Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

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.

The 2019 Stock Incentive Plan provides for up to 507,671 shares of common stock to be awarded in the form of nonqualified options or restricted stock. 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. All stock-based compensation grants during the years ending December 31, 2022, 2021 and 2020 and outstanding at December 31, 2022, 2021 and 2020 were time-based and performance-based restricted stock.

During the years ended December 31, 2022, 2021, and 2020, the Executive Compensation and Personnel Committee of the Corporation's Board of Directors granted a total of 57,823, 55,218 and 36,968 shares, respectively, of time-based restricted common stock to certain key employees and all independent directors of the Corporation.

Compensation expense for the restricted stock awards is recognized over the requisite service period based on the fair value of the shares at the date of grant on a straight-line basis. Non-vested 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 $1.2 million, $1.4 million and $1.4 million for the years ended December 31, 2022, 2021, and 2020, respectively. The total income tax benefit related to the recognized compensation cost of vested restricted stock awards was $262 thousand, $296 thousand and $296 thousand for the years ended December 31, 2022, 2021 and 2020, respectively.

A summary of changes in time-based unvested restricted stock awards follows:


	Shares	Weighted-average Grant Date Fair Value
Non-vested at January 1, 2022	69,643	$	24.18
Granted	46,033	26.64
Forfeited	(1,440)	25.04
Vested	(44,490)	25.05
Non-vested at December 31, 2022	69,746	$	25.21

The above table excludes 11,790 shares in restricted stock awards that were granted to the Corporation’s Board of Directors and certain employees at a weighted average fair value of $26.71 and immediately vested. As of December 31, 2022 and 2021, there was $1.2 million and $1.1 million, respectively, of total unrecognized compensation cost related to non-vested shares granted under the restricted stock award plan. The fair value of shares vesting during the year end December 31, 2022, 2021, and 2020 was $1.4 million, $835 thousand and $1.1 million, respectively.

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 earned over a three year period and are also subject to service-based vesting. In 2022, awards with a maximum of 13,761 shares in aggregate were granted to key employees. In 2021, awards with a maximum of 18,210 shares in aggregate were granted to key employees. In 2020, awards with a maximum of 18,100 shares in aggregate were granted to key employees.

Total compensation expense related to the PBRSAs and included in the above compensation expense total was $91 thousand, $378 thousand and $384 thousand for 2022, 2021 and 2020. Estimated remaining unearned compensation related to PBRSAs at December 31, 2022 was $12 thousand.

In 2021, the 2019 PBRSAs were fully earned and in 2022, 11,895 shares were fully distributed. The fair value of the shares distributed in 2022 was $318 thousand. In 2020, the 2018 PBRSAs were fully earned and in 2021, 10,587 shares were fully distributed. The fair value of the 10,587 shares distributed in 2021 was $223 thousand.

The number of authorized stock-based awards still available for grant as of December 31, 2022 was 320,372.