Stock-Based Compensation

3 Months Ended

Mar. 31, 2021

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 10 - Stock-Based Compensation

At the 2016 annual meeting, stockholders approved the Shore Bancshares, Inc. 2016 Stock and Incentive Plan (“2016 Equity Plan”), replacing the Shore Bancshares, Inc. 2006 Stock and Incentive Plan (“2006 Equity Plan”), which expired on that date. The Company may issue shares of common stock or grant other equity-based awards pursuant to the 2016 Equity Plan. Stock-based awards granted to date generally are time-based, vest in equal installments on each anniversary of the grant date and range over a one- to five-year period of time, and, in the case of stock options, expire 10 years from the grant date. As part of the 2016 Equity Plan, a performance equity incentive award program, known as the “Long-term incentive plan” allows participating officers of the Company to earn incentive awards of performance share/restricted stock units if certain pre-determined targets are achieved at the end of a three-year performance cycle. Stock-based compensation expense based on the grant date fair value is recognized ratably over the requisite service period for all awards and reflects forfeitures as they occur. The 2016 Equity Plan originally reserved 750,000 shares of common stock for grant, and 583,831 shares remained available for grant at March 31, 2021.

The following tables provide information on stock-based compensation expense for the three months ended March 31, 2021 and 2020.

	For Three Months Ended
	March 31,
(Dollars in thousands)	2021		2020
Stock-based compensation expense	$	97	$	61
Excess tax benefits related to stock-based compensation		3		7

	March 31,
(Dollars in thousands)	2021			2020
Unrecognized stock-based compensation expense	$	329		$	257
Weighted average period unrecognized expense is expected to be recognized		0.8	years		1.8	years

The following table summarizes restricted stock award activity for the Company under the 2016 Equity Plan for the three months ended March 31, 2021.

	Three Months Ended March 31, 2021
		Weighted Average
	Number of	Grant Date
	Shares	Fair Value
Nonvested at beginning of period	24,505	$	13.78
Granted	24,583		13.34
Vested	(16,333)		14.09
Forfeited	—		—
Nonvested at end of period	32,755	$	13.22

The fair value of restricted stock awards that vested during the first three months of 2021 and 2020 was $230 thousand and $254 thousand, respectively.

The following table summarizes stock option activity for the Company under the 2016 Equity Plan for the three months ended March 31, 2021.

	Three Months Ended March 31, 2021
		Weighted Average
	Number of	Grant Date
	Shares	Exercise Price
Outstanding at beginning of period	2,709	$	6.64
Granted	—		—
Exercised	—		—
Expired/Cancelled	—		—
Outstanding at end of period	2,709	$	6.64
Exercisable at end of period	2,709	$	6.64

There were no stock options granted during the three months ended March 31, 2021 and March 31, 2020.

At the end of the first quarter of 2021, the aggregate intrinsic value of the options outstanding under the 2016 Equity Plan was $28 thousand based on the $17.02 market value per share of the Company’s common stock at March 31, 2021. Similarly, the aggregate intrinsic value of the options exercisable was $28 thousand at March 31, 2021. At March 31, 2021, the weighted average remaining contract life of options outstanding and exercisable was 1 year.