XML 48 R25.htm IDEA: XBRL DOCUMENT

Stock-Based Compensation

12 Months Ended

Dec. 31, 2019

Note 17 – Stock-Based Compensation

The Company maintains the 2016 Stock Plan (“2016 Plan”), the 2006 Stock Plan (“2006 Plan”) and the 2011 Employee Stock Purchase Plan (“2011 ESPP”).

In connection with the acquisition of Virginia Heritage, the Company assumed the Virginia Heritage 2006 Stock Option Plan and the 2010 Long Term Incentive Plan (the “Virginia Heritage Plans”).

No additional options may be granted under the 2006 Plan or the Virginia Heritage Plans.

The Company adopted the 2016 Plan upon approval by the shareholders at the 2016 Annual Meeting held on May 12, 2016. The 2016 Plan provides directors and selected employees of the Bank, the Company and their affiliates with the opportunity to acquire

shares of stock, through awards of options, time vested restricted stock, performance-based restricted stock and stock appreciation rights. Under the 2016 Plan, 1,000,000 shares of common stock were initially reserved for issuance.

For awards that are service based, compensation expense is being recognized over the service (vesting) period based on fair value, which for stock option grants is computed using the Black-Scholes model. For restricted stock awards granted under the 2006 plan, fair value is based on the average of the high and low stock price of the Company’s shares on the date of grant. For restricted stock awards granted under the 2016 plan, fair value is based on the Company’s closing price on the date of grant. For awards that are performance-based, compensation expense is recorded based on the probability of achievement of the goals underlying the grant.

In February 2019, the Company awarded 112,636 shares of time vested restricted stock to senior officers, directors, and certain employees. The shares vest in three substantially equal installments beginning on the first anniversary of the date of grant.

In February 2019, the Company awarded senior officers a targeted number of 43,145 performance vested restricted stock units (“PRSUs”). The vesting of PRSUs is 100% after three years with payouts based on threshold, target or maximum average performance targets over a three year period. There are two performance metrics: 1) average annual earnings per share growth; and 2) average annual net interest margin growth. Average annual earnings per share growth is measured compared to the Company’s budget. Average annual net interest margin growth is measured against peer companies in the KBW Regional Banking Index.

The Company has unvested restricted stock awards and PRSU grants of 169,494 shares at December 31, 2019. Unrecognized stock based compensation expense related to restricted stock awards and PRSU grants totaled $5.3 million at December 31, 2019. At such date, the weighted-average period over which this unrecognized expense was expected to be recognized was 1.76 years.

The following tables summarize the unvested restricted stock awards at December 31, 2019 and 2018.


	Years Ended December 31,
	2019			2018
		Weighted-			Weighted-
		Average			Average
		Grant Date			Grant Date
Perfomance Awards	Shares	Fair Value		Shares	Fair Value

Unvested at beginning	98,958	$	54.76	62,338	$	50.45
Issued	43,145		55.76	42,533		60.45
Forfeited	(65,589)		55.25	(5,913)		50.28
Vested	(17,734)		—	—		—
Unvested at end	58,780	$	57.74	98,958	$	54.76


	Years Ended December 31,
	2019			2018
		Weighted-			Weighted-
		Average			Average
		Grant Date			Grant Date
Time Vested Awards	Shares	Fair Value		Shares	Fair Value
Unvested at beginning	173,721	$	58.93	164,043	$	53.57
Issued	112,636		55.76	94,344		60.45
Forfeited	(44,600)		58.73	(7,132)		56.48
Vested	(131,043)		57.20	(77,534)		49.67
Unvested at end	110,714	$	57.84	173,721	$	58.93

Below is a summary of stock option activity for the twelve months ended December 31, 2019, 2018 and 2017. The information excludes restricted stock units and awards.


	Years Ended December 31,
	2019			2018			2017
		Weighted-			Weighted-			Weighted-
		Average			Average			Average
		Exercise			Exercise			Exercise
	Shares	Price		Shares	Price		Shares	Price
Beginning balance	34,123	$	14.69	143,224	$	9.13	216,859	$	8.80
Issued	—		—	—		—	—		—
Exercised	(26,784)		12.42	(108,201)		7.17	(72,535)		8.19
Forfeited	(750)		49.08	(900)		34.47	—		—
Expired	—		—	—		—	(1,100)		5.76
Ending balance	6,589	$	19.99	34,123	$	14.69	143,224	$	9.13

The following summarizes information about stock options outstanding at December 31, 2019. The information excludes restricted stock units and awards.


							Weighted-Average
Outstanding:				Stock Options		Weighted-Average	Remaining
Range of Exercise Prices				Outstanding	Exercise Price		Contractual Life (Years)
$	5.76	$	10.72	—		—	—
$	10.73	$	11.40	5,089		11.17	1.88
$	11.41	$	24.86	—		—	—
$	24.87	$	49.91	1,500		49.91	6.36
				6,589	$	19.99	2.90


Exercisable:				Stock Options	Weighted-Average
Range of Exercise Prices				Exercisable	Exercise Price
$	5.76	$	10.72	—		—
$	10.73	$	11.40	5,089		11.17
$	11.41	$	24.86	—		—
$	24.87	$	49.91	1,125		49.91
				6,214	$	18.18

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. There were no grants of stock options during the years ended December 31, 2019, 2018 and 2017.

The total intrinsic value of outstanding stock options was $192 thousand and $1.2 million, respectively, at December 31, 2019 and 2018. The total fair value of stock options vested was $35 thousand, $80 thousand and $71 thousand, for 2019, 2018 and 2017, respectively. Unrecognized stock-based compensation expense related to stock options totaled $2 thousand at December 31, 2019. At such date, the weighted-average period over which this unrecognized expense was expected to be recognized was 0.36 years.

Cash proceeds, tax benefits and intrinsic value related to total stock options exercised is as follows:


	Years Ended December 31,
(dollars in thousands)	2019		2018		2017
Proceeds from stock options exercised	$	332	$	776	$	372
Tax benefits realized from stock compensation		50		5		99
Intrinsic value of stock options exercised		1,022		4,958		3,888

Approved by shareholders in May 2011, the 2011 ESPP reserved 550,000 shares of common stock (as adjusted for stock dividends) for issuance to employees. Whole shares are sold to participants in the plan at 85% of the lower of the stock price at the beginning or end of each quarterly offering period. The 2011 ESPP is available to all eligible employees who have completed at least one year of continuous employment, work at least 20 hours per week and at least five months a year. Participants may contribute a minimum of $10 per pay period to a maximum of $6,250 per offering period or $25,000 annually (not to exceed more than 10% of compensation per pay period). At December 31, 2019, the 2011 ESPP had 371,093 shares reserved for issuance.

Included in salaries and employee benefits in the accompanying Consolidated Statements of Operations, the Company recognized $7.7 million, $6.6 million and $5.6 million in stock-based compensation expense for 2019, 2018 and 2017, respectively. In addition, during 2019 the Company accrued $4.5 million in stock-based compensation costs associated with the retirement of our former Chairman and Chief Executive Officer. Stock-based compensation expense is recognized ratably over the requisite service period for all awards.