XML 41 R28.htm IDEA: XBRL DOCUMENT

SHARE-BASED COMPENSATION PLANS

12 Months Ended

Dec. 31, 2022

SHARE-BASED COMPENSATION PLANS

SHARE-BASED COMPENSATION PLANS

20. SHARE-BASED COMPENSATION PLANS

At December 31, 2022 we had two share-based compensation plans: the 2014 Incentive Plan and the 2017 Incentive Plan (collectively, “the Plans”). Awards are no longer granted under the 2014 Incentive Plan; however, awards previously granted under such plan continue in accordance with their terms. Options to purchase common stock were granted to officers and key employees at exercise prices not less than the fair market value of our Company’s common stock on the date of the grant, and we also grant restricted stock awards. We issue new common stock to satisfy stock option exercises as well as the issuance of restricted stock awards.

Stock options and restricted stock awards were granted in both 2022 and 2021. Stock options and restricted stock awards are valued at fair market value based on the Company’s closing stock price on the date of grant. Stock options granted in 2022 and 2021 vest ratably over five years and expire 10 years from the grant date. Restricted stock granted in 2022 and 2021 vests ratably over four years. As of December 31, 2022, there were approximately 269,000 shares remaining available for share-based awards under the 2017 Incentive Plan.

Stock option exercises can be net share settled such that we withhold shares with value equivalent to the exercise price of the stock option awards plus the employees’ minimum statutory obligation for the applicable income and other employment taxes. The net share settlement has the effect of share repurchases by the Company as they reduce the number of shares that would have otherwise been issued. In 2022, approximately 42,000 shares were withheld , and were based on the value of the stock on the exercise dates. Total payments made by the Company for the employees’ tax obligations to the taxing authorities were $12,000 in 2022 and nominal in 2021; such payments are generally reflected as a financing activity within the consolidated statements of cash flows.

In accordance with ASC 718, share-based compensation expense of approximately $1.5 million and $1.6 million was recognized in 2022 and 2021, respectively, for stock options and restricted stock awards granted since 2015. An estimate of forfeitures, based on historical data, was included in the calculation of share-based compensation.

During 2021, our Board of Directors approved extending the expiration date of stock options granted in years 2015 and 2016. The original expiration date of the stock options granted in 2015 was August 25, 2021, and was extended by two years to August 25, 2023. The original expiration date of the stock options granted in 2016 was August 25, 2022, and was extended by one year to August 25, 2023. We recorded an additional $232,000 of compensation expense in 2021 due to the extension of the exercise periods.

At December 31, 2022, there was $1.8 million of total unrecognized compensation cost related to non-vested stock options granted in the years 2018 through 2022 which is expected to be recognized over the weighted-average remaining vesting period of 3.7 years. At December 31, 2021, there was $1.8 million of total unrecognized compensation cost related to non-vested stock options granted in the years 2017 through 2021 which was expected to be recognized over the weighted-average remaining vesting period of 3.5 years.

The following weighted-average assumptions were used to determine compensation expense related to stock options in 2022 and 2021:


		2022		2021
Risk-free interest rate		3.08	%	1.13	%
Expected dividend yield		3.33	%	4.00	%
Expected term		8.0		8.0
Expected volatility		28.5	%	28.5	%

The risk-free interest rate is based on U.S. Treasury bonds with a remaining term equal to the expected term of the award. The expected dividend yield is based on our expected annual dividend as a percentage of the market value of our Company’s common stock in the year of grant. The expected term of the stock options is determined using historical experience. The expected volatility is based upon historical stock prices over the most recent period equal to the expected term of the award.

The following tables summarize our stock option activity during the years ended December 31, 2022 and 2021:

Stock Options


		Years ended December 31,
		2022						2021
					Weighted Average						Weighted Average
Stock Options		Shares			Exercise Price			Shares			Exercise Price
Outstanding at beginning of year			1,279,833		$	25.44			1,125,383		$	25.62
Granted			143,500			28.83			186,900			24.00
Exercised			(60,914)			24.96			(1,300)			18.00
Forfeited or expired			(17,050)			24.79			(31,150)			24.06
Outstanding at end of year			1,345,369		$	25.83			1,279,833		$	25.44

Exercisable at end of year			891,733		$	26.36			768,522		$	26.58

Weighted average fair market value of options granted		$	6.78					$	4.16


		Weighted Average Remaining
		Contractual Life (in Years)		Aggregate Intrinsic Value
Outstanding - December 31, 2022		5.3		$	532,000
Exercisable - December 31, 2022		3.7		$	234,000

The aggregate intrinsic value of outstanding and exercisable stock options is defined as the difference between the market value of our Company’s common stock on December 31, 2022 of $21.16 and the exercise price multiplied by the number of in-the-money outstanding and exercisable stock options.

Non-vested Stock Options


				Weighted Average			Weighted Average
		Number of Options		Exercise Price			Fair Value
Non-vested - December 31, 2020		485,371		$	24.08		$	3.48
Granted		186,900			24.00			4.16
Vested		(137,180)			25.65			3.83
Forfeited		(23,780)			23.97			3.48
Non-vested - December 31, 2021		511,311		$	23.63		$	3.64
Granted		143,500			28.83			6.78
Vested		(189,375)			25.08			3.87
Forfeited		(11,800)			23.20			3.65
Non-vested - December 31, 2022		453,636		$	24.76		$	4.55

The following table summarizes information about outstanding and exercisable stock options at December 31, 2022:


		Options Outstanding							Options Exercisable
				Weighted
				Average
		Number of		Remaining		Weighted			Number of		Weighted
		Options		Contractual Life		Average			Options		Average
Range of Exercise Prices		Outstanding		(in Years)		Exercise Price			Exercisable		Exercise Price
$18.00		168,320		7.7		$	18.00		74,150		$	18.00
$23.38 to $25.86		736,466		3.9		$	24.71		540,776		$	25.03
$27.94 to $37.22		440,583		6.5		$	30.71		276,807		$	31.19
		1,345,369		5.3		$	25.83		891,733		$	26.36

The following table summarizes our stock option activity for the years ended December 31:


		2022			2021

		(Dollars in thousands)
Total intrinsic value of stock options exercised		$	251		$	8
Net proceeds from stock option exercises		$	293		$	2
Income tax benefit from the exercise of stock options		$	65		$	2
Total fair value of stock options vested		$	734		$	525

Restricted Stock

The following table summarizes our restricted stock award activity during the years ended December 31, 2021 and 2022:


		Shares of Restricted		Weighted Average
		Stock		Grant Date Fair Value
Non-vested - December 31, 2020		72,490		$	23.77
Issued		36,325			24.00
Vested		(30,345)			25.75
Forfeited		—			—
Non-vested - December 31, 2021		78,470		$	23.11
Issued		27,620			28.83
Vested		(34,282)			24.46
Forfeited		—			—
Non-vested - December 31, 2022		71,808		$	24.67

At December 31, 2022, we expected 71,808 shares of restricted stock to vest over a weighted-average remaining contractual term of 2.7 years. These shares had an aggregate intrinsic value of $1.5 million at December 31, 2022. The aggregate intrinsic value was calculated using the market value of our Company’s common stock on December 31, 2022 of $21.16 multiplied by the number of non-vested restricted shares outstanding. The income tax benefit from the vesting of restricted stock for the years ended December 31 was $247,000 in 2022 and $184,000 in 2021.