How do I return a lost iPhone with Activation Lock?

If you ever find another electronic device - Apple or otherwise - please don't wait for someone to come pick it up. Turn it in to the local police. That is probably where the owner tried looking for it.

Activation Lock renders it useless to you or anyone else, except the person who locked it. That person has probably obtained a new iPhone and moved on. He or she likely left it locked to protect any information on it.

There is nothing more you can do. Apple will not take it as a trade-in since it is activation locked. The most responsible thing to do would be to take in for recycling at an Apple Store or any store that accepts electronics for recycling. Some stores, like Staples, will offer a small store credit in return.

You should have turned it in to a lost & found department or a nearby police station at the time.

I guess you still could turn it in to the police, but it seems unlikely the owner will be reunited with it after all of this time. Since you are not the owner and do not have the credentials to remove the Activation Lock, that phone will forever remain a "brick" – by design.

The only thing left to do might be to recycle it.

drop it in the electronics recycle bin at your local Apple Store or other electronics retailer.