

2007

Plan expired in

2017,

there remain outstanding

92,759

shares in equity awards granted under the

2007

Plan. The per share exercise price of an option granted will

not

be less than the fair value of a share of common stock on the date the option is granted.

2017

, the Company adopted the

2017

Omnibus Equity Plan (the

“2017

Plan”) for granting incentive stock options, nonqualified stock options, restricted stock and other equity awards to key officers and employees and nonemployee directors of the Company. The Company’s stockholders approved the

2017

Plan at the annual meeting of the stockholders held on

May 10, 2017.

A total of

224,000

shares of authorized and unissued or issued common stock are reserved for issuance under the

2017

Plan, which expires

ten

years from the date of board approval of the plan. The per share exercise price of an option granted will

not

be less than the fair value of a share of common stock on the date the option is granted. Remaining available shares that can be issued under the Plan were

218,175

December 31, 2017.

The following table presents share data related to the outstanding options:

	2017			Weighted Average Exercise Price Per Share

Outstanding, January 1		29,324		$	23.67
Expired		(1,337	)		37.48
Exercised		(8,237	)		27.97

Outstanding, December 31		19,750		$	20.94

Exercisable, December 31		19,750		$	20.94

The total

intrinsic value of outstanding in-the-money exercisable stock options was

$538,000

December 31, 2017.

The following table summarizes the characteristics of stock options at

December 31,

2017:

			Outstanding						Exercisable
Grant Date	Exercise Price Per Share		Shares		Contractual Average Life		Average Exercise Price Per Share		Shares		Average Exercise Price Per Share

November 10, 2008	$	23.00		12,300		0.85	$	23.00		12,300	$	23.00
May 9, 2011	$	17.55		7,450		3.35	$	17.55		7,450	$	17.55
				19,750						19,750

options

were granted for the years ended

December 31, 2017

and

2016.

The Company recognizes compensation expense in the amount of fair value of the common stock at the grant date and as an addition to stockholders’ equity.

For each of the years ended

December

31,

2017,

2016,

and

2015,

the Company recorded

compensation cost related to vested stock options. As of

December 31, 2017,

there was

unrecognized compensation cost related to unvested stock options.

For the years ended

December 31, 2017

and

2016,

8,237

and

500

options were exercised resulting in net proceeds to the participant of

$95,000

and

$6,000,

respectively.

During

2017,

2016,

and

2015,

the Compensation Committee of the Board of Directors of the Company granted awards of an aggregate of

5,825,

5,090,

and

3,905,

respectively, restricted stock units (“RSUs”) to certain employees of the Bank. The expense recognized as a result of these awards was

$196,000,

$123,000,

and

$55,000

for the years ended

2017,

2016,

and

2015,

respectively. The number of RSUs earned or settled will depend on certain conditions and are also subject to service period-based vesting. The award recipient must maintain service with Middlefield Banc Corp. and affiliates until the

third

anniversary of the award to satisfy the service condition. The performance condition will be satisfied if the average total shareholder annual return on Middlefield Banc Corp. stock for the

three

subsequent years is at least

8.00%.

The following table presents the activity during

2017

related to awards of RSUs:

	Units			Weighted Average Grant Date Fair Value Per Share
Nonvested at January 1, 2017		8,995		$	32.93
Granted		5,825		$	38.70
Forfeited		(219	)	$	38.70
Nonvested at December 31, 2017		14,601		$	35.14
Expected to vest at December 31, 2017		14,601		$	35.14