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Stock Based Compensation | 12 Months Ended
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Dec. 31, 2019
Stock Based Compensation [Abstract] |
Stock Based Compensation | NOTE 12 - STOCK BASED COMPENSATION ﻿ The Company’s shareholders approved the Norwood Financial Corp 2006 Stock Option Plan at the Annual Meeting on April 26, 2006. An aggregate of 412,500 shares of authorized but unissued Common Stock of the Company were reserved for future issuance under the Plan. This includes up to 66,000 shares for awards to outside directors. Under this plan, the Company granted 11,135 options to employees in 2015, 18,750 options to employees in 2014, and 42,900 options, which included 6,000 options granted to outside directors in 2013. No options were granted under this plan in 2019 or 2018. As of December 31, 2019, there were no shares available for future awards under this plan. All share information has been restated to reflect the 50% stock dividend declared in 2017. ﻿ At the Annual Meeting held on April 22, 2014, the Company’s shareholders approved the Norwood Financial Corp 2014 Equity Incentive Plan. An aggregate of 375,000 shares of authorized but unissued Common Stock of the Company were reserved for future issuance under the Plan. This includes up to 60,000 shares for awards to outside directors. The Plan also authorized the Company to award restricted stock to officers and outside directors, limited to 63,000 shares of restricted stock awards for officers and 12,000 shares of restricted stock awards for outside directors. At the Annual Meeting held on April 24, 2018, the Company’s shareholders approved an amendment to the 2014 Equity Incentive Plan to ease certain restrictions on restricted stock awards to outside directors. As a result of this amendment, the number of shares available for restricted stock awards to officers was reduced by 300 shares to 62,700, while the number of shares available for restricted stock awards to outside directors was increased by 20,300 to 32,300 shares. Under this plan, the Company granted 39,850 shares in 2019 which included 26,750 options to employees, 7,500 shares of restricted stock to officers and 5,600 shares of restricted stock to directors. In 2018, the Company granted 42,000 shares which included 26,500 options to employees, 7,500 shares of restricted stock to officers, 2,400 options to directors and 5,600 shares of restricted stock to directors. In 2017, the Company granted 44,150 shares which included 26,750 options to employees, 9,000 shares of restricted stock to officers, 8,000 options to directors and 400 shares of restricted stock to directors. In 2016, the Company granted 36,675 shares which included 24,000 options to employees, 9,000 shares of restricted stock to officers and 3,675 shares of restricted stock to directors. In 2015, the Company granted 2 0,591 shares which included 10,616 options to employees, 6,375 shares of restricted stock to officers and 3,600 shares of restricted stock to directors. In 2014, the Company granted 13,950 shares, which included 9,750 shares of restricted stock to officers and 4,200 shares of restricted stock to outside directors. All shares granted in 2014 were for restricted stock. The restricted shares vest over a five-year period. The product of the number of shares granted and the grant date market price of the Company’s common stock determine the fair value of restricted stock under the company’s restricted stock plan. Management recognizes compensation expense for the fair value of restricted stock on a straight-line basis over the requisite service period for the entire award. As of December 31, 2019, there were 177,785 shares available for future awards under this plan, which includes 151,260 shares available for officer awards and 26,525 shares available for awards to outside directors. Included in these totals are 13,575 shares available for restricted stock awards to officers and 9,225 shares available for restricted stock awards to outside directors. All share information has been restated to reflect the 50% stock dividend declared in 2017. ﻿ Total unrecognized compensation cost related to stock options was $203,000 as of December 31, 2019 and $207,000 as of December 31, 2018. Salaries and employee benefits expense includes $207,000 and $237,000 of compensation costs related to options for the years ended December 31, 2019 and 2018, respectively. Compensation costs related to restricted stock amounted to $289,000 and $205,000 for the years ended December 31, 2019 and 2018, respectively. The expected future compensation expense relating to non-vested restricted stock outstanding as of December 31, 2019 and 2018 was $1,146,000 and $963,000, respectively. ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ A summary of the Company’s stock option activity and related information for the years ended December 31 follows: ﻿ ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ | 2019 |  | 2018
