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STOCK-BASED COMPENSATION PLANS

12 Months Ended

Dec. 31, 2021

NOTE 21 – STOCK-BASED COMPENSATION PLANS

The Company has adopted the HBT Financial, Inc. Omnibus Incentive Plan (the “Omnibus Incentive Plan”). The Omnibus Incentive Plan provides for grants of (i) stock options, (ii) stock appreciation rights, (iii) restricted shares, (iv) restricted stock units, (v) performance awards, (vi) other share-based awards and (vii) other cash-based awards to eligible employees, non-employee directors and consultants of the Company. The maximum number of shares of common stock available for issuance under the Omnibus Incentive Plan is 1,820,000 shares.

The following is a summary of stock-based compensation expense (benefit):


	Year Ended December 31,
	2021		2020		2019

	(dollars in thousands)
Restricted stock units	$	579	$	351	$	—
Performance restricted stock units		185		—		—
Total awards classified as equity		764		351		—
Stock appreciation rights		226		(137)		343
Total stock-based compensation expense	$	990	$	214	$	343

Restricted Stock Units

A restricted stock unit grants a participant the right to receive one share of common stock, following the completion of the requisite service period. Restricted stock units are classified as equity. Compensation cost is based on the Company’s stock price on the grant date and is recognized on a straight-line basis over the service period for the entire award. Dividend equivalents on restricted stock units, which are either accrued until vested or paid at the same time as dividends on common stock, are classified as dividends charged to retained earnings.

During the years ended December 31, 2021 and 2020, the total grant date fair value of the restricted stock units granted was $948,000 and $1,399,000, respectively, based on the grant date closing prices. The total intrinsic value of restricted stock units that vested during the year ended December 31, 2021 was $305,000.

The following is a summary of outstanding restricted stock unit activity:


		Weighted
		Average
	Restricted	Grant Date
	Stock Units	Fair Value
Balance, December 31, 2018	—	$	—
Granted	—		—
Vested	—		—
Forfeited	—		—
Balance, December 31, 2019	—	$	—
Granted	73,700		18.98
Vested	—		—
Forfeited	(2,700)		19.03
Balance, December 31, 2020	71,000	$	18.98
Granted	59,994		15.81
Vested	(20,225)		18.86
Forfeited	(1,525)		18.11
Balance, December 31, 2021	109,244	$	17.27

As of December 31, 2021, unrecognized compensation cost related to non-vested restricted stock units was $1,339,000. This cost is expected to be recognized over the weighted average remaining contractual term of 2.3 years

Performance Restricted Stock Units

A performance restricted stock unit is similar to a restricted stock unit, except that the number of shares of common stock awarded is based on a performance condition and the completion of the requisite service period. The number of shares of common stock that may be earned ranges from 0% to 150% of the number of performance restricted stock units granted. Performance restricted stock units are classified as equity. Compensation cost is based on the Company’s stock price on the grant date and an assessment of the probable outcome of the performance condition. Compensation cost is recognized on a straight-line basis over the service period of the entire award. Changes in the performance condition probability assessment result in cumulative catch-up adjustments to the compensation cost recognized. Dividend equivalents on performance restricted stock units, which are accrued until vested, are classified as dividends charged to retained earnings.

During the year ended December 31, 2021, the total grant date fair value of the performance restricted stock units granted was $603,000, based on the grant date closing prices. Performance conditions are based on either the average annual return on average tangible common equity during the performance period or average loan balances for a specified geographic region during the performance period, with downward adjustments if certain credit quality criteria are not maintained.

The following is a summary of performance restricted stock unit activity:


		Weighted
	Performance	Average
	Restricted	Grant Date
	Stock Units	Fair Value
Balance, December 31, 2018	—	$	—
Granted	—		—
Vested	—		—
Forfeited	—		—
Balance, December 31, 2019	—	$	—
Granted	—		—
Vested	—		—
Forfeited	—		—
Balance, December 31, 2020	—	$	—
Granted	38,344		15.72
Vested	—		—
Forfeited	—		—
Balance, December 31, 2021	38,344	$	15.72

As of December 31, 2021, unrecognized compensation cost related to non-vested performance restricted stock units was $579,000, based on the current assessment of the probable outcome of the performance condition. This cost is expected to be recognized over the weighted average remaining contractual term of 2.5 years.

Stock Appreciation Rights

A stock appreciation right grants a participant the right to receive an amount of cash, the value of which equals the appreciation in the Company’s stock price between the grant date and the exercise date. Stock appreciation rights units are classified as liabilities. Prior to becoming a public entity, the liability was based on the intrinsic value of the stock appreciation rights, calculated using the grant date assigned value and an independent appraisal of the Company’s stock price that was subject to approval by the Board of Directors. Since becoming a public entity on October 11, 2019, the liability was based on an option-pricing model used to estimate the fair value of the stock appreciation rights. Compensation cost for unvested stock appreciation rights is recognized on a straight line basis over the vesting period of the entire award. The unvested stock appreciation rights vest in four equal annual installments beginning on the first anniversary of the grant date.

The following is a summary of outstanding stock appreciation rights activity:


		Weighted
	Stock	Average
	Appreciation	Grant Date
	Rights	Assigned Value
Balance, December 31, 2018	91,800	$	5.73
Granted	110,160		16.32
Exercised	(91,800)		5.73
Expired	—		—
Forfeited	—		—
Balance, December 31, 2019	110,160	$	16.32
Granted	—		—
Exercised	—		—
Expired	—		—
Forfeited	(4,590)		16.32
Balance, December 31, 2020	105,570	$	16.32
Granted	—		—
Exercised	(6,120)		16.32
Expired	(1,530)		16.32
Forfeited	—		—
Balance, December 31, 2021	97,920	$	16.32

A further summary of outstanding stock appreciation rights as of December 31, 2021, is as follows:


			Weighted Average
	Stock Appreciation Rights		Remaining
Grant Date Assigned Values	Outstanding	Exercisable	Contractual Term
$ 16.32	97,920	85,680	7.2	years

As of December 31, 2021, unrecognized compensation cost related to non-vested stock appreciation rights was $56,000.

As of December 31, 2021 and 2020, the liability recorded for outstanding stock appreciation rights was $485,000 and $272,000, respectively. The Company used an option pricing model to value the stock appreciation rights, using the assumptions in the following table. Expected volatility is derived from the historical volatility of the Company’s stock price and a selected peer group of industry-related companies.


	December 31, 2021			December 31, 2020
Risk-free interest rate		1.40	%		0.80	%
Expected volatility		35.52	%		34.72	%
Expected life (in years)		7.7			8.7
Expected dividend yield		3.20	%		3.96	%

As of December 31, 2021, the liability recorded for previously exercised stock appreciation rights was $797,000, which will be paid in three remaining equal annual installments. As of December 31, 2020, the liability recorded for previously exercised units was $1,087,000.