On May 21, 2019, the shareholders of the Company approved the Fauquier Bankshares, Inc. Amended and Restated Stock Incentive Plan (the “Plan”). Under the Plan, awards of options, restricted stock, and other stock-based awards may be granted to employees, directors or consultants of the Company or any affiliate. The effective date of the Plan is May 21, 2019 with a termination date of May 21, 2029. The Company’s Board of Directors may terminate, suspend or modify the Plan within certain restrictions. The Plan authorizes for issuance 350,000 shares of the Company’s common stock.

Restricted shares are accounted for using the fair market value of the Company’s common stock on the date on which these shares were awarded. Restricted shares are issued to certain executive officers are subject to a vesting period, whereby the restrictions on the shares lapse on the third anniversary of the date the shares were awarded. Compensation expense for these shares is recognized over the three-year period. The restricted shares issued to nonemployee directors are not subject to a vesting period and compensation expense is recognized on the date the shares are granted. Compensation expense for restricted shares was $40,000 and $39,000, net of forfeitures, for the three months ended June 30, 2019 and 2018, respectively, and $169,000 and $155,000 for the six months ended June 30, 2019 and 2018, respectively. For the six months ended June 30, 2019 and 2018 , there was $241,000 and $265,000, respectively, of total unrecognized compensation expense related to restricted shares. This expense is expected to be recognized through 2022.

A summary of the status of the Company’s unvested restricted shares granted under the Plan is presented below:

	June 30, 2019					June 30, 2018
	Shares			Weighted Average Fair Value Per Share		Shares			Weighted Average Fair Value Per Share
Unvested shares, beginning		22,569		$	17.98		18,062		$	16.44
Granted		12,058			21.69		11,527			21.47
Vested		(10,033	)		21.63		(6,652	)		21.47
Forfeited or surrendered		(960	)		21.27		(368	)		21.47
Unvested shares, ending		23,634		$	20.10		22,569		$	17.98

The Company grants performance-based restricted stock units to certain executive officers. Performance-based restricted stock units are accounted for using the fair market value of the Company’s common stock on the date awarded, and adjusted as the market value of the stock changes. Performance-based restricted stock units issued to executive officers are subject to a vesting period, whereby the restrictions on the rights lapse on the third anniversary of the date the rights were awarded. Until vesting, the rights are not issued and are not included in shares outstanding. Vesting is contingent upon the Company reaching predetermined performance goals as compared with a predetermined peer group of banks. Compensation expense for performance-based restricted stock units was $28,000 and $21,000 for the three months ended June 30, 2019 and 2018, respectively, and $54,000 and $40,000 for the six months ended June 30, 2019 and 2018, respectively. For the six months ended June 30, 2019 and 2018, there was $188,000 and $200,000 of unrecognized compensation expense, respectively, related to these performance-based restricted stock units. This expense is expected to be recognized through 2022 and is dependent upon management reaching the predetermined goals.

A summary of the status of the Company’s unvested performance-based restricted stock units is presented below:

	June 30, 2019				June 30, 2018
	Performance-based Restricted Stock Units		Weighted Average Fair Value Per Share		Performance-based Restricted Stock Units			Weighted Average Fair Value Per Share
Unvested shares, beginning		22,103	$	17.90		18,062		$	16.44
Granted		7,909		21.69		6,867			21.47
Vested		-		-		-			-
Forfeited		-		-		(2,826	)		21.47
Unvested shares, ending		30,012	$	18.98		22,103		$	17.90