Share-Based Compensation and Employee Benefit Plan

3 Months Ended

Mar. 31, 2025

Share-Based Payment Arrangement [Abstract]

Share-Based Compensation and Employee Benefit Plan

In 2011, the Company adopted the Patriot National Bancorp, Inc. 2012 Stock Plan (the “2012 Plan”). The 2012 Plan was amended in 2020 and renamed as the Patriot National Bancorp, Inc. 2020 Restricted Stock Award Plan (the “2020 Plan”). A copy of the 2020 Plan was filed as Exhibit 10.1 to the Company’s Amendment No. 1 to Annual Report on Form 10-K/A for the year ended December 31, 2020 filed on April 30, 2021. The 2020 Plan provides an incentive to directors and employees of the Company by the grant of restricted stock awards (“RSA”).On November 10, 2022, the Board of Directors approved the Amendment and Restatement of the 2020 Plan (the “Amended and Restated 2020 Plan”), which was approved and ratified by shareholders of the Company on December 14, 2022.

The 2020 Plan was amended primarily to (i) reduce the total number of shares authorized for issuance thereunder from 3,000,000 shares to 400,000 shares; and (ii) limit the maximum number of shares of Company’s Common Stock granted during a single fiscal year to any non-employee director, together with any cash fees paid to such director, to be no more than a total value of $300,000. As of March 31, 2025, 74,540 shares of stock were available for issuance under the Plan. In accordance with the terms of the Plan, the vesting of RSAs may be accelerated at the discretion of the Compensation Committee of the Board of Directors. The Compensation Committee sets the terms and conditions applicable to the vesting of RSAs. RSAs granted to directors and employees generally vest in quarterly or annual installments over a three, four or five year period from the date of grant.

The following is a summary of the status of the Company’s restricted shares under the Amended and Restated 2020 Plan and changes for the three months ended March 31, 2025 and 2024:


Three months ended March 31, 2025:	Number of Shares Awarded	Weighted Average Grant Date Fair Value
Unvested at December 31, 2024	146,185	$2.87

Unvested at March 31, 2025	146,185	$2.87


Three months ended March 31, 2024	Number of Shares Awarded	Weighted Average Grant Date Fair Value
Unvested at December 31, 2023	17,506	$6.09
Granted	10,159	$3.79


Unvested at March 31, 2024	27,665	$5.24

The Company recognizes compensation expense for all director and employee share-based compensation awards on a straight-line basis over the requisite service period, which is equal to the vesting schedule of each award, for each vesting portion of an award equal to its grant date fair value.

Unrecognized compensation expense attributable to the unvested restricted shares outstanding as of March 31, 2025 amounted to $374,000, which amount is expected to be recognized over the weighted average remaining life of the awards of 2.0 years.

For the three months ended March 31, 2025, the Company recognized total share-based compensation expense of $181,000. The share-based compensation attributable to employees of Patriot amounted to $172,000. Included in share-based compensation expense attributable to Patriot’s external directors, were $9,000. The directors received total compensation of $9,000, which amounts are included in other operating expenses in the consolidated statements of operations.

For the three months ended March 31, 2024, the Company recognized total share-based compensation expense of $24,000. The share-based compensation attributable to employees of Patriot amounted to $15,000. Included in share-based compensation expense were $9,000 attributable to Patriot’s external directors, who received total compensation of $68,000, which amounts are included in other operating expenses in the consolidated statements of operations.

2025 Omnibus Equity Incentive Plan

On March 20, 2025, the Company executed securities purchase agreements with its President and director, Steven Sugarman, and other accredited investors, resulting in a $57.75 million private placement (the "Private Placement"). In connection with the Private Placement, the Company’s Board of Directors has approved the 2025 Omnibus Equity Incentive Plan (the “2025 Plan”). This effectiveness is contingent upon the approval of the Company’s shareholders. The 2025 Plan is designed to provide the Company with a competitive advantage in attracting, retaining, and motivating officers, employees, directors, and consultants by offering incentives directly linked to shareholder value. The Compensation Committee of the Board will administer the Plan.

Under the 2025 Plan, various types of awards can be issued, including Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units (RSUs), Performance Units, and Other Stock-Based Awards, as defined within the Plan. The maximum number of shares of Common Stock, Options, and/or Stock Appreciation Rights that may be granted under the Plan is capped at twenty percent (20%) of the total outstanding shares of Common Stock, including both voting and non-voting shares, with a minimum threshold of 10,000,000 shares.

RSUs under the 2025 Plan of 4,049,593 shares were granted pursuant to an employment agreement, effective as of the closing of the Private Placement. These RSUs vest in twelve equal monthly installments starting March 20, 2025, and expire on March 20, 2026. Upon expiration, vested RSUs will be settled based on shareholder approval of the Plan: if the Plan is not approved, each vested RSU will be settled in cash equivalent to the fair market value of one share of Common Stock as of March 20, 2026; if approved, each vested RSU will be settled in one share of Common Stock, with no cash settlement option. However, the employee cannot become the beneficial owner of more than 9.99% of the voting securities issued and outstanding, as defined under Rule 13d-3 of the Exchange Act. The Company recorded $127,000 in share-based compensation expense related to granted RSUs for the three months ended March 31, 2025.

Retirement Plan

Patriot offers employees participation in the Patriot Bank, N.A. 401(k) Savings Plan (the "401(k) Plan") under Section 401(k) of the Internal Revenue Code, along with the ROTH feature to the Plan. The 401(k) Plan covers substantially all employees who have completed one month of service, are 21 years of age and who elect to participate. Under the terms of the 401(k) Plan, participants can contribute up to the maximum amount allowed, subject to Federal limitations. At its discretion, Patriot may match eligible participating employee contributions at the rate of 50% of the first 6% of the participants’ salary contributed to the 401(k) Plan. During the three months ended March 31, 2025 and 2024, Patriot made matching contributions to the 401(k) Plan of $92,000 and $80,000, respectively.