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Stock-Based Compensation
12 Months Ended
Dec. 31, 2019
Stock-Based Compensation [Abstract]  
Stock-Based Compensation

Note M—Stock-Based Compensation. 



In May 2018, the Company adopted an Equity Incentive Plan (the 2018 Plan).  Employees and directors of the Company and the Bank and consultants (with restrictions) are eligible to participate in the 2018 Plan.  The option term may not exceed 10 years from the date of the grant.  Any employee or consultant who possesses more than 10 percent of voting power of all classes of stock of the Company, or any parent or subsidiary, may not have options with terms exceeding five years from the date of grant.  An aggregate of 1,700,000 shares of common stock were reserved for issuance under the 2018 Plan. Restricted stock units may also be granted under the 2018 Plan with conditions similar to those for options.



In May 2013, the Company adopted a Stock Option and Equity Plan (the 2013 Plan).  Employees and directors of the Company and the Bank and consultants (with restrictions) are eligible to participate in the 2013 Plan.  The option term may not exceed 10 years from the date of the grant.  An employee or consultant who possesses more than 10 percent of voting power of all classes of stock of the Company, or any parent or subsidiary, may not have options with terms exceeding five years from the date of grant.  An aggregate of 2,200,000 shares of common stock were originally reserved for issuance under the 2013 Plan but none remain. Restricted stock units may also be granted under the 2013 Plan with conditions similar to those for options.



In May 2011, the Company adopted a Stock Option and Equity Plan (the 2011 Plan).  Employees and directors of the Company and the Bank and consultants (with restrictions) are eligible to participate in the 2011 Plan.  The option term may not exceed 10 years from the date of the grant.  An employee or consultant who possesses more than 10 percent of voting power of all classes of stock of the Company, or any parent or subsidiary, may not have options with terms exceeding five years from the date of grant.  An aggregate of 1,400,000 shares of common stock were originally reserved for issuance under the 2011 Plan but none remain.



In June 2005, the Company adopted an Omnibus Equity Compensation Plan (the 2005 Plan).  Employees and directors of the Company and the Bank are eligible to participate in the 2005 Plan.  An employee or consultant who possesses more than 10 percent of voting power of all classes of stock of the Company, or any parent or subsidiary, may not have options with terms exceeding five years from the date of grant.  An aggregate of 1,000,000 shares of common stock were originally reserved for issuance under the 2005 Plan but none remain.  Options granted under the 2005 Plan expire on the tenth anniversary of their grant.



In October 1999, the Company adopted a stock option plan (the 1999 Plan).  Employees and directors of the Company and the Bank were eligible to participate in the 1999 Plan.  An employee or consultant who possesses more than 10 percent of voting power of all classes of stock of the Company, or any parent or subsidiary, may not have options with terms exceeding five years from the date of grant.  An aggregate of 1,000,000 shares of common stock were originally reserved for issuance under the 1999 Plan, with no more than 75,000 shares being issuable to non-employee directors, but none remain.  Options vested over four years and expire on the tenth anniversary of the grant.



A summary of the Company’s stock options is presented below:







 

 

 

 

 

 

 



 

 

 

 

Weighted-average

 

 



 

 

 

 

remaining

 

 



 

 

Weighted-average

 

contractual

 

Aggregate



Shares

 

exercise price

 

term (years)

 

intrinsic value



(in thousands except per share data)



 

 

 

 

 

 

 

Outstanding at January 1, 2019

1,276,500 

 

$                     8.23 

 

3.77 

 

$              511,200 

Granted

65,104 

 

8.57 

 

3.13 

 

286,458 

Exercised

(30,000)

 

8.59 

 

-

 

75,975 

Expired

 -

 

 -

 

-

 

 -

Forfeited

 -

 

 -

 

-

 

 -

Outstanding at December 31, 2019

1,311,604 

 

$                     8.24 

 

3.11 

 

$           6,203,523 

Exercisable at December 31, 2019

1,171,500 

 

$                     8.32 

 

2.56 

 

$           5,450,565 



A summary of the Company’s restricted stock units is presented below:





 

 

 

 

 



 

 

Weighted-average

 

Average remaining



 

 

grant date

 

contractual



Shares

 

fair value

 

term (years)

Outstanding at January 1, 2019

850,937 

 

$                     8.84 

 

1.44 

Granted

930,831 

 

8.57 

 

1.96 

Vested

(464,430)

 

8.21 

 

 -

Forfeited

(63,411)

 

8.96 

 

 -

Outstanding at December 31, 2019

1,253,927 

 

$                     8.87 

 

1.64 



In 2019, The Company granted 930,831 restricted stock units at a fair value of $8.57 of which 863,331 had a vesting period of three years and 67,500 had a vesting period of one year.  In 2018, the Company granted 507,792 restricted stock units at a fair value of $11.07 per unit of which 440,292 had a vesting period of 2.8 years and 67,500 had a vesting period of one year.  In 2017, the Company granted 955,024 restricted stock units at a fair value of $5.47 per unit of which 820,024 had a vested period of three years and 135,000 had a vesting period of one year.  

 

A summary of the status of the Company’s non-vested options under the plans as of December 31, 2019, and changes during the year then ended, is presented below:







 

 

 



 

 

Weighted-average



 

 

grant date



Shares

 

fair value

Non-Vested at January 1, 2019

150,000 

 

$                     2.89 

Granted

65,104 

 

3.84 

Vested

(75,000)

 

2.89 

Expired

 -

 

 -

Forfeited

 -

 

 -

Non-Vested at December 31, 2019

140,104 

 

$                     3.33 



The Company granted 65,104 common stock options in 2019, with a vesting period of four years, whereas in 2018 and 2017 the Company did not grant any common stock options.  The weighted average fair value of the stock options issued in 2019 was $3.84.    



There were 494,430 options exercised and restricted stock units vested in 2019, 594,673 options exercised and restricted stock units vested in 2018 and 468,431 options exercised and restricted stock units vested in 2017.  The total intrinsic value of the options exercised and stock units vested in 2019, 2018 and 2017 was $4.4 million, $6.2 million and $3.0 million, respectively.  The total issuance date fair value of options that were exercised and restricted units which vested during the year ended December 31, 2019 was $4.0 million.



As of December 31, 2019, there was a total of $7.3 million of unrecognized compensation cost related to unvested awards under share-based plans.  This cost is expected to be recognized over a weighted average period of approximately 1.6 years.  For the years ended December 31, 2019, 2018 and 2017 total compensation expense under share based payment arrangements was $5.7 million, $3.4 million and $3.2 million respectively, and the related tax benefits recognized were $1.2 million, $724,000 and $1.1 million, respectively. 



For the years ended December 31, 2019, 2018 and 2017, the Company estimated the fair value of each stock option grant on the date of grant using the Black-Scholes options pricing model with the following weighted average assumptions:







 

 

 

 

 



December 31,



2019

 

2018

 

2017

Risk-free interest rate

2.63% 

 

 -

 

 -

Expected dividend yield

0% 

 

 -

 

 -

Expected volatility

0% - 41.8%

 

 -

 

 -

Expected lives (years)

1.0 - 6.3

 

 -

 

 -



Expected volatility is based on the historical volatility of the Company’s stock and peer group comparisons over the expected life of the grant.  The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury strip rate in effect at the time of the grant.  The life of the option is based on historical factors which include the contractual term, vesting period, exercise behavior and employee terminations.  In accordance with the ASC 718, Stock Based Compensation, stock based compensation expense for the year ended December 31, 2019 is based on awards that are ultimately expected to vest and has been reduced for estimated forfeitures. The Company estimates forfeitures using historical data based upon the groups identified by management.