14.	EMPLOYEE BENEFITS

Retirement Plan

The Bank maintains section

401(k)

employee savings and investment plans for all full-time employees and officers of the Bank with more than

one

year of service. The Bank’s contributions to the plans are based on

percent matching of voluntary contributions up to

percent of compensation. Employee contributions are vested at all times, and MBC contributions are fully vested after

six

years beginning at the

second

year in

percent increments. Contributions for

2016,

2015,

and

2014,

to these plans amounted to

$156,000,

and

$143,000,

respectively.

Supplemental Retirement Plan

Until

2001,

MBC maintained a Directors’ Retirement Plan to provide postretirement payments over a

ten

-year period to members of the Board of Directors who had completed

five

or more years of service. The plan required payment of

percent of the final average annual board fees paid to a director in the

three

years preceding the director’s retirement.

The following table illustrates the components of the projected payments for the Directors’ Retirement Plan for the years ended:

	Projected Payments

2017	$	23,000
2018		18,000
2019		12,000
2020		10,000
2021		2,000
Total	$	65,000

The retirement plan is available solely for nonemployee directors of The Middlefield Banking Company, but the Bank has not entered into any additional retirement arrangements for nonemployee directors since

2001.

All director participants have retired.

Executive Deferred Compensation Plan

The Company maintains an Executive Deferred Compensation Plan (the “Plan”) to provide post-retirement payments to members of senior management. The Plan agreements are noncontributory, defined contribution arrangements that provide supplemental retirement income benefits to several officers, with contributions made solely by the Bank. During

2016,

2015,

and

2014,

the Company contributed

$99,000,

$65,000,

and

$115,000,

respectively, to the Plan.

Stock Option and Restricted Stock Plan

he Company maintains a stock option and restricted stock plan (“the Plan”) for granting incentive stock options, nonqualified stock options, and restricted stock to key officers and employees and nonemployee directors of the Company. A total of

160,000

shares of authorized and unissued or issued common stock were reserved for issuance under the Plan, which expires

ten

years from the date of board approval of the plan. The per share exercise price of an option granted will not be less than the fair value of a share of common stock on the date the option is granted.

The following table presents share data related to the outstanding options:

				Weighted-					Weighted-
				average					average
				Exercise					Exercise
	2016			Price		2015			Price

Outstanding, January 1	$	31,949		$	25.03	$	46,451		$	27.90
Expired		(2,125	)		40.24		(10,802	)		36.93
Exercised		(500	)		23.00		(2,175	)		21.31
Forfeited		-			-		(1,525	)		33.53

Outstanding, December 31	$	29,324		$	23.67	$	31,949		$	25.03

Exercisable, December 31	$	29,324		$	23.67	$	31,949		$	25.03

The following table summarizes the characteristics of stock options at

December

31,

2016:

			Outstanding						Exercisable
					Contractual		Average				Average
	Exercise				Average		Exercise				Exercise
Grant Date	Price		Shares		Life		Price		Shares		Price


May 16, 2007		37.48		1,337		0.36		37.48		1,337		37.48
December 10, 2007		37.00		1,950		0.93		37.00		1,950		37.00
January 2, 2008		36.25		1,337		1.00		36.25		1,337		36.25
November 10, 2008		23.00		16,500		1.85		23.00		16,500		23.00
May 9, 2011		17.55		8,200		4.35		17.55		8,200		17.55

				29,324						29,324

options were granted for the years ended

December

31,

2016

and

2015.

The Company recognizes compensation expense in the amount of fair value of the common stock at the grant date and as an addition to stockholders’ equity.