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Note 3 - Stock-based Compensation
 3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Compensation and Employee Benefit Plans [Text Block]

NOTE 3 - STOCK-BASED COMPENSATION

 

The Company had no non-vested stock options outstanding as of March 31, 2022, and 2021.

 

There was no stock option activity during the three months ended March 31, 2022.

 

The following table presents the activity during the three months ended March 31, 2022, related to awards of restricted stock:

 

      

Weighted-

 
      

average

 
      

Grant Date Fair

 
  

Units

  

Value Per Unit

 
         

Nonvested at January 1, 2022

  76,933  $23.01 

Granted

  25,414   24.80 

Vested

  (13,524)  25.52 

Nonvested at March 31, 2022

  88,823  $23.01 
         

Expected to vest as of March 31, 2022

  54,124  $24.05 

 

The Company recognizes restricted stock forfeitures in the period they occur.

 

Share-based compensation expense of $117,000 and $0 was recognized for the three-month periods ended March 31, 2022, and 2021, respectively. Vesting of shares under the plan is contingent on a combination of the service period and a market condition tied to the total shareholder return on the Company’s stock. The award recipient must maintain service with Middlefield Banc Corp. and its affiliates until the third anniversary of the award to satisfy the service condition. In addition, the market condition will be met if the average total shareholder annual return (“TSR”) on Middlefield Banc Corp. stock for the three subsequent years meets target for 2021 and 2022. The target TSR is 10%, capped at 125% of target, and reduced proportionally between 0% and 10%. A change in market conditions leads to adjustments to the probability of the market condition achievement, which results in changes in the liability and the compensation expense. Since the shares of restricted stock are historically paid out at the vesting date in a combination of shares and cash, the Company has recorded a liability related to this plan which totals $503,000 and $581,000 on March 31, 2022, and 2021, respectively. When the shares vest, the amount distributed in shares is transferred to common stock and the remainder is distributed in cash.

 

Total unrecognized stock compensation cost related to nonvested share-based compensation on restricted stock as of March 31, 2022 totals $887,000, of which $345,000 is estimated for the rest of 2022, $357,000 for 2023, $164,000 for 2024, and $20,000 for 2025.