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STOCK PLANS AND STOCK BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2023
STOCK PLANS AND STOCK BASED COMPENSATION |
STOCK PLANS AND STOCK BASED COMPENSATION |
16. | STOCK PLANS AND STOCK BASED COMPENSATION
​ In January 2015, the Company’s Board of Directors adopted the Republic Bancorp, Inc. 2015 Stock Incentive Plan (the “2015 Plan”), which replaced the 2005 Stock Incentive Plan. The number of authorized shares under the 2015 Plan is fixed at 3,000,000, with such number subject to adjustment in the event of certain events, such as stock dividends, stock splits, or the like. There is a minimum three-year vesting period for awards granted to employees under the 2015 Plan that vest based solely on the completion of a specified period of service, with options generally exercisable three to six years after the issue date. Stock options generally must be exercised within one year from the date the options become exercisable and have an exercise price that is at least equal to the fair market value of the Company’s stock on their grant date. ​ All shares issued under the 2015 Plan were from authorized and reserved unissued shares. The Company has a sufficient number of authorized and reserved unissued shares to satisfy all anticipated option exercises. There are no Class B stock options outstanding or available for exercise under the Company’s plans. ​ Stock Options ​ The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes based stock option valuation model. This model requires the input of subjective assumptions that will usually have a significant impact on the fair value estimate. Expected volatilities are based on historical volatility of Republic’s stock and other factors. Expected dividends are based on dividend trends and the market price of Republic’s stock price at grant. Republic uses historical data to estimate option exercises and employee terminations within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve at the time of grant. ​ All share-based payments to employees, including grants of employee stock options, are recognized as compensation expense over the service period (generally the vesting period) in the consolidated financial statements based on their fair values. ​ The fair value of stock options granted was determined using the following weighted average assumptions as of grant date: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years Ended December 31, | ​ | 2023 |  | 2022 |  | 2021 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Risk-free interest rate | ​ | ​ | 3.86 | % | ​ | 1.35 | % | ​ | 0.20 | %
Expected dividend yield | ​ | ​ | 3.19 | ​ | ​ | 2.50 | ​ | ​ | 3.18 | ​
Expected stock price volatility | ​ | ​ | 33.14 | ​ | ​ | 32.12 | ​ | ​ | 31.71 | ​
Expected life of options (in years) | ​ | ​ | 4 | ​ | ​ | 4 | ​ | ​ | 4 | ​
Estimated fair value per share | ​ | $ | 9.65 | ​ | $ | 10.41 | ​ | $ | 6.26 | ​
​ The following table summarizes stock option activity from January 1, 2022 through December 31, 2023: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  |  |  |  | ​ |  | Weighted |  |  | ​
​ | ​ | ​ | ​ | Weighted | ​ | Average | ​ | ​ | ​
​ | ​ | Options | ​ | Average | ​ | Remaining | ​ | Aggregate
​ | ​ | Class A | ​ | Exercise | ​ | Contractual | ​ | Intrinsic
​ |  | Shares |  | Price |  | Term (years) |  | Value
Outstanding, January 1, 2022 | ​ | 460,502 | ​ | $ | 37.54 | ​ | ​ | ​ | ​ | ​
Granted |  | 54,281 | ​ |  | 50.34 | ​ | ​ | ​ | ​ | ​
Exercised |  | (5,250) | ​ |  | 34.17 | ​ | ​ | ​ | ​ | ​
Forfeited or expired |  | (44,500) | ​ |  | 40.32 | ​ | ​ | ​ | ​ | ​
Outstanding, December 31, 2022 | ​ | 465,033 | ​ | $ | 38.81 | ​ | 2.25 | ​ | $ | 2,322,635
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Outstanding, January 1, 2023 | ​ | 465,033 | ​ | $ | 38.81 | ​ | ​ | ​ | ​ | ​
