NOTE 9: 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 327,964 shares available for grant at March 31, 2013. All options with the exception of 44,600 options granted on April 23, 2010 and 44,600 options granted on December 12, 2011 are immediately exercisable. DNB expensed $17,000 during the three months ended March 31, 2013 and anticipates additional expense of $25,000 through April 23, 2014 for the options granted on April 23, 2010 and $79,000 through December 12, 2014 for the options granted on December 12, 2011, the dates the options can first be exercised. Stock option activity is indicated below.



	Number		Weighted Average
	Outstanding		Exercise Price
Outstanding January 1, 2013	214,618	$	15.98
Issued	-		-
Exercised	-		-
Forfeited	-		-
Expired	-		-
Outstanding March 31, 2013	214,618	$	15.98



	Number		Weighted Average
	Outstanding		Exercise Price
Outstanding January 1, 2012	236,438	$	15.98
Issued	-		-
Exercised	-		-
Forfeited	-		-
Expired	-		-
Outstanding March 31, 2012	236,438	$	15.98

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



	March 31, 2013
	Range of				Weighted Average
	Exercise	Number	Number		Exercise	Remaining		Intrinsic
	Prices	Outstanding	Exercisable		Price	Contractual Life		Value
$	6.93-10.99	86,050	-	$	8.67	4.91 years	$	699,000
	14.00-19.99	61,715	61,715		17.62	2.47 years		-
	20.00-22.99	18,812	18,812		22.78	1.73 years		-
	23.00-24.27	48,041	48,041		24.27	2.05 years		-
	Total	214,618	128,568	$	15.98	3.29 years	$	699,000



	March 31, 2012
	Range of				Weighted Average
	Exercise	Number	Number		Exercise	Remaining		Intrinsic
	Prices	Outstanding	Exercisable		Price	Contractual Life		Value
$	6.93-10.99	88,200	-	$	8.64	5.89 years	$	493,000
	14.00-19.99	81,096	81,096		17.44	2.71 years		-
	20.00-22.99	19,101	19,101		22.78	2.73 years		-
	23.00-24.27	48,041	48,041		24.27	3.05 years		-
	Total	236,438	148,238	$	15.98	3.97 years	$	493,000

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 years 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 the three-year cliff-vesting period. DNB records compensation expense equal to the value of the shares being amortized. For the three month period ended March 31, 2013, $40,000 was amortized to expense. For the three month period ended March 31, 2012, $18,000 was amortized to expense. As of March 31, 2013, there was approximately $379,000 in additional compensation that will be recognized over the remaining service period of approximately 1.72 years. At March 31, 2013, 158,354 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, 2013	48,270	$	11.39
Granted	-		-
Forfeited	-		-
Vested	-		-
Non-vested stock awards—March 31, 2013	48,270	$	11.39



			Weighted Average
	Shares		Stock Price
Non-vested stock awards—January 1, 2012	29,200	$	8.67
Granted	-		-
Forfeited	-		-
Vested	-		-
Non-vested stock awards—March 31, 2012	29,200	$	8.67