Stock Compensation

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

STOCK COMPENSATION

The Corporation has a stock incentive plan, which is administered by a committee of the Board of Directors and which permits the Corporation to provide various types of stock-based compensation to its key employees, directors, and/or consultants, including time-based and performance-based shares of restricted stock. The Corporation previously maintained the CNB Financial Corporation 2009 Stock Incentive Plan, which terminated in accordance with its terms on February 10, 2019, and currently maintains the CNB Financial Corporation 2019 Omnibus Incentive Plan (the "2019 Stock Incentive Plan"), which was approved by the Corporation’s shareholders and became effective on April 16, 2019.

For key employees, the vesting of time-based restricted stock is one-third, one-fourth, or one-fifth of the granted restricted shares per year, beginning one year after the grant date, with 100% vesting on the third, fourth or fifth anniversary of the grant date, respectively. Prior to 2018, for non-employee directors, the vesting schedule was one-third of the granted restricted shares per year, beginning one year after the grant date, with 100% vested on the third anniversary of the grant date. Beginning in 2018, stock compensation received by non-employee directors vests immediately. At September 30, 2019, there was no unrecognized compensation cost related to stock-based compensation awarded under this plan and, except for the time-based and performance-based restricted stock awards disclosed below and in previous filings, no other stock-based compensation was granted during the three or nine month periods ended September 30, 2019 and 2018.

In addition to the time-based restricted stock disclosed above, the Corporation’s Board of Directors grants performance-based restricted stock awards (“PBRSAs”) to key employees. The number of PBRSAs will depend on certain performance conditions and are also subject to service-based vesting. In 2019, awards with a maximum of 16,681 shares in aggregate were granted to key employees. In 2018, awards with a maximum of 15,657 shares in aggregate were granted to key employees. In 2017, an award with a maximum of 7,109 shares was granted to a key employee. In the third quarter of 2019, a key employee retired resulting in 241 and 557 shares vesting related to their 2019 and 2018 PBRSA, respectively, in accordance with their agreement.

Compensation expense for the restricted stock awards is recognized over the requisite service period noted above based on the fair value of the shares at the date of grant. Nonvested restricted stock awards are recorded as a reduction of additional paid-in-capital in shareholders’ equity until earned. Compensation expense resulting from time-based, performance-based and director restricted stock awards was $242 and $1,109 for the three and nine months ended September 30, 2019 and $269 and $1,218 for the three and nine months ended September 30, 2018. There was $640 and $775 of total unrecognized compensation cost related to unvested restricted stock awards, as of September 30, 2019 and December 31, 2018, respectively. The total income tax benefit related to the recognized compensation cost of vested restricted stock awards was $51 and $233 for the three and nine months ended September 30, 2019 and $56 and $256 for the three and nine months ended September 30, 2018, respectively.

A summary of changes in time-based nonvested restricted stock awards for the three months ended September 30, 2019 follows:



	Shares		Per Share Weighted Average Grant Date Fair Value
Nonvested at beginning of period	64,158		$	24.87
Forfeited	(2,699	)	24.85
Vested	(639	)	23.53
Nonvested at end of period	60,820		$	24.88

A summary of changes in time-based nonvested restricted stock awards for the nine months ended September 30, 2019 follows:



	Shares		Per Share Weighted Average Grant Date Fair Value
Nonvested at beginning of period	75,889		$	23.20
Granted	25,940		25.27
Forfeited	(2,699	)	24.85
Vested	(38,310	)	21.79
Nonvested at end of period	60,820		$	24.88

The above table excludes 13,850 shares in restricted stock awards that were granted at a weighted average fair value of $25.27 and immediately vested. Compensation expense resulting from the immediately vested shares was $0 and $350 for the three and nine months ended September 30, 2019 and is included in the previously disclosed $242 and $1,109 above, respectively.

The fair value of shares vested was $18 and $1,346 during the three and nine months ended September 30, 2019 and $8 and $1,479 for the three and nine months ended September 30, 2018.