Note 18 - Employee Benefit Plans

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

NOTE 18:         EMPLOYEE BENEFIT PLANS

Equity Plans

On May 27, 2015, the Company’s stockholders voted to approve the Guaranty Federal Bancshares, Inc. 2015 Equity Plan (the”2015 Plan”). The Plan provides for the grant of up to 250,000 shares of Common Stock under equity awards including stock options, stock awards, restricted stock, stock appreciation rights, performance units, or other equity-based awards payable in cash or stock to key employees and directors of the Company and the Bank. As of December 31, 2020, restricted stock for 90,016 shares of Common Stock and 108,898 of performance stock units has been granted under the Plan.

On May 26, 2010, the Company’s stockholders voted to approve the Guaranty Federal Bancshares, Inc. 2010 Equity Plan (the”2010 Plan”). The Plan provides for the grant of up to 200,000 shares of Common Stock under equity awards including stock options, stock awards, restricted stock, stock appreciation rights, performance units, or other equity-based awards payable in cash or stock to key employees and directors of the Company and the Bank. As of December 31, 2020, non-incentive stock options for 25,000 shares and restricted stock for 139,330 shares of Common Stock have been granted under the Plan.

In addition, the Company established four stock option plans for the benefit of certain directors, officers and employees of the Company and its subsidiary. A committee of the Company’s Board of Directors administers the plans. The stock options under these plans may be either incentive stock options or nonqualified stock options. Incentive stock options can be granted only to participants who are employees of the Company or its subsidiary. The option price must not be less than the market value of the Company stock on the date of grant. All options expire no later than ten years from the date of grant. The options vest at the rate of 20% per year over a five-year period.

The tables below summarize transactions under the Company’s equity plans:

Stock Options

	Number of shares
	Incentive Stock Option			Non-Incentive Stock Option			Weighted Average Exercise Price
Balance outstanding as of January 1, 2018		46,000			25,000		$	15.74
Granted		-			-			-
Exercised		(13,500	)		(10,000	)		7.07
Forfeited		(20,000	)		(10,000	)		28.71
Balance outstanding as of December 31, 2018		12,500			5,000		$	5.14
Granted		-			-			-
Exercised		(12,500	)		(5,000	)		5.12
Forfeited		-			-			-
Balance outstanding as of December 31, 2019		-			-		$	-
Granted		-			-			-
Exercised		-			-			-
Forfeited		-			-			-
Balance outstanding as of December 31, 2020		-			-		$	-
Options exercisable as of December 31, 2020		-			-		$	-

All stock options issued in prior years were exercised in 2019 and no stock options vested during 2020, 2019 and 2018.

Restricted Stock

	Number of shares			Weighted Average Grant- Fair Value
Balance of shares non-vested as of January 1, 2018		45,550		$	16.44
Granted		13,338			22.41
Vested		(26,539	)		16.40
Forfeited		-			-
Balance of shares non-vested as of December 31, 2018		32,349		$	18.93
Granted		15,434			23.85
Vested		(20,771	)		17.67
Forfeited		(2,634	)		22.38
Balance of shares non-vested as of December 31, 2019		24,378		$	22.75
Granted		20,213			20.99
Vested		(11,464	)		22.13
Forfeited		(5,090	)		22.37
Balance of shares non-vested as of December 31, 2020		28,037		$	21.80

In February 2020, the Company granted 5,579 shares of restricted stock to directors pursuant to the 2015 Equity Plan that have a one year cliff vesting and expensed over that same period. In March 2019, the Company granted 5,502 shares of restricted stock to directors pursuant to the 2015 Equity Plan that have a one year cliff vesting and expensed over that same period. In February 2018, the Company granted 5,852 shares of restricted stock to directors pursuant to the 2015 Equity Plan that have a one year cliff vesting and expensed over that same period. The expense is being recognized over the applicable vesting period. The expense relating to these awards for the years ended December 31, 2020, 2019 and 2018 was $135,110, $131,443 and $138,200, respectively.

During 2020, 2019 and 2018, the Company granted 14,634, 9,932 and 7,486 shares of restricted stock to officers that all have a cliff vesting at the end of three years. The expense is being recognized over the applicable vesting period. The expense relating to these awards for the years ended December 31, 2020, 2019 and 2018 was $114,357, $149,279 and $183,815, respectively.

Performance Stock Units

	Performance Stock Units			Weighted Average Grant- Date Fair Value
Balance of shares non-vested as of January 1, 2018		55,823		$	20.48
Granted		-			-
Vested		-			-
Forfeited		(8,501	)		20.48
Balance of shares non-vested as of December 31, 2018		47,322		$	20.48
Granted		-			-
Vested		(30,919	)		20.48
Forfeited		(16,403	)		20.48
Balance of shares non-vested as of December 31, 2019		-		$	-
Granted		53,075			15.40
Vested		-			-
Forfeited		-			-
Balance of shares non-vested as of December 31, 2020		53,075		$	15.40

During 2020, the Company granted restricted stock units representing 53,075 hypothetical shares of performance stock units to officers. There are three possible levels of incentive awards: threshold (25%); target (50%); and maximum (100%). The performance stock units vest based on two financial performance factors over the period from grant date to December 31, 2022 (the “Performance Period”). The two performance measurements of the Company (and the weight given to each measurement) applicable to each award level are as follows: (i) Earnings Per Share (50%) and (ii) Return on Average Assets (50%). In determining compensation expense, the fair value of the restricted stock unit awards was determined based on the closing price of the Company’s common stock on the date of grant, which averaged $15.40 per share. The expense is being recognized over the applicable vesting period. Due to the fact that the measurements cannot be determined at the time of the grant, the Company currently estimates that the most likely outcome is the achievement between the target and maximum levels. If during the Performance Period, additional information becomes available to lead the Company to believe a different level will be achieved for the Performance Period, the Company will reassess the number of units that will vest for the grant and adjust its compensation expense accordingly on a prospective basis. The total amount of expense for performance stock units during the years ended December 31, 2020, 2019 and 2018 was $54,948, $359,606 and $263,204, respectively.

Total stock-based compensation expense is comprised of expense for restricted stock awards, restricted stock units and stock options. Expense recognized for the years ended December 31, 2020, 2019 and 2018 was $304,415, $640,328 and $585,219, respectively. As of December 31, 2020, there was $429,294 of unrecognized compensation expense related to non-vested restricted stock awards and restricted stock units, which will be recognized over the remaining vesting periods.