Finward Bancorp Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Stock Based Compensation

Stock Based Compensation

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 12 Stock Based Compensation

The Bancorp’s 2015 Stock Option and Incentive Plan (the Plan), which was adopted by the Bancorp’s Board of Directors on February 17, 2015 and approved by the Bancorp’s shareholders on April 24, 2015, permits the grant of equity awards for up to 250,000 shares of common stock. Awards granted under the Plan may be in the form of incentive stock options, non-qualified stock options, restricted stock, unrestricted stock, performance shares, or performance units. The purposes of the Plan are (i) to align the personal interests of Plan participants with those of the shareholders of the Bancorp, (ii) to encourage key individuals to accept or continue employment or service with the Bancorp and its subsidiaries, and (iii) to furnish incentives to such key individuals to improve operations and increase profits by providing such key individuals the opportunity to acquire common stock of the Bancorp or to receive monetary payments based on the value of such common stock. Option awards are generally granted with an exercise price equal to the market price of the Bancorp’s common stock at the date of grant. No expense was charged against income for incentive stock options during 2015 or 2014. The Plan was adopted to replace the Bancorp’s 2004 Stock Option Plan, which terminated on April 20, 2015. No further awards will be made under the 2004 Stock Option Plan.

The fair value of each incentive stock option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model. Expected volatilities are based on historical volatilities of the Company’s common stock. No incentive stock options were granted during 2015 or 2014. The Company uses historical data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

A summary of the Bancorp’s stock option activity for 2015 and 2014 follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at January 1, 2014		6,350		$	29.82
Granted		-			-
Exercised		-			-
Forfeited or expired		(5,600	)		30.00
Outstanding at end of year		750		$	28.50		3.2	$	-
Vested or expected to vest		750		$	28.50		3.2	$	-
Exercisable at December 31, 2014		750		$	28.50		3.2	$	-

Outstanding at January 1, 2015		750		$	28.50
Granted		-			-
Exercised		-			-
Forfeited or expired		-			-
Outstanding at end of year		750		$	28.50		2.2	$	-
Vested or expected to vest		750		$	28.50		2.2	$	-
Exercisable at December 31, 2015		750		$	28.50		2.2	$	-

As of December 31, 2015, there were no unrecognized compensation costs related to non-vested incentive stock options granted under the Plan.

Restricted stock awards are generally granted with an award price equal to the market price of the Bancorp’s common stock on the award date. Restricted stock awards have been issued with a five year vesting period. Forfeiture provisions exist for personnel that separate employment before the vesting period expires. Compensation expense related to restricted stock awards is recognized over the vesting period. Total compensation cost that has been charged against income for those plans was approximately $96 thousand and $61 thousand for 2015 and 2014, respectively.

A summary of changes in the Bancorp’s non-vested restricted stock for 2015 and 2014 follows:

Non-vested Shares	Shares			Weighted Average Grant Date Fair Value
Non-vested at January 1, 2014		11,100		$	21.54
Granted		4,175			26.32
Vested		(2,500	)		18.86
Forefited		-			-
Non-vested at December 31, 2014		12,775		$	23.63

Non-vested at January 1, 2015		12,775		$	23.63
Granted		7,250			27.50
Vested		(300	)		16.75
Forefited		-			-
Non-vested at December 31, 2015		19,725		$	25.15

As of December 31, 2015, there was approximately $316 thousand of total unrecognized compensation cost related to non-vested restricted shares granted under the Plan. The cost is expected to be recognized over a weighted-average period of 3.1 years.