STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

NOTE 18: STOCK-BASED COMPENSATION

The Company acquired a stock option plan which originated under VB Texas, Inc. as a part of a merger of the two companies, or the 2006 Plan. At the merger date, all outstanding options under this plan became fully vested and exercisable. The plan expired in 2016 and no additional options may be granted under its terms. As of December 31, 2021, there were options outstanding to acquire 35,560 shares of the Company’s common stock under the 2006 Plan, all of which will expire in 2022 if not exercised.

In 2014, the Company adopted the 2014 Stock Option Plan, or the 2014 Plan, which was approved by the Company’s shareholders and limits the number of shares that may be optioned to 1,127,200. The 2014 Plan provides that no options may be granted after May 20, 2024. Options granted under the 2014 Plan expire 10 years from the date of grant and become exercisable in installments over a period of one to five years, beginning on the first anniversary of the date of grant. At December 31, 2021, 963,200 shares were available for future grant under the 2014 Plan. No options have been issued under the 2014 Plan since 2017.

In 2017, the Company adopted the 2017 Omnibus Incentive Plan, or the 2017 Plan. The 2017 Plan authorizes the Company to grant options and performance-based and non-performance based restricted stock awards as well as various other types of stock-based awards and other awards that are not stock-based to eligible employees, consultants and non-employee directors up to an aggregate of 600,000 shares of common stock. At December 31, 2021, 276,000 shares were available for future grant under the 2017 Plan.

Stock option activity for the periods indicated below was as follows:

	Years Ended December 31,
	2021			2020
	Number of	Weighted		Number of	Weighted
	Shares	Average		Shares	Average
	Underlying	Exercise		Underlying	Exercise
	Options	Price		Options	Price
Outstanding at beginning of period	201,720	$	17.22	213,078	$	16.92
Granted	—		—	—		—
Exercised	(10,160)		11.32	(11,358)		11.67
Forfeited/expired	—		—	—		—
Outstanding at end of period	191,560	$	17.53	201,720	$	17.22

A summary of stock options as of the date shown indicated was as follows:

	December 31, 2021
Stock Options		Exercisable		Unvested		Outstanding
Number of shares underlying options		175,561		15,999		191,560
Weighted-average exercise price per share	$	17.22	$	21.00	$	17.53
Aggregate intrinsic value (in thousands)	$	2,069	$	128	$	2,197
Weighted-average remaining contractual term (years)		3.6		5.5		3.8

The fair value of the Company’s restricted stock awards is estimated based on the market value of the Company’s common stock at the date of grant. Restricted stock shares are considered fully issued at the time of the grant and the grantee becomes the record owner of the restricted stock and has voting, dividend and other shareholder rights. The shares of restricted stock are non-transferable and subject to forfeiture until the restricted stock vests and any dividends with respect to the restricted stock are subject to the same restrictions, including the risk of forfeiture.

Non-performance based restricted stock grants vest over the service period in equal increments over a period of two to five years, beginning on the first anniversary of the date of grant.

The number of shares earned under the Company’s performance-based restricted stock award agreements is based on the achievement of certain branch production goals. Compensation expense for performance-based restricted stock is recognized for the probable award level over the period estimated to achieve the performance conditions and other goals, on a straight-line basis. If the probable award level and/or the period estimated to be achieved change, compensation expense will be adjusted via a cumulative catch-up adjustment to reflect these changes. The performance conditions and

goals must be achieved within five years or the awards expire. The number of performance-based shares granted presented in the table below is based upon the attainment of the maximum number of shares possible to be earned.

Restricted stock activity for the periods indicated below was as follows:

	Non-performance Based			Performance-based
		Weighted			Weighted
		Average			Average
	Number of	Grant Date		Number of	Grant Date
	Shares	Fair Value		Shares	Fair Value
Outstanding at December 31, 2019	161,443	$	28.20	18,000	$	34.46
Granted	41,594		28.24	—		—
Vested	(63,160)		28.28	—		—
Forfeited	(10,210)		27.53	(15,750)		34.47
Outstanding at December 31, 2020	129,667		28.22	2,250		34.40
Granted	51,665		26.31	—		—
Vested	(94,130)		27.52	—		—
Forfeited	(3,639)		27.79	—		—
Outstanding at December 31, 2021	83,563	$	27.85	2,250	$	34.40

A summary of restricted stock as of the periods indicated below was as follows:

	December 31, 2021
Restricted Stock		Non-performance Based		Performance-based
Number of shares underlying restricted stock		83,563		2,250
Weighted-average grant date fair value per share	$	27.85	$	34.40
Aggregate fair value (in thousands)	$	2,423	$	69
Weighted-average remaining vesting period (years)		1.3		1.8

The Company’s stock compensation plans allow employees to elect to have shares withheld to satisfy their tax liabilities related to options exercised or restricted stock vested or to pay the exercise price of the options. During the periods indicated below, the shares of stock subject to options exercised, restricted stock vested, shares withheld and shares issued were as follows:

	Exercised/Vested	Shares Withheld	Shares Issued
Year Ended December 31, 2021
Stock options	10,160	—	10,160
Non-performance based restricted stock	94,130	(15,169)	78,961
Year Ended December 31, 2020
Stock options	11,358	—	11,358
Non-performance based restricted stock	63,160	(9,578)	53,582

For the years ended December 31, 2021, 2020 and 2019, stock compensation expense was $2.8 million, $1.9 million and $2.4 million, respectively. As of December 31, 2021, there was approximately $1.6 million of unrecognized compensation expense related to unvested stock options, non-performance based restricted stock and performance-based restricted stock, which is expected to be recognized in the Company’s consolidated statements of income over a weighted-average period of 1.3 years.