Note 7 - Stock-based Compensation

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

7. STOCK-BASED COMPENSATION

In May 2022, the Company’s shareholders approved the 2022 Equity Incentive Plan (the “2022 Plan”), which provides for the grant of up to 576,550 shares of common stock, including 126,550 shares that remained available for grant under the 2013 Stock Option Plan when the 2022 Plan was adopted. The 2022 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. The frequency, amount and terms of stock-based awards may be determined by the Board of Directors or its compensation committee, consistent with the terms and purposes of the 2022 plan.

In May 2013, the Company established the 2013 Stock Option Plan for which 167,317 shares of common stock are reserved. With the establishment of the Company’s 2022 Equity Incentive Plan, no further options may be issued under the 2013 Stock Option Plan, though options previously granted continue to be outstanding and governed by the plan.

117,200 options were granted under the 2022 Plan during the three and nine months ended September 30, 2022.  No options were granted during the nine months ended September 30, 2023 and 2022 under the 2013 stock option plan.

A summary of the activity within the 2013 Plan follows: 

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years		Intrinsic Value
Options outstanding at January 1, 2023		189,917		$	21.14
Options exercised		(22,600	)		18.36
Options outstanding at September 30, 2023		167,317		$	21.52		3.3	$	2,111,541
Options exercisable at September 30, 2023		137,467		$	21.49		3.1	$	1,738,958
Expected to vest after September 30, 2023		26,187		$	21.66		4.1	$	326,868

A summary of the activity within the 2022 Plan follows: 

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years		Intrinsic Value
Options outstanding at September 30, 2023		117,200	$	31.00		8.56	$	368,008
Options exercisable at September 30, 2023		24,400	$	31.00		8.49	$	76,616
Expected to vest after September 30, 2023		81,413	$	31.00		8.57	$	255,637

As of September 30, 2023, there was $15,183 of total unrecognized compensation cost related to non-vested, share-based compensation under the 2013 plan. That cost is expected to be recognized over a weighted average period of 0.1 years. As of September 30, 2023, there was $786,000 of total unrecognized compensation cost related to non-vested stock options, share-based compensation under the 2022 plan. That cost is expected to be recognized over a weighted average period of 3.7 years.

The total fair value of options vested during the nine months ended September 30, 2023 and 2022 was $222,000 and $101,000, respectively. The total intrinsic value of options at time of exercise was $457,000 and $830,000 for the nine months ended September 30, 2023 and 2022, respectively.

Compensation cost related to stock options recognized in operating results under the stock option plans was $87,000 and $36,000 for the three months ended September 30, 2023 and 2022, respectively. The associated income tax benefit recognized was $7,000 and $2,000 for each of the three months ended September 30, 2023 and 2022, respectively. Compensation cost related to stock options recognized in operating results under the stock option plans was $260,000 and $153,000 for the nine months ended September 30, 2023 and 2022, respectively. The associated income tax benefit recognized was $19,000 and $10,000 for each of the nine months ended September 30, 2023 and 2022, respectively.

Cash received from option exercises under the plans for the nine months ended September 30, 2023 and 2022 were $261,000 and $277,000, respectively. The tax benefit realized for the tax deductions from option exercise totaled $75,000 and $55,000 for the nine months ended September 30, 2023 and 2022, respectively.

During the three months ended September 30, 2022 the Company granted 1,650 shares of restricted stock with a fair value of $31 per share and a one-year vesting period. 825 of these shares were terminated during the three months ended September 30, 2023. Compensation costs related to these shares during the three months and nine months ended September 30, 2023, totaled $(21,000) and $4,000, respectively.  Compensation costs related to these shares during the three and nine months ended September 30, 2022 totaled $9,000.  As of September 30, 2023, there was no unrecognized compensation cost related to restricted stock. Of the 1,650 restricted stock shares issued, 825 were fully vested at September 30, 2023, and 825 were terminated.