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Stock Compensation Plans

12 Months Ended

Dec. 31, 2023

Note 20: Stock Compensation Plans

The Company established the 2013 Equity 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 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, 2023, 215,394 options were outstanding under the 2013 Plan.

The Company established the 2018 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 800,000 shares of common stock. On May 11, 2022, the Company’s stockholders approved the Great Southern Bancorp, Inc. 2022 Omnibus Incentive Plan (the “2022 Plan”). Upon the stockholders’ approval of the 2022 Plan, the 2018 Plan was frozen. As a result, no new stock options or other awards may be granted under the 2018 Plan; however, existing outstanding awards under the 2018 Plan were not affected. At December 31, 2023, 612,511 options were outstanding under the 2018 Plan.

The 2022 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 2022 Plan is 900,000 (the “2022 Plan Limit”). Shares utilized for awards other than stock options and stock appreciation rights will be counted against the 2022 Plan Limit on a 2.5-to-1 basis. At December 31, 2023, 412,400 options were outstanding under the 2022 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 Compensation Committee has discretion to accelerate a participant’s right to exercise an option.

Stock awards may be granted upon terms and conditions determined solely at the discretion of the Compensation Committee.

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


		Shares	Weighted
	Available	Under	Average
	to Grant	Option	Exercise Price

Balance, January 1, 2021	245,350	971,107	$	48.079
Granted from 2018 Plan	(202,700)	202,700		57.980
Exercised	—	(91,285)		40.532
Forfeited from terminated plan(s)	—	(5,197)		44.563
Forfeited from current plan(s)	44,022	(44,022)		52.256

Balance, December 31, 2021	86,672	1,033,303		50.528
Granted from 2018 Plan	(2,500)	2,500		61.550
Forfeited from terminated plan(s)	39,235	(39,235)		52.523
Termination of 2018 Plan	(123,407)	—		—
Available to Grant from 2022 Plan	900,000	—		—
Granted from 2022 Plan	(205,900)	205,900		61.505
Exercised	—	(136,801)		42.149
Forfeited from current plan(s)	750	(750)		61.550

Balance, December 31, 2022	694,850	1,064,917		53.671
Forfeited from terminated plan(s)	—	(9,100)		51.123
Granted from 2022 Plan	(210,300)	210,300		53.166
Exercised	—	(22,762)		38.830
Forfeited from current plan(s)	3,050	(3,050)		61.550

Balance, December 31, 2023	487,600	1,240,305	$	53.857

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 each 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 significant. Forfeitures are estimated annually based on historical information.

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, 2023, 2022 and 2021:


	2023			2022			2021

Expected dividends per share	$	1.60		$	1.60		$	1.44
Risk-free interest rate		4.51	%		3.77	%		1.24	%
Expected life of options		6 years			6 years			5 years
Expected volatility		23.69	%		23.70	%		28.33	%
Weighted average fair value of options granted during year	$	11.69		$	13.46		$	11.56

Expected volatilities are based on the historical volatility of the Company’s stock price over the measured period. The expected life 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. For 2023 and 2022, the risk-free interest rate is based on the average of the five-year treasury rate and the seven-year treasury rate on the grant date of the options. For 2021, 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, 2023:


				Weighted
		Weighted		Average
		Average		Remaining
		Exercise		Contractual
	Options	Price		Term

Options outstanding, January 1, 2023	1,064,917	$	53.671	7.13 years
Granted	210,300		53.166
Exercised	(22,762)		38.830
Forfeited	(12,150)		53.741
Options outstanding, December 31, 2023	1,240,305		53.857	6.74 years

Options exercisable, December 31, 2023	571,490	$	51.688	4.64 years

For the years ended December 31, 2023, 2022 and 2021, options granted were 210,300, 208,400, and 202,700, 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, 2023, 2022 and 2021, was $354,000, $2.6 million and $1.4 million, respectively. Cash received from the exercise of options for the years ended December 31, 2023, 2022 and 2021, was $884,000, $6.3 million and $3.7 million, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $212,000 million, $2.3 million and $1.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. The total intrinsic value of options outstanding at December 31, 2023, 2022 and 2021, was $7.4 million, $6.7 million and $9.2 million, respectively. The total intrinsic value of options exercisable at December 31, 2023, 2022 and 2021, was $4.5 million, $4.1 million and $5.3 million, respectively.

The following table presents the activity related to nonvested options under all plans for the year ended December 31, 2023.


		Weighted		Weighted
		Average		Average
		Exercise		Grant Date
	Options	Price		Fair Value

Nonvested options, January 1, 2023	636,844	$	56.073	$	11.117
Granted	210,300		53.166		11.681
Vested this period	(169,592)		53.882		9.755
Nonvested options forfeited	(8,737)		56.347		11.299

Nonvested options, December 31, 2023	668,815	$	55.711	$	11.640

For the years ended December 31, 2023, 2022 and 2021, compensation expense for stock option grants was $1.6 million, $1.4 million and $1.2 million, respectively. At December 31, 2023, there was $7.0 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 2029, with the majority of this expense recognized in 2024 and 2025.

The following table further summarizes information about stock options outstanding at December 31, 2023:


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

$32.590 to 38.610	26,906	0.96 years	$	33.317	26,906	$	33.317
$41.300 to 41.740	200,538	5.71 years		41.628	119,930		41.552
$50.250 to 59.750	668,327	6.87 years		54.686	316,725		54.194
$60.150 to 62.010	344,534	7.55 years		60.971	107,929		60.176

	1,240,305	6.74 years	$	53.857	571,490	$	51.688