Note 14 - Stock-based Compensation

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

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 $638,000 and $726,000 for the three months ended September 30, 2022 and 2021, respectively. Stock-based compensation totaled $1,980,000 and $1,905,000 for the nine months ended September 30, 2022 and 2021, respectively. Stock–based compensation is included in “Salaries, wages and benefits” in the interim condensed consolidated statements of operations.

At September 30, 2022, the Company had $3,846,000 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, 2022 and for the year ended December 31, 2021.

	September 30, 2022			December 31, 2021
Risk–free interest rate		1.84	%		0.21	%
Expected volatility		31.46	%		34.90	%
Expected life, in years		2.9			2.2
Expected dividend yield		3.57	%		3.00	%

The following table summarizes our outstanding stock options for the nine months ended September 30, 2022 and for the year ended December 31, 2021.

	Number of Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value
Options outstanding at January 1, 2021		866,956		$	72.11	$	–
Options granted		55,706			70.80		–
Options exercised		(541,736	)		71.39		–
Options cancelled		(6,000	)		72.94		–
Options outstanding at December 31, 2021		374,926			72.95		–
Options granted		301,386			65.02		–
Options exercised		(18,954	)		66.91		–
Options cancelled		(196,051	)		76.19		–
Options outstanding at September 30, 2022		461,307			66.63	$	44,582
Options exercisable at September 30, 2022		159,921			69.68	$	44,582

Options Outstanding September 30, 2022	Exercise Prices				Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years
372,912		61.90	-	69.19		64.72		3.8
88,395		71.64	-	77.92		74.72		2.6
461,307						66.63		3.6