NOTE 13: Share-Based Plans

On April 15, 2008, the Corporation's shareholders approved the Amended and Restated C&F Financial Corporation 2004 Incentive Stock Plan (the Amended 2004 Plan), which, among other things, expanded the group of eligible award recipients to include certain key employees of the Corporation, as well as non-employee directors (including non-employee regional or advisory directors). The Amended 2004 Plan authorizes an aggregate of 500,000 shares of Corporation common stock to be issued as equity awards in the form of stock options, stock appreciation rights, restricted stock and/or restricted stock units to key employees and non-employee directors. Since the Amended 2004 Plan's approval in 2008, equity awards have only been issued in the form of restricted stock, which are accounted for using the fair market value of the Corporation's common stock on the date the restricted shares are awarded.

Prior to the approval of the Amended 2004 Plan, the Corporation awarded options to purchase common stock and/or grants of restricted shares of common stock to certain key employees of the Corporation under the plan that was approved by the Corporation's shareholders on April 20, 2004. Options were issued to employees at a price equal to the fair market value of common stock at the date granted. Restricted shares were accounted for using the fair market value of the Corporation's common stock on the date the restricted shares were awarded. All options outstanding under this plan are exercisable as of December 31, 2011. All options expire ten years from the grant date.

Prior to the approval of the plan in 2004, the Corporation granted options to purchase common stock under the Amended and Restated C&F Financial Corporation 1994 Incentive Stock Plan (the 1994 Plan). The 1994 Plan expired on April 30, 2004. The maximum aggregate number of shares that could be issued pursuant to awards made under the 1994 Plan was 500,000. Options were issued to employees at a price equal to the fair market value of common stock at the date granted. All options outstanding under the 1994 Plan are exercisable as of December 31, 2011. All options expire ten years from the grant date.

In 1998, the Board of Directors authorized 25,000 shares of common stock for issuance under the C&F Financial Corporation 1998 Non-Employee Director Stock Compensation Plan (the Director Plan). In 1999, the Director Plan was amended to authorize a total of 150,000 shares for issuance. Under the Director Plan, options were issued to non-employee directors at a price equal to the fair market value of common stock at the date granted. All options outstanding under the Director Plan are exercisable as of December 31, 2011. All options expire ten years from the grant date. In 2008, the Corporation ceased granting awards to non-employee directors under the Director Plan, which expired in 2008, and non-employee directors were added to the group of eligible award recipients under the Amended 2004 Plan.

In 1999, the Board of Directors authorized 25,000 shares of common stock for issuance under the C&F Financial Corporation 1999 Regional Director Stock Compensation Plan (the Regional Director Plan). Options were issued to regional directors of the Bank at a price equal to the fair market value of common stock at the date granted. All options outstanding under the Regional Director Plan are exercisable as of December 31, 2011. All options expire ten years from the grant date. Upon approval of the Amended 2004 Plan in 2008, the Corporation ceased granting awards to regional directors of the Bank under the Regional Director Plan, which expired in 2009, and regional directors of the Bank were added to the group of eligible award recipients under the Amended 2004 Plan.

Stock option transactions under the various plans for the periods indicated were as follows:

	2011							2010					2009
(Dollars in thousands, except for per share amounts)	Shares			Exercise Price*		Intrinsic Value		Shares			Exercise Price*		Shares			Exercise Price*
Outstanding at beginning of year		390,617		$	34.95				417,717		$	33.71		455,017		$	32.71
Granted		-			-				-			-		-			-
Exercised		(34,800	)		18.70				(23,100	)		15.90		(17,100	)		16.91
Cancelled		(30,750	)		35.07				(4,000	)		15.75		(20,200	)		25.35
Outstanding and exercisable at end of year		325,067		$	36.68	$	190		390,617		$	34.95		417,717		$	33.71

*	Weighted average

The total intrinsic value of in-the-money options exercised in 2011 was $131,000. Cash received from option exercises during 2011 was $651,000. The Corporation has a policy of issuing new shares to satisfy the exercise of stock options.

The following table summarizes information about stock options outstanding at December 31, 2011:

	Options Outstanding and Exercisable
Range of Exercise Prices	Number Outstanding at December 31, 2011		Remaining Contractual Life (Years)*		Exercise Price*
$22.30 to $23.49		48,567		.9	$	22.68
$35.20 to $39.60		206,800		3.7		38.25
$40.50 to $46.20		69,700		2.3		41.77
Total		325,067		3.0	$	36.68

*	Weighted average

As permitted under the Amended 2004 Plan, the Corporation awards shares of restricted stock to certain key employees and non-employee directors. Restricted shares awarded to employees are generally subject to a five-year vesting period and restricted shares awarded to non-employee directors are subject to a three-year vesting period. A summary of the activity for restricted stock awards for the periods indicated is presented below:

	2011					2010
	Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value
Nonvested at beginning of year		86,025		$	25.89		58,725		$	28.59
Granted		31,100			23.80		28,850			20.70
Vested		(22,650	)		35.44		-			-
Cancelled		(7,350	)		26.80		(1,550	)		31.40
Nonvested at end of year		87,125		$	22.59		86,025		$	25.89

Compensation is accounted for using the fair market value of the Corporation's common stock on the date the restricted shares are awarded. The weighted-average grant date fair value of restricted stock granted for the years 2011, 2010 and 2009 was $23.80, $20.70 and $16.63, respectively. Compensation expense is charged to income ratably over the vesting periods, and was $363,000 in 2011 $367,000 in 2010 and $318,000 in 2009. As of December 31, 2011, there was $1.27 million of total unrecognized compensation cost related to restricted stock granted under the Amended 2004 Plan. The cost is expected to be recognized through 2016.