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Note 20: Stock Compensation Plans

12 Months Ended

Dec. 31, 2019

The Company established the 2003 Stock Option and Incentive Plan (the “2003 Plan”) for employees and directors of the Company and its subsidiaries. Under the plan, stock options or other awards could be granted with respect to 598,224 shares of common stock. On May 15, 2013, the Company’s stockholders approved the Great Southern Bancorp, Inc. 2013 Equity Incentive Plan (the “2013 Plan”). Upon the stockholders’ approval of the 2013 Plan, the Company’s 2003 Plan was frozen. As a result, no new stock options or other awards may be granted under the 2003 Plan; however, existing outstanding awards under the 2003 Plan were not affected. At December 31, 2019, 42,941 options were outstanding under the 2003 Plan.

The Company established the 2013 Stock Option and Incentive Plan (the “2013 Plan”) for employees and directors of the Company and its subsidiaries. Under the plan, stock options or other awards could be granted with respect to 700,000 shares of common stock. On May 9, 2018, the Company’s stockholders approved the Great Southern Bancorp, Inc. 2018 Omnibus Incentive Plan (the “2018 Plan”). Upon the stockholders’ approval of the 2018 Plan, the Company’s 2013 Plan was frozen. As a result, no new stock options or other awards may be granted under the 2013 Plan; however, existing outstanding awards under the 2013 Plan were not affected. At December 31, 2019, 401,827 options were outstanding under the 2013 Plan.

The 2018 Plan provides for the grant from time to time to directors, emeritus directors, officers, employees and advisory directors of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units. The number of shares of Common Stock available for awards under the 2018 Plan is 800,000 (the “2018 Plan Limit”). Shares utilized for awards other than stock options and stock appreciation rights will be counted against the 2018 Plan Limit on a 2.5-to-1 basis. At December 31, 2019, 363,100 options were outstanding under the 2018 Plan.

Stock options may be either incentive stock options or nonqualified stock options, and the option price must be at least equal to the fair value of the Company’s common stock on the date of grant. Options generally are granted for a 10-year term and generally become exercisable in four cumulative annual installments of 25% commencing two years from the date of grant. The Stock Option Committee may accelerate a participant’s right to purchase shares under the plan.

Stock awards may be granted to key officers and employees upon terms and conditions determined solely at the discretion of the Stock Option Committee.

The table below summarizes transactions under the Company’s stock compensation plans, all of which related to stock options granted under such plans:

				Weighted
	Available to Grant	Shares Under Option		Average Exercise Price

Balance, January 1, 2017	219,475	661,203	$	33.672
Granted from 2013 Plan	(157,800)	157,800		52.118
Exercised	—	(119,692)		27.352
Forfeited from terminated plan(s)	—	(675)		24.690
Forfeited from current plan(s)	15,837	(15,837)		41.916

Balance, December 31, 2017	77,512	682,799		38.860
Granted from 2013 Plan	(1,000)	1,000		52.500
Exercised	—	(81,940)		27.597
Forfeited from 2013 Plan	13,773	(13,773)		45.692
Termination of 2013 Plan	(90,285)	—
	—	588,086
Available to grant from 2018 Plan	800,000	—
Granted from 2018 Plan	(185,750)	185,750		55.297
Forfeited from current plan(s)	600	(600)		55.000

Balance, December 31, 2018	614,850	773,236		43.886
Granted from 2018 Plan	(186,400)	186,400		60.086
Exercised	—	(125,894)		33.031
Forfeited from terminated plan(s)	—	(17,424)		44.163
Forfeited from current plan(s)	8,450	(8,450)		55.000

Balance, December 31, 2019	436,900	807,868	$	49.139

The Company’s stock option grants contain terms that provide for a graded vesting schedule whereby portions of the options vest in increments over the requisite service period. These options typically vest one-fourth at the end of years two, three, four and five from the grant date. As provided for under FASB ASC 718, the Company has elected to recognize compensation expense for options with graded vesting schedules on a straight-line basis over the requisite service period for the entire option grant. In addition, ASC 718 requires companies to recognize compensation expense based on the estimated number of stock options for which service is expected to be rendered. The Company’s historical forfeitures of its share-based awards have not been material.

