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Note 7 - Stock Compensation Plans
 3 Months Ended
Mar. 31, 2024
Notes to Financial Statements  
Share-Based Payment Arrangement [Text Block]

Note 7. Stock Compensation Plans

 

On May 10, 2023, the Company’s shareholders approved the First National Corporation 2023 Stock Incentive Plan, which replaced the 2014 Stock Incentive Plan and makes available up to 325,000 shares of common stock for the granting of stock options, restricted stock awards, restricted stock units, stock appreciation rights, and other stock-based awards.  Beginning on May 11, 2023, new equity awards granted by the Company are from the 2023 Stock Incentive Plan and not from the 2014 Stock Incentive Plan.   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. 

 

There was no compensation expense related to stock awards for the three months ended March 31, 2024.  Compensation expense related to stock awards totaled $200 thousand for the three months ended March 31, 2023.  

 

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 2024, 13,412 restricted stock units were granted to employees, with 4,475 units vesting on February 15, 2024, and 8,937 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:

 

  

Three Months Ended

 
  

March 31, 2024

 
  

Shares

  

Weighted Average Grant Date Fair Value

 

Unvested, beginning of year

  41,507  $18.47 

Granted

  13,412   19.06 

Vested

  (17,762)  19.59 

Forfeited

  —   — 

Unvested, end of period

  37,157  $18.25 

 

At March 31, 2024, 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 $464 thousand. This expense is expected to be recognized through 2028. Compensation expense related to restricted stock unit awards recognized for the three months ended  March 31, 2024 and 2023 totaled $142 thousand and $138 thousand, respectively.