Note 17 – Stock Incentive Plans

At the Annual Shareholders Meeting on May 21, 2014, shareholders approved the Virginia National Bankshares Corporation 2014 Stock Incentive Plan (“2014 Plan”). The 2014 Plan makes available up to 250,000 shares of the Company's common stock to be issued to plan participants. Similar to the Company's 2003 Stock Incentive Plan (“2003 Plan”) and 2005 Stock Incentive Plan (“2005 Plan”), the 2014 Plan provides for granting of both incentive and nonqualified stock options, as well as restricted stock and other stock based awards. The 2005 Plan expired on December 20, 2014. No new grants will be issued under the 2003 Plan or the 2005 Plan as these plans have expired.

For all of the Company's stock incentive plans (the "Plans"), the option price of incentive options will not be less than the fair value of the stock at the time an option is granted. Nonqualified options may be granted at prices established by the Board of Directors, including prices less than the fair market value on the date of grant. Outstanding options generally expire in ten years from the grant date. Stock options generally vest by the fourth or fifth anniversary of the date of the grant.

A summary of the shares issued and available under each of the Company's stock incentive plans (the “Plans”) is shown below as of December 31, 2015. Although the 2003 Plan and 2005 Plan have expired and no new grants will be issued under these plans, there were shares issued before the plans expired which are still outstanding as shown below.

	2003 Plan	2005 Plan	2014 Plan
Aggregate shares issuable	128,369	230,000	250,000
Options issued, net of forfeited and
expired options	(108,054)	(124,547)	-
Cancelled due to Plan expiration	(20,315)	(105,453)	-
Remaining available for grant	-	-	250,000

Grants issued and outstanding:
Total vested and unvested shares	30,214	121,904	-
Fully vested shares	30,214	115,654	-

Exercise price range	$15.65 to $18.26	$11.74 to $36.74	N/A

The Company accounts for all of its stock incentive plans under recognition and measurement accounting principles which require that the compensation cost relating to stock-based payment transactions be recognized in financial statements. Stock-based compensation arrangements include stock options and restricted stock. All stock-based payments to employees are required to be valued using a fair value method on the date of grant and expensed based on that fair value over the applicable vesting period. For the years ended December 31, 2015 and December 31, 2014, the Company recognized $30,000 and $52,000, respectively, in compensation expense for stock options and restricted stock grants. As of December 31, 2015, there was $36,000 in unamortized compensation expense remaining to be recognized in future reporting periods through 2017.

Stock Options

Changes in the stock options outstanding related to the Plans are summarized as follows:

	December 31, 2015
			Weighted Average		Aggregate
	Number of Options		Exercise Price		Intrinsic Value
Outstanding at January 1, 2015	180,796		$	25.86	$	271
Exercised	(1,250)			18.10
Expired	(18,400	)		31.21
Forfeited	(9,028	)		24.46
Outstanding at December 31, 2015	152,118		$	25.36	$	354

Options exercisable at December 31, 2015	145,868		$	25.72	$	309

There was no intrinsic value for the options exercised during the year ended December 31, 2015.

The fair value of any grant is estimated at the grant date using the Black-Scholes pricing model. During the first quarter of 2014, there was one stock option grant for 5,000 shares. No other stock option grant has been issued during the years ended December 31, 2015 and 2014.

Summary information pertaining to options outstanding at December 31, 2015 is as follows:

			Weighted-Average	Weighted				Weighted-
			Remaining	Average Exercise				Average Exercise
Exercise Price	Options Outstanding		Contractual Life	Price		Options Exercisable		Price
$11.74 to 20.00		45,764	4.5 Years	$	17.17		39,514	$	17.22
$20.01 to 30.00		58,514	2.2 Years		24.83		58,514		24.83
$30.01 to 36.74		47,840	0.6 Years		33.83		47,840		33.83
Total		152,118	2.4 Years	$	25.36		145,868	$	25.72

Restricted Stock

The restricted stock that had been outstanding as of January 1, 2014 was fully vested in November 2014. No restricted stock grants were awarded during 2015 or 2014.