XML 39 R27.htm IDEA: XBRL DOCUMENT

SHARE-BASED COMPENSATION PLANS

12 Months Ended

Dec. 31, 2023

SHARE-BASED COMPENSATION PLANS

SHARE-BASED COMPENSATION PLANS

19. SHARE-BASED COMPENSATION PLAN

At December 31, 2023 we had one share-based compensation plan, entitled the 2017 Incentive Plan (hereinafter, “the Plan”). Under the Plan, options to purchase common stock are 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. We also grant restricted stock awards under the Plan. 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 2023 and 2022. 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 2023 and 2022 vest ratably

over five years and expire 10 years from the grant date. Restricted stock granted in 2023 and 2022 vests ratably over four years. As of December 31, 2023, there were approximately 92,000 shares remaining available for share-based awards under the 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 2023, approximately 430,000 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 $186,000 in 2023 and $12,000 in 2022; 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 $1.4 million and $1.5 million was recognized in 2023 and 2022, respectively, for stock options and restricted stock awards granted since 2017. An estimate of forfeitures, based on historical data, was included in the calculation of share-based compensation.

At December 31, 2023, there was $2.1 million of total unrecognized compensation cost related to non-vested stock options granted in the years 2019 through 2023 which is expected to be recognized over the weighted-average remaining vesting period of 3.7 years. 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 was expected to be recognized over the weighted-average remaining vesting period of 3.7 years.

The following weighted-average assumptions were used to determine compensation expense related to stock options in 2023 and 2022:


		2023		2022
Risk-free interest rate		4.31	%	3.08	%
Expected dividend yield		3.88	%	3.33	%
Expected term		8.0		8.0
Expected volatility		31.0	%	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, 2023 and 2022:

Stock Options

Years ended December 31,

2023

2022

Weighted Average

Weighted Average

Stock Options

Shares

Exercise Price

Shares

Exercise Price

Outstanding at beginning of year

1,345,369

$

25.83

1,279,833

$

25.44

Granted

149,200

25.79

143,500

28.83

Exercised

(487,331)

25.02

(60,914)

24.96

Forfeited or expired

(40,021)

26.31

(17,050)

24.79

Outstanding at end of year

967,217

$

26.22

1,345,369

$

25.83

Exercisable at end of year

524,829

$

27.30

891,733

$

26.36

Weighted average fair market value of options granted

$

6.63

$

6.78


		Weighted Average Remaining
		Contractual Life (in Years)		Aggregate Intrinsic Value
Outstanding - December 31, 2023		6.7		$	5,649,000
Exercisable - December 31, 2023		5.4		$	2,804,000

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 29, 2023 of $31.36 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, 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
Granted		149,200			25.79			6.63
Vested		(147,128)			25.26			4.44
Forfeited		(13,320)			25.24			4.91
Non-vested - December 31, 2023		442,388		$	24.93		$	5.28

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


		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		134,760		6.7		$	18.00		74,260		$	18.00
$23.38 to $25.79		432,695		7.8		$	24.43		160,415		$	23.65
$27.94 to $37.22		399,762		5.7		$	30.92		290,154		$	31.70
		967,217		6.7		$	26.22		524,829		$	27.30

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


		2023			2022

		(Dollars in thousands)
Total intrinsic value of stock options exercised		$	1,537		$	251
Net proceeds from stock option exercises		$	103		$	293
Income tax benefit from the exercise of stock options		$	400		$	65
Total fair value of stock options vested		$	653		$	734

Restricted Stock

The following table summarizes our restricted stock award activity during the years ended December 31, 2022 and 2023:


		Shares of Restricted		Weighted Average
		Stock		Grant Date Fair Value
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
Issued		27,700			25.79
Vested		(28,243)			23.60
Forfeited		(2,175)			25.13
Non-vested - December 31, 2023		69,090		$	25.54

At December 31, 2023, we expected 69,090 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 $2.2 million at December 31, 2023. The aggregate intrinsic value was calculated using the market value of our Company’s common stock on December 29, 2023 of $31.36 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 $188,000 in 2023 and $247,000 in 2022.