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Note 10 - Stock-based Compensation
 12 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Share-Based Payment Arrangement [Text Block]

NOTE 10 – STOCK-BASED COMPENSATION

 

Stock-based compensation plans are used to provide directors and employees with an increased incentive to contribute to our long-term performance and growth, to align the interests of directors and employees with the interests of our shareholders through the opportunity for increased stock ownership and to attract and retain directors and employees. Stock-based compensation, reported as noninterest expense in the Consolidated Statements of Income, totaled $3.3 million, $3.4 million and $3.4 million in 2024, 2023 and 2022, respectively. The Stock Incentive Plan of 2020 was approved by shareholders in May, 2020, and was effectively replaced with the Stock Incentive Plan of 2023 that was approved by shareholders in May, 2023.

 

Grants included on the following tables were made under the various Stock Incentive Plans as follows:

 

 

●

Stock Incentive Plan of 2020

 

o

Restricted stock grants in 2021 and 2022

 

●

Stock Incentive Plan of 2023

 

o

Restricted stock grants in 2023

 

In addition, stock grants to directors as retainer payments during the years 2020 through 2022 were from the Stock Incentive Plan of 2020, while stock grants to directors as retainer payments during 2024 and 2023 were from the Stock Incentive Plan of 2023.

 

Under the Stock Incentive Plan of 2020 and the Stock Incentive Plan of 2023, incentive awards may include, but are not limited to, stock options, restricted stock, stock appreciation rights and stock awards. Incentive awards that are stock options or stock appreciation rights are granted with an exercise price not less than the closing price of our common stock on the date of grant.  Price, vesting and expiration date parameters are determined by Mercantile’s Compensation Committee on a grant-by-grant basis.  No payments are required from employees for restricted stock awards.  The restricted stock awards granted during the years 2021 through 2023 fully vest after three years and, in the case of performance-based restricted stock issued to executive officers in 2020 through 2023, are subject to the attainment of pre-determined performance goals.  At year-end 2024, there were approximately 383,000 shares authorized for future incentive awards.

 

A summary of restricted stock activity during the year ended December 31, 2024 is as follows:

 

      

Weighted

 
      

Average

 
  

Shares

  

Fair Value

 
         

Nonvested at beginning of year

  355,890  $34.18 

Vested

  (115,762)  32.02 

Forfeited

  (11,482)  34.09 

Nonvested at end of year

  228,646  $35.84 

 

Of the restricted stock shares granted in 2023 and 2022, a total of 25,239 shares and 26,112 shares, respectively, are performance-based awards made to our Named Executive Officers at the target level and are subject to the attainment of pre-determined performance goals.  

 

We periodically grant shares of common stock to our Corporate and Bank Board Directors for retainer payments with the related expense being recorded over the period of the Directors' service, as summarized below:

 

      Total Cost  

Grant Year

 

Shares Granted

  

(in thousands)

 

Covered Period

2021

  10,489  $344 

June 1, 2021 - May 31, 2022

2022

  11,166   359 

June 1, 2022 - May 31, 2023

2023

  11,529   350 

June 1, 2023 - May 31, 2024

2024

  11,316   423 

June 1, 2024 - May 31, 2025