Stock Compensation Plans

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock Compensation Plans

5) Stock Compensation Plans

The Company has equity incentive plans (the “2013 Plan”, the “2014 Director Plan” and the “2022 Plan”).

Stock Options

Stock based compensation expense for stock options issued of $145,973 and $230,853 has been recognized for these plans for the three month periods ended September 30, 2023, and 2022, respectively, and $430,856 and $722,775 has been recognized for these plans for the nine month periods ended September 30, 2023 and 2022, respectively, and is included in personnel expenses on the condensed consolidated statements of earnings. As of September 30, 2023, the total unrecognized compensation expense related to the options issued was $102,775, which is expected to be recognized over the remaining vesting period.

The fair value of each 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.

Activity of the stock option plans during the nine month period ended September 30, 2023, is summarized as follows:

	Number of Class A Shares			Weighted Average Exercise Price (2)		Number of Class C Shares		Weighted Average Exercise Price (2)
Outstanding at January 1, 2023		976,605		$	4.56		1,157,203	$	5.31
Adjustment for the effect of stock dividends		38,266					57,859
Granted		16,000					-
Exercised		(233,180	)				-
Cancelled		-					-
Outstanding at September 30, 2023		797,691		$	4.78		1,215,062	$	5.31
As of September 30, 2023:
Options exercisable		770,066		$	4.73		1,141,312	$	5.25
As of September 30, 2023:
Available options for future grant		171,386					834,750
Weighted average contractual term of options
outstanding at September 30, 2023		4.69 years					6.15 years
Weighted average contractual term of options
exercisable at September 30, 2023		4.53 years					6.03 years
Aggregated intrinsic value of options
outstanding at September 30, 2023 (1)	$	2,438,675				$	3,074,037
Aggregated intrinsic value of options
exercisable at September 30, 2023 (1)	$	2,398,360				$	2,955,012

(1) The Company used a stock price of $7.84 as of September 30, 2023 to derive intrinsic value.

(2) Adjusted for the effect of annual stock dividends.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2023 (Unaudited)

5) Stock Compensation Plans (Continued)

Activity of the stock option plans during the nine month period ended September 30, 2022, is summarized as follows:

	Number of Class A Shares			Weighted Average Exercise Price (2)		Number of Class C Shares		Weighted Average Exercise Price (2)
Outstanding at January 1, 2022		1,024,351		$	4.38		821,146	$	5.26
Adjustment for the effect of stock dividends		47,780					41,057
Granted		4,000					-
Exercised		(71,330	)				-
Cancelled		(1,591	)				-
Outstanding at September 30, 2022		1,003,210		$	4.58		862,203	$	5.26
As of September 30, 2022:
Options exercisable		978,835		$	4.49		804,703	$	5.04
As of September 30, 2022:
Available options for future grant		1,239,795					17,523
Weighted average contractual term of options outstanding at September 30, 2022		4.32 years					6.75 years
Weighted average contractual term of options exercisable at September 30, 2022		4.19 years					6.63 years
Aggregated intrinsic value of options outstanding at September 30, 2022 (1)	$	1,775,100				$	939,395
Aggregated intrinsic value of options exercisable at September 30, 2022 (1)	$	1,819,950				$	1,055,445

(1) The Company used a stock price of $6.35 as of September 30, 2022 to derive intrinsic value.

(2) Adjusted for the effect of annual stock dividends.

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 nine month periods ended September 30, 2023 and 2022 was $454,923 and $521,527, respectively.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2023 (Unaudited)

5) Stock Compensation Plans (Continued)

Restricted Stock Units (“RSUs”)

Stock based compensation expense for RSUs issued of nil has been recognized under these plans for each of the three month periods ended September 30, 2023 and 2022, and of $742 and nil has been recognized under these plans for the nine month periods ended September 30, 2023 and 2022, respectively, and is included in personnel expenses on the condensed consolidated statements of earnings. As of September 30, 2023, the total unrecognized compensation expense related to the RSUs issued was nil. The fair value of each RSU granted is determined based on the Company’s stock price on the date of grant. Prior to December 2022, the Company did not grant any RSUs.

Activity of the RSUs during the nine month period ended September 30, 2023 is summarized as follows:

	Number of Class A Shares			Weighted Average Grant Date Fair Value
Non-vested at January 1, 2023		1,620		$	6.48
Granted		-
Vested		(810	)
Non-vested at September 30, 2023		810		$	6.48
Available RSUs for future grant	$	18,380
Aggregated intrinsic value of RSUs outstanding at September 30, 2023 (1)	$	1,102

(1) The Company used a stock price of $7.84 as of September 30, 2023 to derive intrinsic value.

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2023 (Unaudited)