STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Note 14 – Stock-Based Compensation

The MVB Financial Corp. Incentive Stock Plan (the “Plan”) provides for the issuance of stock options, restricted stock awards and RSUs to selected employees and directors. As of December 31, 2021, the Plan had 3.2 million shares authorized and 412,853 shares remaining available for issuance. To date, we have awarded both stock options and RSUs to selected employees and directors.

Stock-Based Compensation Expense

Stock-based compensation expense is recognized as salary and employee benefit cost based upon the fair value of the instruments on the date of the grant. The amount that we recognized in stock-based compensation expense related to the issuance of stock options and RSUs is presented in the following table:


(Dollars in thousands)	2021		2020		2019
Stock options	$	832	$	950	$	873
RSUs	1,802		1,403		886
Total stock-based compensation expense	$	2,634	$	2,353	$	1,759

Proceeds from stock options exercised were $4.9 million, $4.5 million and $2.2 million during 2021, 2020 and 2019, respectively. During 2021, 2020 and 2019, certain options were exercised in broker-assisted cashless transactions. Shares were forfeited related to exercise price and related tax obligations and we paid tax authorities amounts due resulting in a net cash outflow.

Stock Options

Under the provisions of the Plan, the option price per share shall not be less than the fair market value of the common stock on the grant date. Generally, options granted vest in five years and expire ten years from the grant date.

The following summarizes stock options as of and for the year ended December 31, 2021:


	2021
	Number of Shares	Weighted-Average Exercise Price
Outstanding at beginning of year	1,396,794	$	15.36
Granted	43,908	38.82
Exercised	(316,682)	15.59
Forfeited	(6,660)	15.47
Expired	(3,160)	12.82

Outstanding at end of year	1,114,200	$	15.86

Exercisable at end of year	822,063	$	14.52

Weighted-average fair value of options granted during 2021		$	10.61
Weighted-average fair value of options granted during 2020		$	4.48
Weighted-average fair value of options granted during 2019		$	4.22

The intrinsic value of options exercised during 2021, 2020 and 2019 was $8.0 million, $1.9 million and $1.9 million, respectively.

The fair value for the options was estimated at the grant date using a Black-Scholes option-pricing model with the following inputs:


	2021		2020		2019
Average risk-free interest rates	1.27	%	0.66	%	2.02	%
Weighted-average life (years)	7		7		7
Expected volatility	41.2	%	30.9	%	21.8	%
Expected dividend yield	1.08	%	2.20	%	0.84	%

The following summarizes information related to the total outstanding and exercisable stock options at December 31, 2021:


Options Outstanding				Options Exercisable
Total Options	Weighted-Average Exercise Price	Intrinsic Value (in millions)	Weighted-Average Remaining Life	Total Options	Weighted-Average Exercise Price	Intrinsic Value (in millions)	Weighted-Average Remaining Life
1,114,200	$15.86	$28.6	4.98	822,063	$14.52	$22.2	4.17

At December 31, 2021, total unrecognized pre-tax compensation expense related to unvested stock options outstanding was $1.1 million. This cost is expected to be recognized over a weighted-average period of 3.1 years. For the year ended December 31, 2021, the fair value of stock options vested was $0.8 million.

Restricted Stock Units

Under the provisions of the Plan, RSUs are similar to restricted stock awards, except the recipient does not receive the stock immediately, but instead receives the stock according to a vesting plan and distribution schedule, after achieving required performance milestones or upon remaining with us for a particular length of time. Each RSU that vests entitles the recipient to receive one share of our common stock on a specified issuance date. The recipient does not have any stockholder rights, including voting, dividend or liquidation rights, with respect to the shares underlying awarded RSUs until the recipient becomes the record holder of those shares.

We granted 66,872 RSUs in 2021, 41,348 of which were time-based awards and 25,524 of which were performance-based awards. Time-based RSUs granted in 2021 generally vest in five equal installments over a five-year period, with the exception of time-based grants to members of the Board of Directors, which vest over a one-year period. Performance-based RSUs vest in one installment at the end of three years, based on set criteria.

A summary of the activity for our RSUs for the period indicated is presented in the following table:


	2021
	Shares	Weighted-Average Grant Date Fair Value
Balance at beginning of year	253,036	$	14.70
Granted	66,872	40.95
Vested	(77,050)	14.79
Forfeited	(952)	32.38
Balance at end of year	241,906	$	21.46

Weighted-average fair value of RSUs granted during 2021		$	40.95
Weighted-average fair value of RSUs granted during 2020		$	13.08
Weighted-average fair value of RSUs granted during 2019		$	15.50

At December 31, 2021, based on RSU awards outstanding at that time, the total unrecognized pre-tax compensation expense related to unvested RSU awards was $3.2 million. This cost is expected to be recognized over a weighted-average period of 2.6 years. At December 31, 2021, the fair value of RSU awards vested during the year was $3.1 million.