﻿ |  |  | Weighted |  |  |  |  |  | Weighted |  |
﻿ |  |  | Average |  | Average |  |  |  | Average |  | Average
﻿ |  |  | Exercise |  | Intrinsic |  |  |  | Exercise |  | Intrinsic
﻿ | Options |  | Price |  | Value |  | Options |  | Price |  | Value
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Outstanding, beginning of year | 208,700 |  | $ | 22.54 |  |  |  |  | 212,725 |  | $ | 20.76 |  |  |
﻿Granted | 26,750 |  |  | 36.02 |  |  |  |  | 28,900 |  |  | 32.34 |  |  |
﻿Exercised | (32,350) |  |  | 19.71 |  |  |  |  | (28,275) |  |  | 18.39 |  |  |
﻿Forfeited | (3,275) |  |  | 24.31 |  |  |  |  | (4,650) |  |  | 27.08 |  |  |
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Outstanding, end of year | 199,825 |  | $ | 24.78 |  | $ | 2,822,470 |  | 208,700 |  | $ | 22.54 |  | $ | 2,182,537
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Exercisable, end of year | 173,075 |  | $ | 23.04 |  | $ | 2,745,430 |  | 179,800 |  | $ | 20.97 |  | $ | 2,163,463
﻿ Exercise prices for options outstanding as of December 31, 2019 ranged from $16.65 to $36.02 per share. The weighted average remaining contractual life is 5.9 years. ﻿ The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: ﻿ ﻿
﻿ |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |
﻿ | Years Ended December 31,
﻿ | 2019 |  | 2018 |  |
﻿Dividend yield |  | 3.59% |  |  | 3.72% |  |  |
﻿Expected life |  | 10 years |  |  | 10 years |  |  |
﻿Expected volatility |  | 29.08% |  |  | 29.10% |  |  |
﻿Risk-free interest rate |  | 1.92% |  |  | 2.68% |  |  |
﻿Weighted average fair value of options granted | $ | 7.61 |  | $ | 7.18 |  |  |
﻿ The expected volatility is based on historical volatility. The risk-free interest rates for periods within the contractual life of the awards are based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life is based on historical exercise experience. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts. ﻿ Proceeds from stock option exercises totaled $638,000 in 2019. Shares issued in connection with stock option exercises are issued from available treasury shares or from available authorized shares. During 2019, for the shares issued in connection with stock option exercises, 32,350 shares in total, all shares were issued from available authorized shares. All share information has been adjusted to reflect the 50% stock dividend declared in 2017. ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ As of December 31, 2019, outstanding stock options consist of the following: ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  |  |
﻿ |  |  | Average |  |  |  |  |  | Average
﻿ | Options |  | Exercise |  | Remaining |  | Options |  | Exercise
﻿ | Outstanding |  | Price |  | Life, Years |  | Exercisable |  | Price
﻿ | 13,200 |  | $ | 16.83 |  | 1.0 |  | 13,200 |  | $ | 16.83
﻿ | 18,825 |  |  | 16.65 |  | 2.0 |  | 18,825 |  |  | 16.65
﻿ | 23,925 |  |  | 18.03 |  | 3.0 |  | 23,925 |  |  | 18.03
﻿ | 1,650 |  |  | 18.36 |  | 3.0 |  | 1,650 |  |  | 18.36
﻿ | 3,000 |  |  | 19.30 |  | 3.8 |  | 3,000 |  |  | 19.30
﻿ | 20,875 |  |  | 17.93 |  | 4.0 |  | 20,875 |  |  | 17.93
﻿ | 8,250 |  |  | 19.39 |  | 4.9 |  | 8,250 |  |  | 19.39
﻿ | 11,250 |  |  | 19.03 |  | 5.9 |  | 11,250 |  |  | 19.03
﻿ | 16,250 |  |  | 22.37 |  | 7.0 |  | 16,250 |  |  | 22.37
﻿ | 29,500 |  |  | 32.81 |  | 8.0 |  | 29,500 |  |  | 32.81
﻿ | 26,350 |  |  | 32.34 |  | 9.0 |  | 26,350 |  |  | 32.34
﻿ | 26,750 |  |  | 36.02 |  | 10.0 |  | - |  |  | -
﻿ |  |  |  |  |  |  |  |  |  |  |
﻿Total | 199,825 |  |  |  |  |  |  | 173,075 |  |  |
﻿ ﻿ ﻿ ﻿ A summary of the Company’s restricted stock activity and related information for the years ended December 31 is as follows:
﻿ |  |  |  |  |  |  |  |
﻿ |  | 2019 |  | 2018
﻿ |  |  |  | Weighted-Average |  |  |  | Weighted-Average
﻿ |  | Number of |  | Grant Date |  | Number of |  | Grant Date
﻿ |  | Shares |  | Fair Value |  | Shares |  | Fair Value
﻿ |  |  |  |  |  |  |  |
﻿Non-vested, beginning of year |  | 34,615 |  | $27.82 |  | 30,415 |  | $24.46
﻿Granted |  | 13,100 |  | 36.02 |  | 13,100 |  | 32.34
﻿Vested |  | (11,520) |  | 25.12 |  | (8,900) |  | 23.00
﻿Forfeited |  | - |  | - |  | - |  | -
﻿Non-vested at December 31 |  | 36,195 |  | $31.65 |  | 34,615 |  | $27.82
﻿

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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