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STOCK PLANS AND STOCK BASED COMPENSATION

12 Months Ended

Dec. 31, 2024

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,		2024			2023			2022


Risk-free interest rate			4.02	%		3.86	%		1.35	%
Expected dividend yield			3.04			3.19			2.50
Expected stock price volatility			27.62			33.14			32.12
Expected life of options (in years)			3.5			4			4
Estimated fair value per share		$	9.64		$	9.65		$	10.41

The following table summarizes stock option activity from January 1, 2023 through December 31, 2024:


							Weighted
				Weighted			Average
		Options		Average			Remaining		Aggregate
		Class A		Exercise			Contractual		Intrinsic
		Shares		Price			Term (years)		Value
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

Outstanding, January 1, 2024		460,650		$	38.37
Granted		59,413			49.25
Exercised		(223,252)			36.24
Forfeited or expired		(20,930)			42.03
Outstanding, December 31, 2024		275,881		$	42.15		2.21		$	7,646,215

Unvested		199,670		$	41.15		2.59		$	5,735,017
Exercisable (vested) at December 31, 2024		76,211		$	44.79		1.20		$	1,911,198

Information related to the stock options during each year follows:



Years Ended December 31, (in thousands, except per share data)		2024			2023			2022

Total intrinsic value of options exercised		$	4,453		$	58		$	57
Total cash received from options exercised, net of shares redeemed			(638)			(2)			52
Total tax benefit of options exercised			53			1			6

Loan balances of employees that were originated solely to fund stock option exercises were as follows:


December 31, (in thousands)		2024			2023

Outstanding loans		$	72		$	129

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, 2023 through December 31, 2024:


		Restricted		Weighted-Average			Weighted-Average
		Stock Awards		Grant Date			Remaining Contractual
		Class A Shares		Fair Value			Term (years)
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

Outstanding, January 1, 2024		87,066		$	43.37
Granted		13,590			58.88
Forfeited		(3,400)			43.67
Earned and issued		(29,454)			45.25
Outstanding, December 31, 2024		67,802		$	45.65		1.75

Unvested		67,802		$	45.65		1.75

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 2024, 2023, and 2022 was approximately $1.8 million, $1.5 million, and $186,000.

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, 2023 through December 31, 2024:


		Performance
		Stock Units		Weighted-Average
		Class A Shares		Grant Date Fair Value
Outstanding, January 1, 2023		—		$	—
Granted		10,999			42.74
Forfeited		(10,999)			42.74
Earned and issued		—			—
Outstanding, December 31, 2023		—		$	—

Outstanding, January 1, 2024		—		$	—
Granted		8,854			49.25
Forfeited		—			—
Earned and issued		—			—
Outstanding, December 31, 2024		8,854		$	49.25

Expense Related to Stock Incentive Plans

The Company recorded expense related to stock incentive plans for the years ended December 31, 2024, 2023, and 2022 as follows:


Years Ended December 31, (in thousands)		2024			2023			2022

Stock option expense		$	758		$	774		$	560
Restricted stock award expense			291			829			937
Performance stock unit expense			145			(281)			152
Total expense		$	1,194		$	1,322		$	1,649

Unrecognized expenses related to unvested awards under stock incentive plans are estimated as follows:


		Stock			Restricted
Year (in thousands)		Options			Stock Awards			Total

2025		$	423		$	1,272		$	1,695
2026			197			937			1,134
2027			5			77			82
2028			—			—			—
2029			—			—			—
Total		$	625		$	2,286		$	2,911

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, 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

Outstanding, January 1, 2024		113,403		$	35.65
Deferred fees and dividend equivalents converted to stock units		12,726			55.68
Stock units converted to Class A Common Shares		(6,371)			36.77
Outstanding, December 31, 2024		119,758		$	37.72

Vested		119,758		$	37.72

Director deferred compensation has been expensed as follows:


Years Ended December 31, (in thousands)		2024			2023			2022

Director deferred compensation expense		$	719		$	777		$	503

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 31^st 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, 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

Outstanding, January 1, 2024		96,258		$	42.17
Deferred base salaries and dividend equivalents converted to stock units		8,412			56.88
Matching stock units credited		8,215			57.87
Matching stock units forfeited		(2,087)			43.70
Stock units converted to Class A Common Shares		(5,734)			46.34
Outstanding, December 31, 2024		105,064		$	44.32		3.16

Vested		73,829		$	42.63		3.14
Unvested		31,235		$	48.31		3.21

The following presents key-employee deferred compensation expense for the period presented:


Years Ended December 31, (in thousands)		2024			2023			2022

Key-employee - base salary		$	493		$	484		$	408
Key-employee - employer match			385			250			317
Total		$	878		$	734		$	725

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, 2022, June 30, 2022, September 30, 2022, December 31, 2022, March 31, 2023, June 30, 2023, September 30, 2023, December 31, 2023, March 31, 2024, June 30, 2024, September 30, 2024, and December 31, 2024.

The following presents expense under the ESPP for the period presented:


Years Ended December 31, (in thousands)			2024			2023			2022

ESPP expense			$	117		$	111		$	104