The fair value of each option award is estimated on the date of the grant using the Black-Scholes option pricing model with the following assumptions for the years ended December 31, 2019, 2018 and 2017:

	2019	2018	2017

Expected dividends per share	$1.36	$1.27	$0.95
Risk-free interest rate	1.59%	2.86%	2.03%
Expected life of options	5 years	5 years	5 years
Expected volatility	25.15%	17.61%	23.49%
Weighted average fair value of
options granted during year	$11.20	$8.30	$10.04

Expected volatilities are based on the historical volatility of the Company’s stock, based on the monthly closing stock price. The expected term of options granted is based on actual historical exercise behavior of all employees and directors and approximates the graded vesting period of the options. Expected dividends are based on the annualized dividends declared at the time of the option grant. The risk-free interest rate is based on the five-year treasury rate on the grant date of the options.

The following table presents the activity related to options under all plans for the year ended December 31, 2019:

				Weighted
			Weighted	Average
			Average	Remaining
			Exercise	Contractual
	Options		Price	Term

Options outstanding, January 1, 2019	773,236	$	43.886	7.44 years
Granted	186,400		60.086
Exercised	(125,894)		33.031
Forfeited	(25,874)		49.395
Options outstanding, December 31, 2019	807,868		49.139	7.54 years

Options exercisable, December 31, 2019	255,491		37.310	5.10 years

For the years ended December 31, 2019, 2018 and 2017, options granted were 186,400, 186,750, and 157,800, respectively. The total intrinsic value (amount by which the fair value of the underlying stock exceeds the exercise price of an option on exercise date) of options exercised during the years ended December 31, 2019, 2018 and 2017, was $3.1 million, $2.2 million and $3.0 million, respectively. Cash received from the exercise of options for the years ended December 31, 2019, 2018 and 2017, was $4.2 million, $2.3 million and $3.3 million, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $2.7 million, $1.6 million and $2.7 million for the years ended December 31, 2019, 2018 and 2017, respectively. The total intrinsic value of options outstanding at December 31, 2019, 2018 and 2017, was $11.5 million, $4.7 million and $8.8 million, respectively. The total intrinsic value of options exercisable at December 31, 2019, 2018 and 2017, was $6.6 million, $3.9 million and $5.7 million, respectively.

The following table presents the activity related to nonvested options under all plans for the year ended December 31, 2019.

			Weighted		Weighted
			Average		Average
			Exercise		Grant Date
	Options		Price		Fair Value

Nonvested options, January 1, 2019	506,494	$	50.023	$	8.431
Granted	186,400		60.086		11.195
Vested this period	(115,393)		44.327		7.744
Nonvested options forfeited	(25,124)		49.998		8.394

Nonvested options, December 31, 2019	552,377		54.610		9.509

At December 31, 2019, there was $4.7 million of total unrecognized compensation cost related to nonvested options granted under the Company’s plans. This compensation cost is expected to be recognized through 2024, with the majority of this expense recognized in 2020 and 2021.

The following table further summarizes information about stock options outstanding at December 31, 2019:

	Options Outstanding
		Weighted			Options Exercisable
		Average		Weighted			Weighted
		Remaining		Average			Average
Range of	Number	Contractual		Exercise	Number		Exercise
Exercise Prices	Outstanding	Term		Price	Exercisable		Price

$16.810 to 29.640	79,493	3.01 years	$	25.408	79,493	$	25.408
$32.590 to 38.610	66,231	4.89 years		33.043	62,606		32.794
$41.300 to 47.800	90,193	6.81 years		41.323	35,586		41.300
$50.710 to 52.500	208,851	7.18 years		51.656	77,806		51.280
$55.000 to 60.150	363,100	9.39 years		57.763	—		—

	807,868	7.54 years		49.139	255,491		37.310