Stock Based Compensation

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 19 - Stock Based Compensation

The Company maintains three stock-based compensation plans from which new grants could be issued. The Company’s stock-based compensation plans permit Parent Corporation common stock to be issued to key employees and directors of the Company and its subsidiaries. Grants under the existing plans can be in the form of stock options (qualified or non-qualified), restricted shares, or performance units. Shares available for grant and issuance under the existing plans as of December 31, 2015 are as follows: 202,219 under the 2009 Equity Incentive Plan, 380,644 under the 2003 Non-Employee Director Stock Option Plan, and 235,090 shares under the North Jersey Community Bancorp 2009 Equity Compensation Plan. The Company intends to issue all shares under these plans in the form of newly issued shares.

Restricted stock and option awards typically have a three-year vesting period starting one year after the date of grant with one-third vesting each year. The options generally expire ten years from the date of grant. Restricted stock awards granted to new employees and board members may be granted with shorter vesting periods. Grants of performance units typically have a cliff vesting after 3 years. All issuances are subject to forfeiture if the recipient leaves or is terminated prior to the awards vesting. Restricted shares have the same dividend and voting rights as common stock while options and performance units do not.

All awards are issued at fair value of the underlying shares at the grant date. Shares issued by Legacy ConnectOne prior to its IPO in 2013 were granted at book value per share as of the grant date. The Company expenses the cost of the awards, which is determined to be the fair market value of the awards at the date of grant, ratably over the vesting period.

No options were granted in 2015 or 2014. In 2013, 41,639 stock options were issued. Total compensation expense related to options granted under the plans was $12,000, $58,000 and $59,000 for 2015, 2014 and 2013, respectively.

During 2015, 69,258 restricted shares were awarded. During 2014 no restricted shares were issued and during 2013, 18,829 shares were awarded. The compensation expense related to restricted stock awards was $746,000, $165,000 and $24,000 in 2015, 2014 and 2013, respectively.

In 2015, the Company granted to various key employees performance unit awards, with each unit entitling the holder to one share of the Company’s common stock contingent upon the Company meeting or exceeding certain return on asset targets over the course of a three-year period commencing January 1, 2015. Under the agreement, and assuming the Company has met or exceeded the applicable targets, grants of performance unit awards will vest on the third anniversary of the grant date or on an earlier date in the event of a change in control, as defined in the agreement. At December 31, 2015, the specific number of shares related to performance unit awards that were expected to vest was 94,585, determined by actual performance in consideration of the established range of the performance targets, which is consistent with the level of expense currently being recognized over the vesting period. Should this expectation change, additional compensation expense could be recorded in future periods or previously recognized expense could be reversed. The maximum amount of performance unit awards is 113,502 shares. The total amount of compensation cost related to performance unit awards included in salary expense was $409,000 in 2015. No performance units were issued in 2014 or 2013 and no expenses relating to performance units were included for 2014 or 2013.

The fair value of stock option payment awards was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values:

	2015		2014		2013
Weighted average fair value of grants	$	-	$	-	$	2.50-2.87
Risk-free interest rate		-%		-%		1.86-2.29%
Dividend yield		-%		-%		1.76-2.11%
Expected volatility		-%		-%		23.21-33.74%
Expected life in months				-		69-90

Option activity under the principal option plans as of December 31, 2015 and changes during the twelve months ended December 31, 2015 were as follows:

				Weighted-
				Average
		Weighted-		Remaining
		Average		Contractual
		Exercise		Term	Aggregate
	Shares	Price		(In Years)	Intrinsic Value
Outstanding at December 31, 2014	882,657	$	5.65
Granted	-		-
Exercised	(340,492)		4.19
Forfeited/cancelled/expired	(6,259)		5.60
Outstanding at December 31, 2015	535,906	$	6.48	3.16	$	6,541,740
Exercisable at December 31, 2015	532,376	$	6.43	3.13	$	6,526,031

Information related to the stock option plan during 2015:

	2015
Intrinsic value of options exercised	$	5,218,993
Cash received from options exercised		1,424,814
Tax benefit realized from options exercised		341,000
Weighted average fair value of options granted		-

The aggregate intrinsic value of options above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of 2015 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2015. This amount changes based on the fair market value of the Parent Corporation’s stock.

The below table represents information regarding restricted shares currently outstanding at December 31, 2015:

		Weighted-
		Average
	Nonvested	Grant Date
	Shares	Fair Value
Nonvested at December 31, 2014	50,303	$	11.79
Granted	69,258		18.13
Vested	(19,061)		11.53
Forfeited/cancelled/expired	(3,598)		18.43
Nonvested at December 31, 2015	96,902	$	16.81

As of December 31, 2015, there was $976,000 of total unrecognized compensation cost related to nonvested restricted shares granted under the plans. The cost is expected to be recognized over a weighted average period of 16.07 months. The total fair value of shares vested during year ended December 31, 2015 and 2014, was $225,000 and 374,000, respectively.

A summary of the status of unearned performance unit awards and the change during the period is presented in the table below:

		Weighted-
		Average
		Grant Date
	Shares	Fair Value
Unearned at December 31, 2014	-	$	-
Awarded	94,585		19.46
Forfeited	-		-
Expired	-		-
Unearned at December 31, 2015	94,585	$	19.46

At December 31, 2015, compensation cost of $1,329,345 related to nonvested awards not yet recognized is expected to be recognized over a weighted-average period of 2.2 years.