NOTE

: EMPLOYEE BENEFIT PLANS

Equity Plans

May 27, 2015,

the Company’s stockholders voted to approve the Guaranty Federal Bancshares, Inc.

2015

Equity Plan (

the”2015

Plan”). The Plan provides for the grant of up to

250,000

shares of Common Stock under equity awards including stock options, stock awards, restricted stock, stock appreciation rights, performance units, or other equity-based awards payable in cash or stock to key employees and directors of the Company and the Bank. As of

December 31, 2019,

restricted stock for

69,803

shares of Common Stock and

55,823

of performance stock units has been granted under the Plan.

May 26, 2010,

the Company’s stockholders voted to approve the Guaranty Federal Bancshares, Inc.

2010

Equity Plan (

the”2010

Plan”). The Plan provides for the grant of up to

200,000

December 31, 2019,

non-incentive stock options for

25,000

shares and restricted stock for

139,330

shares of Common Stock have been granted under the Plan.

In addition, the Company established

four

stock option plans for the benefit of certain directors, officers and employees of the Company and its subsidiary. A committee of the Company’s Board of Directors administers the plans. The stock options under these plans

may

be either incentive stock options or nonqualified stock options. Incentive stock options can be granted only to participants who are employees of the Company or its subsidiary. The option price must

not

be less than the market value of the Company stock on the date of grant. All options expire

later than

ten

years from the date of grant. The options vest at the rate of

20%

per year over a

five

-year period.

The tables below summarize transactions under the Company’s equity plans:

Stock Options

	Number of shares
	Incentive Stock Option			Non-Incentive Stock Option			Weighted Average Exercise Price
Balance outstanding as of January 1, 2017		60,000			50,000		$	19.95
Granted		-			-			-
Exercised		(3,000	)		-			5.19
Forfeited		(11,000	)		(25,000	)		29.48
Balance outstanding as of December 31, 2017		46,000			25,000		$	15.74
Granted		-			-			-
Exercised		(13,500	)		(10,000	)		7.07
Forfeited		(20,000	)		(10,000	)		28.71
Balance outstanding as of December 31, 2018		12,500			5,000		$	5.14
Granted		-			-			-
Exercised		(12,500	)		(5,000	)		5.12
Forfeited		-			-
Balance outstanding as of December 31, 2019		-			-		$	-
Options exercisable as of December 31, 2019		-			-		$	-

The total intrinsic value of outstanding stock options was

and

$292,200

December 31, 2019

and

2018,

respectively. The total intrinsic value of outstanding exercisable stock options was

and

$292,200

December 31, 2019

and

2018,

respectively. There were

options that vested during

2019,

2018

and

2017.

Restricted Stock

	Number of shares			Weighted Average Grant- Fair Value
Balance of shares non-vested as of January 1, 2017		60,955		$	13.62
Granted		13,386			20.33
Vested		(28,791	)		12.29
Forfeited		-			-
Balance of shares non-vested as of December 31, 2017		45,550		$	16.44
Granted		13,338			22.41
Vested		(26,539	)		16.40
Forfeited		-			-
Balance of shares non-vested as of December 31, 2018		32,349		$	18.93
Granted		15,434			23.85
Vested		(20,771	)		17.67
Forfeited		(2,634	)		22.38
Balance of shares non-vested as of December 31, 2019		24,378		$	22.75

March 2019,

the Company granted

5,502

shares of restricted stock to directors pursuant to the

2015

Equity Plan that have a

one

year cliff vesting and expensed over that same period. In

February 2018,

the Company granted

5,852

shares of restricted stock to directors pursuant to the

2015

Equity Plan that have a

one

year cliff vesting and expensed over that same period. In

February 2017,

the Company granted

6,960

shares of restricted stock to directors pursuant to the

2015

Equity Plan of which

6,195

have a cliff vesting at the end of

one

year and thus, expensed over that same period and

765

shares have a cliff vesting at the end of

three

years, and thus, expensed over that same period. The expense is being recognized over the applicable vesting period. The expense relating to these awards for the years ended

December 31, 2019,

2018

and

2017

was

$131,443,

$138,200

and

$135,274,

respectively.

During

2019,

2018

and

2017,

the Company granted

9,932,

7,486

and

6,426

shares of restricted stock to officers that all have a cliff vesting at the end of

three

years. The expense is being recognized over the applicable vesting period. The expense relating to these awards for the years ended

December 31, 2019,

2018

and

2017

was

$149,279,

$183,815

and

$210,008,

respectively.

Performance

Stock

Units

	Performance Stock Units			Weighted Average Grant-Date Fair Value

Balance of shares non-vested as of January 1, 2017		-		$	-
Granted		55,823			20.48
Vested		-			-
Forfeited		-			-
Balance of shares non-vested as of December 31, 2017		55,823		$	20.48
Granted		-			-
Vested		-			-
Forfeited		(8,501	)		20.48
Balance of shares non-vested as of December 31, 2018		47,322		$	20.48
Granted		-			-
Vested		(30,919	)		20.48
Forfeited		(16,403	)		20.48
Balance of shares non-vested as of December 31, 2019		-		$	-

March 29, 2017,

the Company granted restricted stock units representing

55,823

hypothetical shares of common stock to officers. There are

three

possible levels of incentive awards: threshold (

25%

); target (

50%

); and maximum (

100%

). The restricted stock units vest based on

two

financial performance factors over the period from

March 29, 2017

December 31, 2019 (

the “Performance Period”). The

two

performance measurements of the Company (and the weight given to each measurement) applicable to each award level are as follows: (i) Total Assets (

50%

) and (ii) Return on Average Assets (

50%

). In determining compensation expense, the fair value of the restricted stock unit awards was determined based on the closing price of the Company’s common stock on the date of grant, which was

$20.48

per share. The expense was being recognized over the applicable vesting period. Due to the fact that the measurements could

not

be determined at the time of the grant, the Company estimated that the most likely outcome was the achievement of the target level. Upon vesting at

December 31, 2019,

the conversion rate of the PSUs was

65.33%

(or

30,919

common shares) based on the achievement of the pre-established performance metrics noted above. The total amount of expense for restricted stock units during the years ended

December 31, 2019,

2018

and

2017

was

$359,606,

$263,204

and

$153,242,

respectively.

Total stock-based compensation expense is comprised of expense for restricted stock awards, restricted stock units and stock options. Expense recognized for the years ended

December 31, 2019,

2018

and

2017

was

$640,328,

$585,219

and

$498,524,

respectively. As of

December 31, 2019,

there was

$219,100

of unrecognized compensation expense related to non-vested restricted stock awards and restricted stock units, which will be recognized over the remaining vesting periods.