Note

13.

Stock Compensation Plans

May

13,

2014,

the Company’s shareholders approved the First National Corporation

2014

Stock Incentive Plan, which makes available up to

240,000

shares of common stock for the granting of stock options, restricted stock awards, stock appreciation rights, and other stock-based awards. Awards are made at the discretion of the Board of Directors and compensation cost equal to the fair value of the award is recognized over the vesting period.

Stock Awards

Whenever the Company deems it appropriate to grant a stock award, the recipient receives a specified number of unrestricted shares of employer stock. Stock awards

may

be made by the Company at its discretion without cash consideration and

may

be granted as settlement of a performance-based compensation award. The Company did

not

have compensation expense related to stock awards for the

three

months ended

March 31, 2020

and

2019

Restricted Stock Units

Restricted stock units are an award of units that correspond in number and value to a specified number of shares of employer stock which the recipient receives according to a vesting plan and distribution schedule after achieving required performance milestones or upon remaining with the employer for a particular length of time. Each restricted stock unit that vests entitles the recipient to receive

one

share of common stock on a specified issuance date.

In the

first

quarter of

2020

14,457

restricted stock units were granted to employees, with

4,825

units vesting immediately and

9,632

units subject to a

two

year vesting schedule with

one

half of the units vesting each year on the grant date anniversary. The recipient does

not

have any stockholder rights, including voting, dividend, or liquidation rights, with respect to the shares underlying awarded restricted stock units until vesting has occurred and the recipient becomes the record holder of those shares. The unvested restricted stock units will vest on the established schedule if the employees remain employed by the Company on future vesting dates.

A summary of the activity for the Company’s restricted stock units for the period indicated is presented in the following table:

	Three Months Ended
	March 31, 2020
	Shares			Weighted Average Grant Date Fair Value
Unvested, beginning of year		10,393		$	19.26
Granted		14,457			20.94
Vested		(8,992	)		19.96
Forfeited		—			—
Unvested, end of period		15,858		$	20.40

March 31, 2020

, based on restricted stock unit awards outstanding at that time, the total unrecognized pre-tax compensation expense related to unvested restricted stock unit awards was

$285

thousand. This expense is expected to be recognized through

2024.

Compensation expense related to restricted stock unit awards recognized for the

three

months ended

March 31, 2020

and

2019

totaled

$132

thousand and

$43

thousand, respectively.