Stock Compensation Plans

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock Compensation Plans

13) Stock Compensation Plans

The Company has three stock compensation plans (the “2013 Plan”, the “2014 Director Plan” and the “2022 Equity Incentive Plan”).

Stock Options

Stock based compensation expense for stock options issued of $929,321 and $118,384 has been recognized under these plans for the years ended December 31, 2022 and 2021, respectively, and is included in personnel expenses on the consolidated statements of earnings. As of December 31, 2022, the total unrecognized compensation expense related to the stock options issued was $506,701, which is expected to be recognized over the vesting period.

The fair value of each stock option granted is estimated on the date of grant using the Black Scholes Option Pricing Model. The Company estimates the expected life of the options using the simplified method. Future volatility is estimated based upon the weighted historical volatility of the Company’s Class A common stock over a period equal to the expected life of the options. The risk-free interest rate for the expected life of the options is based upon the Federal Reserve Board’s daily interest rates in effect at the time of the grant.

The following table summarizes the assumptions used in estimating the fair value of each stock option granted along with the weighted-average fair value of the stock options granted.

				Assumptions
Grant Date	Plan	Weighted-Average Fair Value of Each Option		Expected Dividend Yield (1)			Underlying stock FMV		Weighted-Average Volatility			Weighted-Average Risk-Free Interest Rate			Weighted-Average Expected Life (years)
December 2, 2022	All Plans	$	1.48		5	%	$	6.48		37.03	%		3.69	%		4.88
December 3, 2021	All Plans	$	2.99		5	%	$	8.62		36.50	%		1.15	%		5.31

(1) Stock dividend

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2022 and 2021

13) Stock Compensation Plans (Continued)

Activity of the stock option plans is summarized as follows:

	Number of Class A Shares			Weighted Average Exercise Price		Number of Class C Shares			Weighted Average Exercise Price
Outstanding at January 1, 2021		1,072,863		$	4.12		662,666		$	4.50
Adjustment for the effect of stock dividends		47,594					33,136
Granted		89,500					230,000
Exercised		(183,935	)				(104,656	)
Cancelled		(1,671	)				-
Outstanding at December 31, 2021		1,024,351		$	4.38		821,146		$	5.26
Adjustment for the effect of stock dividends		47,780					41,057
Granted		82,500					295,000
Exercised		(176,435	)				-
Cancelled		(1,591	)				-
Outstanding at December 31, 2022		976,605		$	4.78		1,157,203		$	5.59
Exercisable at end of year		897,105		$	4.63		862,203		$	5.26
Available options for future grant		132,313					795,000
Weighted average contractual term of options
outstanding at December 31, 2022		4.72 years					6.90 years
Weighted average contractual term of options
exercisable at December 31, 2022		4.26 years					6.24 years
Aggregated intrinsic value of options outstanding at December 31, 2022 (1)	$	2,460,755				$	1,979,588
Aggregated intrinsic value of options exercisable at December 31, 2022 (1)	$	2,397,275				$	1,758,488

(1) The Company used a stock price of $7.30 as of December 31, 2022 to derive intrinsic value.

The total intrinsic value (which is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date) of stock options exercised during the years ended December 31, 2022 and 2021 was $619,064 and $1,153,417, respectively.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2022 and 2021

13) Stock Compensation Plans (Continued)

Restricted Stock Units (“RSUs”)

Stock based compensation expense for RSUs issued of $371 and nil has been recognized under these plans for the years ended December 31, 2022 and 2021, respectively, and is included in personnel expenses on the consolidated statements of earnings. As of December 31, 2022, the total unrecognized compensation expense related to the RSUs issued was $742, which is expected to be recognized over the vesting period of three months. The fair value of each RSU granted is determined based on the Company’s stock price on the date of grant. The weighted average grant date fair value of RSUs granted on December 2, 2022 was $6.48.

Activity of the RSUs is summarized as follows:

	Number of Class A Shares		Weighted Average Grant Date Fair Value
Non-vested at December 31, 2021		-	$	-
Granted		1,620		6.48
Vested		-
Non-vested at December 31, 2022		1,620	$	6.48
Available RSUs for future grant		18,380
Aggregated intrinsic value of RSUs outstanding at December 31, 2022 (1)	$	1,328

(1) The Company used a stock price of $7.30 as of December 31, 2022 to derive intrinsic value.

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2022 and 2021