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Note 14 - Stock-based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Text Block]

Note 14 – Stock–Based Compensation

NHC recognizes stock–based compensation expense for all stock options granted over the requisite service period using the fair value at the date of grant using the Black–Scholes pricing model. Stock–based compensation totaled $518,000 and $340,000 for the three months ended September 30, 2020 and 2019, respectively. Stock-based compensation totaled $1,807,000 and $1,448,000 for the nine months ended September 30, 2020 and 2019, respectively. Stock–based compensation is included in “Salaries, wages and benefits” in the interim condensed consolidated statements of operations.

At September 30, 2020, the Company had $3,024,000 of unrecognized compensation cost related to unvested stock–based compensation awards. This unrecognized compensation cost will be amortized over an approximate two-year period.

Stock Options

The following table summarizes the significant assumptions used to value the options granted for the nine months ended September 30, 2020 and for the year ended December 31, 2019.

	September 30, 2020	December 31, 2019
Risk–free interest rate	0.85%	2.30%
Expected volatility	20.2%	17.4%
Expected life, in years	2.2	2.3
Expected dividend yield	2.92%	2.73%

The following table summarizes our outstanding stock options for the nine months ended September 30, 2020 and for the year ended December 31, 2019.

	Number of Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value
Options outstanding at January 1, 2019		1,163,381		$	71.16	$	–
Options granted		53,316			77.89		–
Options exercised		(346,168	)		71.57		–
Options cancelled		(85,000	)		72.94		–
Options outstanding at December 31, 2019		785,529			71.24		–
Options granted		102,124			75.74		–
Options exercised		(33,573	)		62.46		–
Options cancelled		(3,000	)		72.94
Options outstanding at September 30, 2020		851,080		$	72.12	$	66,000

Options exercisable at September 30, 2020		215,456		$	68.35	$	18,000

Options Outstanding September 30, 2020	Exercise Prices			Weighted Average Exercise Price	Weighted Average Remaining Contractual Life in Years
153,000	$60.73	-	$64.64	62.67	2.53
698,080	$72.94	-	$86.48	74.19	1.55
851,080				72.12	1.48