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SIERRA BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
67
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Stock-Based Compensation
At December 31, 2015, the Company had one stock-based compensation plan, the Sierra Bancorp 2007
Stock Incentive Plan (the “2007 Plan”), which was adopted by the Company’s Board of Directors on March
15, 2007 and approved by the Company’s shareholders on May 23, 2007. The 2007 Plan originally covered
1,500,000 shares of the Company’s authorized but unissued common stock, subject to adjustment for stock
splits and dividends, and provides for the issuance of both “incentive” and “nonqualified” stock options to
salaried officers and employees, and of “nonqualified” stock options to non-employee directors. The 2007
Plan also provides for the issuance of restricted stock awards to these same classes of eligible participants.
We have not issued, nor do we currently have plans to issue, restricted stock awards. The 2007 plan
supersedes the Company’s 1998 Stock Option plan (“1998 Plan”) which was terminated. The outstanding
options issued under the 1998 Plan were not affected by this termination
.
Compensation cost and director’s expense is recognized for stock options issued to employees and directors
and is recognized over the required service period, generally defined as the vesting period. The Company
is using the Black-Scholes model to value stock options. The “multiple option” approach is used to allocate
the resulting valuation to actual expense for current period. Expected volatility is based on historical
volatility of the Company’s common stock. 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 subsequent to vesting,
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. The fair value
of each option is estimated on the date of grant using the following assumptions:
2015
2014
2013
(1)
Dividend yield
2.18%
2.08%
N/A
Expected Volatility
26.45% 25.01%
N/A
Risk-free interest rate
1.02%
1.00%
N/A
Expected option life
4.0 years
4.0 years
N/A
(1)
No stock options were issued in 2013.
Years Ended December 31,