Granted |  | 69,617 | ​ |  | 42.74 | ​ | ​ | ​ | ​ | ​
Exercised |  | (10,000) | ​ |  | 46.08 | ​ | ​ | ​ | ​ | ​
Forfeited or expired |  | (64,000) | ​ |  | 45.09 | ​ | ​ | ​ | ​ | ​
Outstanding, December 31, 2023 | ​ | 460,650 | ​ | $ | 38.37 | ​ | 1.87 | ​ | $ | 7,734,879
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Unvested |  | 287,148 | ​ | $ | 38.76 |  | 2.42 | ​ | $ | 4,708,333
Exercisable (vested) at December 31, 2023 |  | 173,502 | ​ | $ | 37.72 |  | 0.96 | ​ | $ | 3,026,546
​ Information related to the stock options during each year follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years Ended December 31, (in thousands, except per share data) |  | 2023 |  | 2022 |  | 2021
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total intrinsic value of options exercised | ​ | $ | 58 | ​ | $ | 57 | ​ | $ | 1,335
Total cash received from options exercised, net of shares redeemed | ​ |  | (2) | ​ |  | 52 | ​ |  | (142)
Total tax benefit of options exercised | ​ | ​ | 1 | ​ | ​ | 6 | ​ | ​ | 223
​ Loan balances of employees that were originated solely to fund stock option exercises were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, (in thousands) |  | 2023 |  | 2022
​ | ​ | ​ | ​ | ​ | ​ | ​
Outstanding loans | ​ | $ | 129 | ​ | $ | 178
​ ​ Restricted Stock Awards ​ Restricted stock awards generally vest within three to six years after issuance, with accelerated vesting due to “change in control” or “death or disability of a participant” as defined and outlined in the 2015 Plan. The following table summarizes all restricted stock activity from January 1, 2022 through December 31, 2023: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Restricted |  | Weighted-Average |  | Weighted-Average
​ | ​ | Stock Awards | ​ | Grant Date |  | Remaining Contractual
​ | ​ | Class A Shares | ​ | Fair Value |  | Term (years)
Outstanding, January 1, 2022 | ​ | 56,059 | ​ | $ | 39.12 | ​ | ​ | ​
Granted |  | 12,174 | ​ |  | 46.05 | ​ | ​ | ​
Forfeited |  | — | ​ |  | — | ​ | ​ | ​
Earned and issued |  | (3,500) | ​ |  | 37.74 | ​ | ​ | ​
Outstanding, December 31, 2022 |  | 64,733 | ​ | $ | 40.49 | ​ | 2.25
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Outstanding, January 1, 2023 | ​ | 64,733 | ​ | $ | 40.49 | ​ | ​ | ​
Granted |  | 55,157 | ​ |  | 43.60 | ​ | ​ | ​
Forfeited |  | (1,470) | ​ |  | 49.08 | ​ | ​ | ​
Earned and issued |  | (31,354) | ​ |  | 37.56 | ​ | ​ | ​
Outstanding, December 31, 2023 |  | 87,066 | ​ | $ | 43.37 | ​ | 1.98
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Unvested |  | 87,066 | ​ | $ | 43.37 |  | 1.98
​ The fair value of the restricted stock awards is based on the closing stock price on the date of grant with the associated expense amortized to compensation expense over the vesting period, generally three to six years. The total fair value of restricted shares that vested during 2023, 2022, and 2021 was approximately $1.5 million, $186,000, and $50,000. ​ Performance Stock Units ​ Performance stock units are earned within one year of issuance and vest within three years of issuance, with accelerated vesting due to “change in control” or “death or disability of a participant” as defined and outlined in the 2015 Plan. ​ The following table summarizes all PSU activity from January 1, 2022 through December 31, 2023: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Performance | ​ | ​ | ​
​ | ​ | Stock Units | ​ | Weighted-Average
​ | ​ | Class A Shares | ​ | Grant Date Fair Value
Outstanding, January 1, 2022 |  | — | ​ | $ | —
Granted |  | 8,874 | ​ |  | 51.39
Forfeited |  | (8,874) | ​ |  | 51.39
Earned and issued |  | — | ​ |  | —
Outstanding, December 31, 2022 |  | — | ​ | $ | —
​ | ​ | ​ | ​ | ​ | ​
Outstanding, January 1, 2023 | ​ | — | ​ | $ | —
Granted |  | 10,999 | ​ |  | 42.74
Forfeited |  | (10,999) | ​ |  | 42.74
