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 in which these shares were awarded. Restricted shares are issued to certain executive officers and 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 at the date the shares are granted. Compensation expense for restricted shares amounted to $243,000, $223,000 and $168,000, net of forfeiture, for the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, there was $156,000 of total unrecognized compensation cost related to restricted shares. This amount is expected to be recognized through 2022.

	December 31, 2019					December 31, 2018
	Shares			Weighted Average Grant Date Fair Value Per Share		Shares			Weighted Average Grant Date Fair Value Per Share
Unvested shares, beginning		22,569		$	18.08		18,062		$	16.58
Granted		12,058			21.69		11,527			21.47
Vested		(12,105	)		21.20		(6,652	)		21.47
Forfeited or surrendered		(2,170	)		20.46		(368	)		21.47
Unvested shares, ending		20,352		$	20.20		22,569		$	18.08

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 units were awarded. Until vesting, the shares underlying the units 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 totaled $97,000, $80,000 and $48,000 for the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, there was $113,000 unrecognized compensation expense 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.

The table below summarizes the Company’s unvested performance-based stock units.

	December 31, 2019				December 31, 2018
	Shares		Weighted Average Fair Value Per Share		Performance Based Stock Rights			Weighted Average Fair Value Per Share
Unvested shares, beginning		22,103	$	17.90		18,062		$	16.58
Granted		7,909		21.69		6,867			21.47
Forfeited		-		-		(2,826	)		21.47
Unvested shares, ending		30,012	$	18.90		22,103		$	17.90