NOTE 12 - LONG TERM INCENTIVE PLANS

9 Months Ended

Sep. 30, 2021

Retirement Benefits [Abstract]

NOTE 12 - LONG TERM INCENTIVE PLANS

NOTE 12 - LONG TERM INCENTIVE PLANS

Restricted stock

Restricted stock expense was $149 thousand and $122 thousand, respectively, for the three month periods ended September 30, 2021 and 2020, and $449 thousand and $393 thousand, respectively, for the nine month periods ended September 30, 2021 and 2020. The tax benefit from restricted stock expense was $27 thousand and $22 thousand, respectively, for the three month periods ended September 30, 2021 and 2020; and $81 thousand and $71 thousand, respectively, for the nine month periods ended September 30, 2021 and 2020. In second quarter 2021, Salisbury granted a total of 16,650 shares of restricted stock to certain employees and Directors pursuant to its 2017 Long Term Incentive Plan. The fair value of the stock at grant date was approximately $746 thousand. The restricted stock will vest three years from the grant date. Unrecognized compensation cost relating to the awards as of September 30, 2021 and 2020 totaled $1,075 thousand and $906 thousand, respectively. There were no forfeitures in the third quarter or year to date for 2021. There were forfeitures of $21 thousand or 500 shares in the third quarter of 2020 and forfeitures of $50 thousand or 1,200 shares for year to date 2020.

Performance-based restricted stock units

On March 29, 2019, the Compensation Committee granted 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 paid out the final tranche of these awards 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. No performance-based restricted stock units were awarded prior to 2019.

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, vesting will occur no later than March 15, 2023.

On June 23, 2021, the Compensation Committee granted an additional 7,400 units under the RSU plan. The performance goal for this tranche is based on the increase in the Bank's tangible book value by $7.00 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 ($9.00 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 15, 2024.

The fair value of the awards granted under the RSU plan at the grant date was $354 thousand, $264 thousand, and $280 thousand, respectively, for those grants awarded in 2021, 2020 and 2019. Compensation expense of $61 thousand and $80 thousand was recorded with respect to these RSUs for the three months ended September 2021 and 2020, and $236 thousand and $127 thousand for the nine months ended September 30, 2021 and 2020, respectively. The shares noted above are contingently issuable only upon attainment of the minimum performance goal. The tax benefit from performance restricted stock expense was $11 thousand and $14 thousand, respectively, for the three month periods ended September 30, 2021 and 2020; and $42 thousand and $23 thousand, respectively, for the nine month periods ended September 30, 2021 and 2020.

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 $210 thousand and $189 thousand for the three months ended September 30, 2021 and 2020, and expenses of $757 thousand and $530 thousand for the first nine months of 2021 and 2020, respectively. The tax benefit from (STIP) expense was $38 thousand and $34 thousand, respectively, for the three month periods ended September 30, 2021 and 2020; and $136 thousand and $95 thousand, respectively, for the nine month periods ended September 30, 2021 and 2020.

Options

Salisbury issued stock options in conjunction with its acquisition of Riverside Bank in 2014. In third quarter 2021 and third quarter 2020, no stock options were exercised. In first quarter 2021 and first quarter 2020, a former Riverside Bank executive exercised 1,755 stock options at $17.04 per share. Also, in first quarter 2020, a former Riverside employee exercised 1,350 stock options at $17.04 per share.