STOCK INCENTIVE PLANS

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

STOCK INCENTIVE PLANS

14. STOCK INCENTIVE PLANS

We have two employee Stock Incentive Plans: the first plan, which was approved in 2010, has 300,000 (363,000 adjusted for two 10% stock dividends) shares reserved and the second plan, which was approved in 2020, has 300,000 shares reserved. No new options may be granted under the 2010 plan, as it expired on April 14, 2020. Under the 2020 plan, options are periodically granted to employees at a price not less than the fair market value of the shares at the date of grant. Employees become 20% vested after five years and then vest 20% each year until fully vested. The right to exercise each such 20% of the options is cumulative and will not expire until the tenth anniversary of the date of the grant. All employees are eligible to participate in the 2020 plan if the Executive/Long-Range Planning Committee, in its sole discretion, determines that such person has contributed or can be expected to contribute to our profits or growth. With respect to Executive Officers, the Executive/ Long-Range Planning Committee will obtain approval from the Compensation Committee for any options granted to them.

We also have a stock incentive plan to provide equity incentive compensation to the Company’s eligible independent directors. The plan was approved by the shareholders in 2021 and has 150,000 shares reserved. Under the 2021 plan, options may be granted to eligible independent directors at a price not less than the fair market value of the shares at the date of grant. Options granted to independent directors become vested as to 20% of the options per year and will be fully vested after five years. The right to exercise each such 20% of the options is cumulative and will not expire until the tenth anniversary of the date of the grant. Each independent director is eligible to participate in the 2021 plan if the Compensation Committee, in its sole discretion, determines that such person has contributed or can be expected to contribute to our profits or growth.

Option awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant. The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatilities of our common stock. The expected term of the options granted shall not exceed ten years from the date of grant (the amount of time options granted are expected to be outstanding). The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

The fair value of options granted was determined using the following weighted-average assumptions as of grant date:

	2022			2021			2020
Risk free interest rate		2.75	%		1.46	%		0.63	%
Expected life (in years)		5.00			5.99			7.50
Expected stock price volatility		35.30	%		34.18	%		32.90	%
Dividend yield		4.15	%		4.00	%		4.26	%

The following table presents a summary of the activity under the 2010, 2020 and 2021 Stock Incentive Plans for the years ended December 31:

	2022					2021					2020
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding, January 1		273,747		$	17.50		202,344		$	14.89		86,097		$	12.92
Granted		5,000			17.10		115,750			20.15		145,750			15.31
Exercised		(11,085	)		14.58		(22,305	)		10.64		(19,298	)		9.39
Forfeited		(13,250	)		18.68		(22,042	)		15.07		(10,205	)		15.19
Outstanding, December 31		254,412		$	17.56		273,747		$	17.50		202,344		$	14.89
Exercisable at year end		20,626		$	17.76		7,804		$	12.17		21,113		$	9.77

The following table presents information pertaining to options outstanding at December 31, 2022.

Exercise Price		Number of Options Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price of Options Outstanding		Intrinsic Value of Options Outstanding		Number of Options Exercisable		Weighted Average Exercise Price of Options Exercisable		Intrinsic Value of Options Exercisable
$	12.26		3,508		1.58	$	12.26	$	43,008		2,806	$	12.26	$	13,038
$	12.40		969		1.00	$	12.40	$	12,016		969	$	12.40	$	4,366
$	13.05		7,260		2.33	$	13.05	$	94,743		4,356	$	13.05	$	16,796
$	15.21		106,250		7.33	$	15.21	$	1,616,063		—	$	15.21	$	—
$	16.73		10,000		7.33	$	16.73	$	167,300		—	$	16.73	$	—
$	17.10		5,000		9.42	$	17.10	$	85,500		—	$	16.73	$	—
$	18.23		28,950		7.33	$	18.23	$	527,759		—	$	18.23	$	—
$	19.82		7,225		7.33	$	19.82	$	143,200		495	$	19.82	$	—
$	20.04		20,250		8.59	$	20.04	$	405,810		—	$	20.04	$	—
$	21.10		65,000		8.33	$	21.10	$	1,371,500		12,000	$	21.10	$	—
			254,412		7.48	$	17.56	$	4,466,899		20,626	$	17.76	$	34,200

The total intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020 was $161,740, $208,259 and $139,837, respectively. Shares issued upon exercise of stock options are obtained from the authorized and unissued pool of common stock. Shares surrendered as payment of the stock option exercise price are included in treasury stock.

We recognized compensation cost for the years ended December 31, 2022, 2021 and 2020 in the amount of $121,673, $103,033 and $92,986, respectively, related to the granted options.

As of December 31, 2022, there was a total of $593,680 in unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan. The cost is expected to be recognized over a weighted average period of 4.41 years.