Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

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, 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 three-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 455,530 shares remained available for grant at December 31, 2023.

The Company assumed 3,977 shares of restricted stock and 90,783 of restricted stock units at a fair value of $11.56 per share as a result of the merger with TCFC. The vesting period for the outstanding restricted stock grants and restricted stock units is between three and five years and one to three years, respectively. The recipients of the restricted stock units do not have any shareholder rights, including voting, dividend, or liquidation rights, with respect to the shares underlying awarded restricted units until the recipient becomes the record holder of those shares.

The following tables provide information on stock-based compensation expense for the years ended December 31, 2023 and December 31, 2022.

(Dollars in thousands)	December 31, 2023		December 31, 2022
Stock-based compensation expense	$	1,174	$	636

(Dollars in thousands)	December 31, 2023		December 31, 2022
Unrecognized stock-based compensation expense	$	1,859	$	138
Weighted average period unrecognized expense is expected to be recognized	1.3 years		0.2 years

The following tables summarize the unvested restricted stock and restricted stock unit awards outstanding for the Company for the years ended December 31, 2023 and 2022, respectively.

	Restricted Stock			Restricted Stock Units
	December 31, 2023			December 31, 2023
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Nonvested at beginning of period	36,860	$	20.15	—	$	—
Replacement awards issued in acquisition of TCFC	3,977	11.56		90,783	11.56
Granted	44,340	15.58		91,047	11.56
Vested	(38,184)	19.68		(15,573)	11.56
Forfeited	(1,671)	17.49		(1,202)	11.56
Nonvested at end of period	45,322	15.42		165,055	11.56

	Restricted Stock			Restricted Stock Units
	December 31, 2022			December 31, 2022
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Nonvested at beginning of period	29,425	$	13.95	—	$	—
Granted	34,184	20.48		—	—
Vested	(26,749)	13.75		—	—
Forfeited	—	—		—	—
Nonvested at end of period	36,860	20.15		—	—

The fair value of restricted stock awards that vested during 2023 and 2022 was $0.6 million and $0.5 million, respectively. The fair value of restricted stock units vested during 2023 was $0.2 million. There were no stock options granted during 2023 and 2022.