Note 11

STOCK-BASED COMPENSATION

At December 31, 2018, the Company had three stock-based compensation plans, consisting of the 2011 Associate Incentive Plan (“AIP”), the 2011 Associate Stock Purchase Plan (“ASPP”), and the 2011 Director Stock Purchase Plan (“DSPP”).  These plans, which were approved by the shareowners in April 2011, replaced substantially similar plans approved by the shareowners in 2004. Total compensation expense associated with these plans for 2016 through 2018 was $1.8 million, $2.0 million, and $1.9 million, respectively.

AIP.  The AIP allows the Company's Board of Directors to award key associates various forms of equity-based incentive compensation.  Under the 2011 AIP there were 875,000 shares reserved for issuance. In 2018, the Company, pursuant to the terms and conditions of the AIP, created the 2018 Incentive Plan (“2018 Plan”), under which all participants in the 2018 Plan were eligible to earn performance shares. Awards under the 2018 Plan were tied to internally established performance goals. At base level targets, the grant-date fair value of the shares eligible to be awarded in 2018 was approximately $0.9 million. Approximately 75% of the award is in the form of stock and 25% in the form of a cash bonus. For 2018, a total of 28,800 shares were eligible for issuance, but additional shares could be earned if performance exceeded established goals. A total of 34,436 shares were earned for 2018. The Company recognized expense of $1.1 million, $0.8 million, and $1.2 million for years ended 2018, 2017 and 2016, respectively.

Executive Long-Term Incentive Plan (“LTIP”). In 2007, the Company established a Performance Share Unit Plan under the provisions of the AIP that allows William G. Smith, Jr., the Chairman, President, and Chief Executive Officer of CCBG, Inc. to earn shares based on the compound annual growth rate in diluted earnings per share over a three-year period. At December 31, 2018, there were three LTIP agreements in place for the years 2016-2018. The Company recognized $0.3 million, $0.6 million, and $0.3 million in expense for years 2018, 2017 and 2016, respectively, under these LTIP agreements. At Mr. Smith’s request, the Compensation Committee, with board approval, exercised its negative discretion option whereby the grant for the three-year period beginning 2016 was cancelled and therefore there was no pay-out. In addition, the Company entered into similar LTIP agreements with Thomas A. Barron, the President of CCB for the years 2016-2018 that allows shares to be earned based on the compound annual growth rate in diluted earnings per share over a three-year period. At December 31, 2018, there were three LTIP agreements in place for the years 2016-2018. The Company recognized $0.2 million, $0.4, and $0.2 million in expense for years 2018, 2017 and 2016, respectively. Shares issued under Mr. Barron’s LTIP plans were 9,810 in 2018 and 6,450 in 2017. The Company also entered into a similar agreement with J. Kimbrough Davis, Chief Financial Officer of the Company, which is being phased in over a three-year period (2017-2019) that allows shares to be earned based on the compound annual growth rate in diluted earnings per share. The Company recognized $0.2 million and $0.1 million in expense for the years ended 2018 and 2017, respectively, under this agreement. Shares issued under Mr. Davis’s LTIP plan were 2,406 in 2018.

After deducting the shares earned in 2018 under the AIP and LTIP, 426,472 shares remain eligible for issuance under the 2011 AIP.

DSPP.  The Company’s DSPP allows the directors to purchase the Company’s common stock at a price equal to 90% of the closing price on the date of purchase.  Stock purchases under the DSPP are limited to the amount of the directors' annual retainer and meeting fees.  Under the 2011 DSPP there were 150,000 shares reserved for issuance.  For 2018, the Company issued 14,470 shares and recognized approximately $35,000 in expense under the DSPP. For 2017, the Company issued 10,340 shares and recognized approximately $22,000 in expense under the DSPP. For 2016, the Company issued 15,530 shares under the DSPP and recognized approximately $23,000 in expense related to this plan.  At December 31, 2018, there are 33,910 shares eligible for issuance under the 2011 DSPP.

ASPP.  Under the Company’s ASPP, substantially all associates may purchase the Company’s common stock through payroll deductions at a price equal to 90% of the lower of the fair market value at the beginning or end of each six-month offering period.  Stock purchases under the ASPP are limited to 10% of an associate's eligible compensation, up to a maximum of $25,000 (fair market value on each enrollment date) in any plan year.  Under the 2011 ASPP there were 593,750 shares of common stock reserved for issuance.   For 2018, 19,503 shares were acquired and approximately $70,000 in expense was recognized under the ASPP. For 2017, 28,874 shares were acquired and approximately $94,000 in expense was recognized under the ASPP. For 2016, 44,782 shares were acquired under the ASPP and approximately $100,000 in expense was recognized related to this plan. At December 31, 2018, 304,073 shares remained eligible for issuance under the ASPP.

Based on the Black-Scholes option pricing model, the weighted average estimated fair value of each of the purchase rights granted under the ASPP was $3.57 for 2018.  For 2017 and 2016, the weighted average fair value purchase right granted was $3.28 and $2.22, respectively.  In calculating compensation, the fair value of each stock purchase right was estimated on the date of grant using the following weighted average assumptions: