Note 17. Stock Based Compensation

In 2004, the Corporation adopted the Employee Stock Purchase Plan of 2004 (ESPP). Under the ESPP of 2004, options for 250,000 shares of stock can be issued to eligible employees. The number of shares that can be purchased by each participant is defined by the plan and the Board of Directors sets the option price. However, the option price cannot be less than 90% of the fair market value of a share of the Corporation’s common stock on the date the option is granted. The Board of Directors also determines the expiration date of the options; however, no option may have a term that exceeds one year from the grant date. ESPP options are exercisable immediately upon grant. Any shares related to unexercised options are available for future grant The Board of Directors may amend, suspend or terminate the ESPP at any time. The grant price of the 2019 ESPP options was set at 95% of the stock’s fair value at the time of the award.

In 2019 the Corporation approved the 2019 Omnibus Stock Incentive Plan (Stock Plan), replacing the Incentive Stock Option Plan of 2013 (ISOP). No new awards will be made under the 2013 plan; however, any awards made under the 2013 plan remain outstanding under the terms they were issued. Under the Stock Plan, 400,000 shares have been authorized to be issued, inclusive of the remaining shares available under the 2013 plan that were rolled into the Stock Plan. The Stock Plan allows for various types of awards including incentive stock options, restricted stock and stock appreciation rights. At December 31, 2019, no awards have been made under the Stock Plan.

The ESPP and ISOP options outstanding at December 31, 2019 are all exercisable. The ESPP options expire on June 30, 2020 and the ISOP options expire 10 years from the grant date. The following table summarizes the stock option activity:


(Dollars in thousands except share and per share data)
	ESPP	Weighted Average		Aggregate
	Options	Price Per Share		Intrinsic Value
Balance Outstanding at December 31, 2017	17,837	$	29.95	$	132
Granted	19,790		32.73
Exercised	(3,257)		30.54
Expired	(15,992)		30.07
Balance Outstanding at December 31, 2018	18,378	$	32.73	$	-
Granted	19,644		36.21
Exercised	(2,270)		32.75
Expired	(16,641)		32.84
Balance Outstanding at December 31, 2019	19,111	$	36.21	$	47

Shares available for future grants at December 31, 2019	193,281


	ISOP	Weighted Average		Aggregate
	Options	Price Per Share		Intrinsic Value
Balance Outstanding at December 31, 2017	85,225	$	24.75	$	1,075
Granted	34,054		34.10
Exercised	(12,268)		21.55
Forfeited	(3,000)		23.77
Balance Outstanding at December 31, 2018	104,011	$	28.22	$	341
Granted	—		—
Exercised	(8,482)		22.82
Forfeited	(2,550)		34.10
Balance Outstanding at December 31, 2019	92,979	$	28.55	$	943

Shares available for future grants at December 31, 2019	307,021

The following table provides information about the options outstanding at December 31, 2019:


	Options					Weighted
	Outstanding		Exercise Price or	Weighted Average		Average Remaining
Stock Option Plan	and Exercisable		Price Range	Exercise Price		Life (years)
Employee Stock Purchase Plan	19,111	$	36.21	$	36.21	0.5

Incentive Stock Option Plan	31,225		21.27 - 22.05		21.54	5.8
Incentive Stock Option Plan	30,250		30.00		30.00	7.2
Incentive Stock Option Plan	31,504		34.10		34.10	8.2
ISOP Total/Average	92,979			$	28.55	7.0

The fair value of the ISOP options granted has been estimated using the Black-Scholes method and the following assumptions for the years shown:


	2019		2018
Incentive Stock Option Plan
Options granted		—		34,054
Risk-free interest rate		—		2.66%
Expected volatility of the Corporation's stock		—		19.51%
Expected dividend yield		—		2.49%
Expected life (in years)		—		5.25
Weighted average fair value of options granted	$	—	$	5.42

(Dollars in thousands)
Compensation expense included in net income
ESPP	$	—	$	—
ISOP		—		185
Total compensation expense included in net income	$	—	$	185

The Corporation uses the “simplified” method for estimating the expected term of the ISO award. The risk-free interest rate is the U.S. Treasury rate commensurate with the expected average life of the option at the date of grant. The volatility of the Corporation’s stock is based on historical volatility for a period equal to the term of the award and the dividend yield is the yield at the date of the award. There is no unrecognized compensation expense on any options outstanding at December 31, 2019.