NOTE 8: STOCK-BASED COMPENSATION

Stock Option Plan

DNB has a Stock Option Plan for employees and directors. Under the plan, options (both qualified and non-qualified) to purchase a maximum of 793,368 (as adjusted for subsequent stock dividends) shares of DNB’s common stock could be issued to employees and directors. Under the plan, option exercise prices must equal the fair market value of the shares on the date of option grant and the option exercise period may not exceed ten years. Vesting of options under the plan is determined by the Plan Committee. There were 354,090 shares available for grant at June 30, 2015. All options are immediately exercisable. DNB had no expenses during the three and six months ended June 30, 2015 compared to $13,000 and $30,000 during the three and six months ended June 30, 2014. DNB has no anticipated additional expense. Stock option activity is indicated below.



	Number		Weighted Average
	Outstanding		Exercise Price
Outstanding January 1, 2015	163,586	$	15.13
Issued	-		-
Exercised	95,834		19.40
Forfeited	-		-
Expired	-		-
Outstanding June 30, 2015	67,752	$	9.09



	Number		Weighted Average
	Outstanding		Exercise Price
Outstanding January 1, 2014	207,303	$	15.92
Issued	-		-
Exercised	500		6.93
Forfeited	-		-
Expired	-		-
Outstanding June 30, 2014	206,803	$	15.94

The weighted-average price and weighted average remaining contractual life for the outstanding options are listed in the following table for the dates indicated.



June 30, 2015
	Range of				Weighted Average
	Exercise	Number	Number		Exercise	Remaining		Intrinsic
	Prices	Outstanding	Exercisable		Price	Contractual Life		Value
$	6.93-10.99	64,500	64,500	$	8.67	2.66 years	$	1,108,000
	14.00-19.99	3,252	3,252		17.51	0.48 years		27,000
	Total	67,752	67,752	$	9.09	2.56 years	$	1,135,000



December 31, 2014
	Range of				Weighted Average
	Exercise	Number	Number		Exercise	Remaining		Intrinsic
	Prices	Outstanding	Exercisable		Price	Contractual Life		Value
$	6.93-10.99	80,650	80,650	$	8.66	3.15 years	$	1,044,000
	14.00-19.99	34,895	34,895		17.51	0.97 years		143,000
	23.00-24.27	48,041	48,041		24.27	0.29 years		-
	Total	163,586	163,586	$	15.13	1.85 years	$	1,187,000

Other Stock-Based Compensation

DNB maintains an Incentive Equity and Deferred Compensation Plan (the "Plan"). The Plan provides that up to 243,101 (as adjusted for subsequent stock dividends) shares of common stock may be granted, at the discretion of the Board, to individuals of the Corporation. Shares already granted are issuable on the earlier of three or four years (cliff vesting period) after the date of the grant or a change in control of DNB if the recipients are then employed by DNB (“Vest Date”). Upon issuance of the shares, resale of the shares is restricted for an additional one year, during which the shares may not be sold, pledged or otherwise disposed of. Prior to the Vest Date and in the event the recipient terminates association with DNB for reasons other than death, disability or change in control, the recipient forfeits all rights to the shares that would otherwise be issued under the grant.

Share awards granted by the Plan were recorded at the date of award based on the market value of shares. Awards are being amortized to expense over a three or four year cliff-vesting period. DNB records compensation expense equal to the value of the shares being amortized. For the three and six month periods ended June 30, 2015, $78,000 and $165,000 was amortized to expense, respectively. For the three and six month periods ended June 30, 2014, $52,000 and $105,000 was amortized to expense, respectively. As of June 30, 2015, there was approximately $766,000 in additional compensation that will be recognized over the remaining service period of approximately 2.04 years. At June 30, 2015, 117,714 shares were reserved for future grants under the Plan.

Stock grant activity is indicated below:



			Weighted Average
	Shares		Stock Price
Non-vested stock awards—January 1, 2015	75,930	$	17.66
Granted	-		-
Forfeited	1,220		19.36
Vested	-		-
Non-vested stock awards—June 30, 2015	74,710	$	17.35



			Weighted Average
	Shares		Stock Price
Non-vested stock awards—January 1, 2014	50,795	$	15.65
Granted	-		-
Forfeited	-		-
Vested	-		-
Non-vested stock awards—June 30, 2014	50,795	$	15.65