Stock Based Compensation

LCNB established an Ownership Incentive Plan (the "2002 Plan") during 2002 that allowed for stock-based awards to eligible employees, as determined by the Board of Directors. The awards were made in the form of stock options, share awards, and/or appreciation rights. The 2002 Plan provided for the issuance of up to 200,000 shares of common stock. The 2002 Plan expired on April 16, 2012. Any outstanding unexercised options, however, continue to be exercisable in accordance with their terms.

The 2015 Ownership Incentive Plan (the "2015 Plan") was ratified by LCNB's shareholders at the annual meeting on April 28, 2015 and allows for stock-based awards to eligible employees, as determined by the Compensation Committee of the Board of Directors. Awards may be made in the form of stock options, appreciation rights, restricted shares, and/or restricted share units. The 2015 Plan provides for the issuance of up to 450,000 shares of common stock. The 2015 Plan will terminate on April 28, 2025 and is subject to earlier termination by the Compensation Committee.

Stock-based awards may be in the form of treasury shares or newly issued shares.

LCNB has not granted stock option awards since 2012. Options granted to date under the 2002 Plan vest ratably over a five-year period and expire ten years after the date of grant. Stock options outstanding at March 31, 2018 were as follows:



	Outstanding Stock Options				Exercisable Stock Options
Exercise Price Range	Number	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Number	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
$9.00 - $10.99	4,356	$	9.00	0.8	4,356	$	9.00	0.8
$11.00 - $12.99	13,278	11.98		2.9	13,278	11.98		2.9
	17,634	11.25		2.4	17,634	11.25		2.4

The following table summarizes stock option activity for the periods indicated:



	Three Months Ended March 31,
	2018				2017
	Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price
Outstanding, January 1,	20,265		$	11.42	24,669		$	12.17
Exercised	(2,631	)	12.55		(3,398	)	14.97
Expired	—		—		(1,006	)	17.88
Outstanding, March 31,	17,634		11.25		20,265		11.42
Exercisable, March 31,	17,634		11.25		20,265		11.42

The following table provides information related to stock options exercised during the periods indicated (in thousands):



	Three Months Ended March 31,
	2018		2017
Intrinsic value of options exercised	$	17	$	25
Cash received from options exercised	33		51
Tax benefit realized from options exercised	2		5

The aggregate intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) for options outstanding and exercisable at March 31, 2018 that were "in the money" (market price greater than exercise price) was $137,000. The aggregate intrinsic value for options outstanding and exercisable at March 31, 2017 that were in the money was $252,000. The intrinsic value changes based upon fluctuations in the market value of LCNB's common stock.

Compensation cost related to option awards was recognized in full during the first quarter 2017. Total expense related to options included in salaries and employee benefits for the three months ended March 31, 2017 was $1,000 and the related tax benefit was $0.

Restricted stock awards granted under the 2015 Plan were as follows:



	2018				2017
	Shares		Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Outstanding, January 1,	8,817		$	16.44	8,624	$	15.47
Granted	10,634		19.20		4,027	22.60
Vested	(669	)	22.60		—	—
Forfeited	—		—		—	—
Outstanding, March 31,	18,782		$	17.78	12,651	$	17.74

Total expense related to restricted stock awards included in salaries and wages in the consolidated condensed statements of income for the three months ended March 31, 2018 was $56,000 and the related tax benefit was $12,000. Unrecognized compensation expense for restricted stock awards was $232,000 at March 31, 2018 and is expected to be recognized over a period of 4.0 years. Total expense related to restricted stock awards included in salaries and wages in the consolidated condensed statements of income for the three months ended March 31, 2017 was $56,000 and the related tax benefit was $19,000, respectively.