Earned and issued |  | — | ​ |  | —
Outstanding, December 31, 2023 |  | — | ​ | $ | —
​ | ​ | ​ | ​ | ​ | ​
​ ​ ​ ​ Expense Related to Stock Incentive Plans ​ The Company recorded expense related to stock incentive plans for the years ended December 31, 2023, 2022, and 2021 as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years Ended December 31, (in thousands) | ​ | 2023 |  | 2022 |  | 2021
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Stock option expense | ​ | $ | 774 | ​ | $ | 560 | ​ | $ | 574
Restricted stock award expense | ​ | ​ | 829 | ​ | ​ | 937 | ​ | ​ | 738
Performance stock unit expense | ​ | ​ | (281) | ​ | ​ | 152 | ​ | ​ | 129
Total expense | ​ | $ | 1,322 | ​ | $ | 1,649 | ​ | $ | 1,441
​ Unrecognized expenses related to unvested awards under stock incentive plans are estimated as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Stock |  | Restricted |  | ​ | ​ |
Year (in thousands) | ​ | Options | ​ | Stock Awards | ​ | Total |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2024 | ​ | $ | 489 | ​ | $ | 1,052 | ​ | $ | 1,541 | ​
2025 | ​ |  | 263 | ​ |  | 844 | ​ |  | 1,107 | ​
2026 | ​ |  | 18 | ​ |  | 539 | ​ |  | 557 | ​
2027 | ​ |  | 5 | ​ |  | 8 | ​ |  | 13 | ​
2028 | ​ |  | — | ​ |  | — | ​ |  | — | ​
Total | ​ | $ | 775 | ​ | $ | 2,443 | ​ | $ | 3,218 | ​
​ Deferred Compensation ​ On April 19, 2018, the shareholders of Republic approved an amendment and restatement of the Non-Employee Director and Key Employee Deferred Compensation Plan (the “Plan”). Prior to the Plan’s 2018 amendment and restatement, only directors participated in the plan, with the 2018 amendment and restatement initiating key-employee participation. The Plan provides non-employee directors and designated key employees the ability to defer compensation and have those deferred amounts paid later in the form of Company Class A Common shares based on the shares that could have been acquired as the deferrals were made. The Company maintains a bookkeeping account for each director or key-employee participant, and at the end of each fiscal quarter, deferred compensation is converted to “stock units” equal to the amount of compensation deferred during the quarter divided by the quarter-end fair market value of the Company’s Class A Common stock. Stock units for each participant’s account are also credited with an amount equal to the cash dividends that would have been paid on the number of stock units in the account if the stock units were deemed to be outstanding shares of stock. Any dividends credited are converted into additional stock units at the end of the fiscal quarter in which the dividends were paid. ​ DIRECTORS ​ Members of the Board of Directors may defer board and committee fees from two to five years, with each director participant retaining a nonforfeitable interest in his or her deferred compensation account. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The following table presents information on director deferred compensation under the Plan for the periods presented: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Outstanding | ​ | Weighted-Average
​ | ​ | Stock | ​ | Market Price
​ |  | Units |  | at Date of Deferral
Outstanding, January 1, 2022 | ​ | 86,800 | ​ | $ | 29.98
Deferred fees and dividend equivalents converted to stock units |  | 18,241 | ​ |  | 46.58
Stock units converted to Class A Common Shares |  | (5,814) | ​ |  | 49.51
Outstanding, December 31, 2022 |  | 99,227 | ​ | $ | 31.43
​ | ​ | ​ | ​ | ​ | ​
Outstanding, January 1, 2023 | ​ | 99,227 | ​ | $ | 31.43
Deferred fees and dividend equivalents converted to stock units |  | 17,811 | ​ |  | 43.14
Stock units converted to Class A Common Shares |  | (3,635) | ​ |  | 33.29
Outstanding, December 31, 2023 |  | 113,403 | ​ | $ | 35.65
​ | ​ | ​ | ​ | ​ | ​
Vested |  | 113,403 | ​ | $ | 35.65
