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Note 7 - Stock Compensation Plans
 6 Months Ended
Jun. 30, 2022
Notes to Financial Statements  
Share-Based Payment Arrangement [Text Block]

Note 7. Stock Compensation Plans

 

On May 13, 2014, the Company’s shareholders approved the First National Corporation 2014 Stock Incentive Plan, which makes available up to 240,000 shares of common stock for the granting of stock options, restricted stock awards, stock appreciation rights, and other stock-based awards. Awards are made at the discretion of the Board of Directors and compensation cost equal to the fair value of the award is recognized over the vesting period.

 

Stock Awards

 

Whenever the Company deems it appropriate to grant a stock award, the recipient receives a specified number of unrestricted shares of employer stock. Stock awards may be made by the Company at its discretion without cash consideration and may be granted as settlement of a performance-based compensation award. 

 

Compensation expense related to stock awards totaled $0 and $351 thousand for the three months and six months ended June 30, 2022, respectively.  The Company did not have compensation expense related to stock awards for the three months and six months ended June 30, 2022 and 2021.

 

Restricted Stock Units

 

Restricted stock units are an award of units that correspond in number and value to a specified number of shares of employer stock which the recipient receives according to a vesting plan and distribution schedule after achieving required performance milestones or upon remaining with the employer for a particular length of time. Each restricted stock unit that vests entitles the recipient to receive one share of common stock on a specified issuance date.

 

During the first quarter of 2022, 10,110 restricted stock units were granted to employees, with 3,375 units vesting immediately, and 6,735 units subject to a two year vesting schedule with one half of the units vesting each year. The recipient does not have any stockholder rights, including voting, dividend, or liquidation rights, with respect to the shares underlying awarded restricted stock units until vesting has occurred and the recipient becomes the record holder of those shares. The unvested restricted stock units will vest on the established schedule if the employees remain employed by the Company on future vesting dates.

 

A summary of the activity for the Company’s restricted stock units for the period indicated is presented in the following table:

 

  

Six Months Ended

 
  

June 30, 2022

 
  

Shares

  Weighted Average Grant Date Fair Value 

Unvested, beginning of year

  30,781  $19.79 

Granted

  10,110   22.19 

Vested

  (11,643)  20.58 

Forfeited

  —   — 

Unvested, end of period

  29,248  $20.31 

 

At June 30, 2022, based on restricted stock unit awards outstanding at that time, the total unrecognized pre-tax compensation expense related to unvested restricted stock unit awards was $423 thousand. This expense is expected to be recognized through 2026. Compensation expense related to restricted stock unit awards recognized for the three and six months ended June 30, 2022 and 2021 totaled $56 thousand and $190 thousand, respectively.   Compensation expense related to restricted stock unit awards recognized for the three and six months ended June 30, 2022 and 2021 totaled $45 thousand and $119 thousand, respectively.