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NOTE 16 - LONG TERM INCENTIVE PLANS
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
NOTE 16 - LONG TERM INCENTIVE PLANS

NOTE 16 - LONG TERM INCENTIVE PLANS

The Board of Directors adopted the 2011 Long Term Incentive Plan (the “Plan”) on March 25, 2011, and the shareholders approved the Plan at the 2011 Annual Meeting. The Plan was amended on January 18, 2013, January 29, 2016 and again on April 28, 2017. The purpose of the Plan is to assist Salisbury and the Bank in attracting, motivating, retaining and rewarding employees, officers and directors by enabling such persons to acquire or increase a proprietary interest in Salisbury in order to strengthen the mutuality of interests between such persons and our shareholders, and providing such persons with stock-based long-term performance incentives to expend their maximum efforts in the creation of shareholder value.

The terms of the Plan provide for grants of Directors Stock Retainer Awards, Stock Options, Stock Appreciation Rights (“SARs”), Restricted Stock, Restricted Stock Units, Performance Awards, Deferred Stock, Dividend Equivalents, and Stock or Other Stock-Based Awards that may be settled in shares of common stock, cash, or other property (collectively, “Awards”). Under the Plan, the total number of shares of Common Stock reserved and available for issuance in the ten years following adoption of the Plan in connection with Awards under the Plan is 84,000 shares of Common Stock, which represented less than 5% of Salisbury’s outstanding shares of Common Stock at the time the Plan was adopted. Shares of Common Stock with respect to Awards previously granted under the Plan that are cancelled, terminate without being exercised, expire, are forfeited or lapse will again be available for issuance as Awards. Also, shares of Common Stock subject to Awards settled in cash and shares of Common Stock that are surrendered in payment of any Award or any tax withholding requirements will again be available for issuance as Awards. No more than 30,000 shares of Common Stock may be issued pursuant to Awards in any one calendar year. In addition, the Plan limits the total number of shares of Common Stock that may be awarded as Incentive Stock Options (“ISOs”) to 42,000 and the total number of shares of Common Stock that may be issued as Directors Stock Retainer Awards to 15,000. The Directors stock retainer awards were increased from 120 shares per year to 240 shares per year effective January 25, 2013. Effective January 29, 2016, the Directors stock retainer award was increased from 240 shares to 340 shares annually.

The Board of Directors adopted the 2017 Long Term Incentive Plan (the “2017 LTIP”) on February 24, 2017, which was approved by shareholders at the 2017 Annual Meeting on May 17, 2017. Pursuant to the 2017 LTIP, as of May 2017, following shareholder approval of the 2017 LTIP, no further awards will be made under the 2011 LTIP, which shall remain in existence solely for purposes of administering outstanding grants. Under the 2017 LTIP, the total number of shares of Common Stock reserved and available for issuance in the next ten years in connection with awards under the 2017 LTIP is 200,000 shares of Common Stock, which represents approximately 7% of Salisbury’s 2,770,036 outstanding shares of Common Stock as of March 20, 2017. Of the maximum shares available under the 2017 LTIP, 200,000 shares may be issued upon the exercise of stock options (all of which may be granted as incentive stock options) and 150,000 shares may be issued as restricted stock or restricted stock units (including deferred stock units), provided that, to the extent that a share is issued as a restricted stock award or a restricted stock unit, the share would no longer be available for award as a stock option, unless the restricted stock award or restricted unit is forfeited or otherwise returned to the 2017 LTIP. On March 9, 2020 the Board of Directors approved an amendment to the Salisbury Bancorp, Inc. 2017 Long Term Incentive Plan (the “Plan”) which allows the Committee, in its sole discretion, to accelerate vesting of all or a portion of an award upon the termination of service of a participant or the occurrence of a change in control.

Restricted stock

In 2020, 2019 and 2018 Salisbury granted a total of 15,475, 15,130, and 13,210 shares of restricted stock pursuant to its 2011 and 2017 LTIP to certain employees and Directors. The fair value of the stock at grant date was determined to be $554 thousand, $601 thousand, and $585 thousand, respectively. The stock will be vested three years from the grant date.