​ Director deferred compensation has been expensed as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years Ended December 31, (in thousands) | ​ | 2023 |  | 2022 |  | 2021
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Director deferred compensation expense | ​ | $ | 777 | ​ | $ | 503 | ​ | $ | 417
​ KEY EMPLOYEES ​ Designated key employees may defer a portion of their base salaries on a pre-tax basis under the Plan, with the Company matching employee deferrals up to a prescribed limit. With limited exception, the Company match amount remains unvested until December 31st of the year that is five years from the beginning of the year that the Company match is made. ​ The following table presents information on key-employee deferred compensation under the Plan for the periods presented: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Outstanding | ​ | Weighted-Average | ​ | Weighted-Average
​ | ​ | Stock | ​ | Market Price | ​ | Remaining Contractual
​ | ​ | Units | ​ | at Date of Deferral | ​ | Term (years)
Outstanding, January 1, 2022 |  | 65,318 | ​ | $ | 40.57 | ​ | ​ | ​
Deferred base salaries and dividend equivalents converted to stock units |  | 9,389 | ​ |  | 43.08 | ​ | ​ | ​
Matching stock units credited | ​ | 9,315 | ​ | ​ | 43.08 | ​ | ​ | ​
Matching stock units forfeited | ​ | (1,151) | ​ | ​ | 48.25 | ​ | ​ | ​
Stock units converted to Class A Common Shares |  | — | ​ |  | — | ​ | ​ | ​
Outstanding, December 31, 2022 |  | 82,871 | ​ | $ | 41.03 | ​ | 3.13
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Outstanding, January 1, 2023 | ​ | 82,871 | ​ | $ | 41.03 | ​ | ​ | ​
Deferred base salaries and dividend equivalents converted to stock units |  | 10,646 | ​ |  | 45.03 | ​ | ​ | ​
Matching stock units credited | ​ | 10,578 | ​ | ​ | 44.90 | ​ | ​ | ​
Matching stock units forfeited | ​ | (2,753) | ​ | ​ | 41.09 | ​ | ​ | ​
Stock units converted to Class A Common Shares |  | (5,084) | ​ |  | 43.01 | ​ | ​ | ​
Outstanding, December 31, 2023 |  | 96,258 | ​ | $ | 42.17 | ​ | 2.84
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Vested |  | 59,626 | ​ | $ | 42.60 | ​ | 3.11
Unvested |  | 36,632 | ​ | $ | 41.48 | ​ | 2.40
​ The following presents key-employee deferred compensation expense for the period presented: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years Ended December 31, (in thousands) | ​ | 2023 |  | 2022 |  | 2021
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Key-employee - base salary | ​ | $ | 484 | ​ | $ | 408 | ​ | $ | 429
Key-employee - employer match | ​ | ​ | 250 | ​ | ​ | 317 | ​ | ​ | 178
Total | ​ | $ | 734 | ​ | $ | 725 | ​ | $ | 607
​ Employee Stock Purchase Plan ​ On April 19, 2018, the shareholders of Republic approved the ESPP. Under the ESPP, participating employees may purchase shares of the Company Class A Common Stock through payroll withholdings at a purchase price that cannot be less than 85% of the lower of the fair market value of the Company’s Class A Common Stock on the first trading day of each offering period, or on the last trading day of each offering period. Participating employees were able purchase the Company’s Class A Common Stock through the ESPP at: ​
| ● | 85% of fair market value on the last day of the three-month offering periods ended March 31, 2021, June 30, 2021, September 30, 2021, December 31, 2021, March 31, 2022, June 30, 2022, September 30, 2022, December 31, 2022, March 31, 2023, June 30, 2023, September 30, 2023, and December 31, 2023.
​ The following presents expense under the ESPP for the period presented: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years Ended December 31, (in thousands) | ​ | ​ | 2023 |  | 2022 |  | 2021
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
ESPP expense | ​ | ​ | $ | 111 | ​ | $ | 104 | ​ | $ | 104
​

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