Note 13 - Stock Option Plan

QNB has stock option plans (the Plans) administered by a committee which consists of three or more members of QNB’s Board of Directors. The Plans provide for the granting of either (i) Non-Qualified Stock Options (NQSOs) or (ii) Incentive Stock Options (ISOs). The exercise price of an option, as defined by the Plans, is the fair market value of QNB’s common stock at the date of grant. The Plans provide for the exercise either in cash or in securities of the Company or in any combination thereof.

The 1998 Plan authorized the issuance of 220,500 shares. The time period by which any option is exercisable under the Plan is determined by the Committee but shall not commence before the expiration of six months after the date of grant or continue beyond the expiration of ten years after the date the option is awarded. The granted options vest after a three-year period. As of December 31, 2017, there were 225,058 options granted, 60,244 options forfeited, 164,814 options exercised and 0 options outstanding under this Plan. The 1998 Plan expired March 10, 2008.

The 2005 Plan authorizes the issuance of 200,000 shares. The terms of the 2005 Plan are identical to the 1998 Plan except the options expire five years after the grant date. As of December 31, 2017, there were 184,200 options granted, 65,350 options forfeited, 81,525 options exercised and 37,025 options outstanding under this Plan. The 2005 Plan expired March 15, 2015.

The 2015 Plan authorizes the issuance of 300,000 shares. The terms of the 2015 Plan are identical to the 2005 plan. There were 48,500 options granted and outstanding and no options forfeited or exercised under this Plan as of December 31, 2017.

As of December 31, 2017, there was approximately $88,000 of unrecognized compensation cost related to unvested stock option awards granted. That cost is expected to be recognized over the next 26 months.

Stock option activity during 2017, 2016, and 2015 was as follows:

	Number of options			Weighted average exercise price		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2014		88,375		$	23.27
Exercised		(13,750	)		18.11
Forfeited		(12,750	)		31.80
Granted		21,000			29.25
Outstanding at December 31, 2015		82,875			24.33
Exercised		(22,700	)		20.90
Forfeited		(9,725	)		25.60
Granted		23,500			30.40
Outstanding at December 31, 2016		73,950			27.14
Exercised		(13,125	)		22.42
Forfeited		(300	)		22.58
Granted		25,000			37.60
Outstanding at December 31, 2017		85,525		$	30.94		2.66	$	1,151
Exercisable at December 31, 2017		19,175		$	24.48		0.72	$	382

As of December 31, 2017, outstanding stock options consist of the following:

	Options outstanding		Exercise price		Remaining life (in years)		Options exercisable		Exercise price
		6,650		23.20		0.06		6,650	$	23.20
		12,525		25.16		1.08		12,525		25.16
		17,850		29.25		2.08		—		—
		23,500		30.40		3.13		—		—
		25,000		37.60		4.13		—		—
Outstanding at December 31, 2017		85,525	$	30.94		2.66		19,175	$	24.48

The intrinsic value related to total stock options exercised during 2017, 2016, and 2015 are as follows:

		2017				2016				2015
Intrinsic value of stock options exercised		$	204			$	234			$	148