The following table presents the amount of cumulatively granted restricted stock awards under the 2011 and 2017 Long-Term Incentive Plans:

Weighted Average Weighted Average
Year Ended December 31, 2020 Grant Price 2019 Grant Price
Beginning of Year 39,626 $41.04 39,434 $37.73
Granted 15,475 35.82 15,130 39.70
Vested (13,776) 39.71 (14,228) 30.33
Forfeited (1,200) 41.25 (710) 42.81
End of Year 40,125 $39.44 39,626 $41.04

 

The fair value of the restricted shares that vested during 2020, 2019 and 2018 were $464 thousand, $556 and $0 thousand, respectively. Compensation expense for restricted stock awards in 2020, 2019, and 2018 was $525 thousand, $491 thousand, and $447 thousand, respectively. Unrecognized compensation cost relating to the restricted stock awards was $774 thousand, $795 thousand, and $711 thousand as of December 31, 2020, 2019 and 2018, respectively. The remaining weighted average vesting period on restricted shares as of December 31, 2020, over which unrecognized compensation cost is expected to be recognized, is 1.5 years. The tax benefit associated with restricted stock awards, which was recognized in earnings for 2020, 2019 and 2018, was approximately $95 thousand, $88 thousand and $87 thousand, respectively.

Additionally, in 2018 the Compensation Committee granted a total of 53,500, Phantom Stock Appreciation Units (“PSAUs” pursuant to the 2013 Phantom Stock Appreciation Unit and Long-Term Incentive Plan (the “Plan”) to certain employees, including the Named Executive Officers. The units will vest on the third anniversary of the grant date. Salisbury’s compensation expense related to the PSAUs was $141 thousand, $414 thousand, and $171 thousand for 2020, 2019, and 2018 respectively.

Performance-based restricted stock units

On March 29, 2019, the Compensation Committee granted 6,800 performance-based restricted stock units (RSU) pursuant to the 2017 Long-Term Incentive Plan to further align compensation with the Bank’s performance. This RSU plan replaced the Bank’s Phantom Stock Appreciation Units plan (Phantom). Salisbury will continue to record an expense for the Phantom plan until the final tranche of awards is paid out in January 2021.

The performance goal for awards granted under the RSU plan in 2019 is based on the increase in the Bank’s tangible book value by $3.50 per share over the performance period for threshold performance. Vesting will range from 75% of target for achieving threshold performance, to 100% of target for achieving target payout performance ($5.00 increase in tangible book value per share) to 150% of target for achieving in excess of target payout performance and, if the performance goals are achieved, vesting will occur no later than March 29, 2022.

On July 29, 2020, the Compensation Committee granted an additional 7,250 units under the RSU plan. The performance goal for this tranche is based on the relative increase in the Bank’s tangible book value compared with a pre-determined group of peer banks over the performance period for threshold performance. Vesting will range from 50% of target for achieving threshold performance, to 100% of target for achieving tangible book value growth of at least 50% but less than 55% of the peer group, to 150% of target for achieving in excess of target payout performance and, if the performance goal is achieved.

The fair value of the awards granted under the RSU plan at the grant date was $264 thousand and $280 thousand, respectively, for those grants awarded in 2020 and 2019. In 2020, 350 RSUs were forfeited. Compensation expense of $221 thousand and $70 thousand was recorded with respect to these RSUs in 2020 and 2019, respectively. No performance-based restricted stock units were awarded prior to 2018. The shares noted above are contingently issuable only upon attainment of the minimum performance goal.

The following table presents the amount of cumulatively granted performance based restricted stock units awarded under the 2017 Long-Term Incentive Plans:

Weighted Average Weighted Average
Year Ended December 31, 2020 Grant Price 2019 Grant Price
Beginning of Year 6,800 $41.20 0 $0.00
Granted 7,250 36.36 6,800 41.20
Vested 0 0 0 0.00
Forfeited (350) 41.20 0 0.00
End of Year 13,700 $38.64 6,800 $41.20

Short Term Incentive Plan (STIP)

Salisbury offers a short-term discretionary compensation plan to eligible employees on an annual basis. Under this incentive plan, Salisbury may reward employees with cash compensation if certain pre-determined Bank and individual performance goals have been achieved. The STIP expense, which is included in compensation expenses, totaled $941 thousand, $888 thousand, and $758 thousand, in 2020, 2019, and 2018, respectively.