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Note 14 - Stock Based Compensation
12 Months Ended
Dec. 31, 2021
Notes to Financial Statements  
Share-based Payment Arrangement [Text Block]

Note 14 - Stock Based Compensation

 

Options to buy stock have been granted to key employees to provide them with additional equity interests in ChoiceOne. Compensation expense in connection with stock options granted was $15,000 in 2021, $15,000 in 2020, and $53,000 in 2019.  The Stock Incentive Plan of 2012 was approved by the Company’s shareholders at the Annual Meeting held on April 25, 2012. The Stock Incentive Plan of 2012, as amended effective May 23, 2018, provides for the issuance of up to 200,000 shares of common stock. At  December 31, 2021, there were 76,467 shares available for future grants. 

 

A summary of stock options activity during the year ended December 31, 2021 was as follows:

 

      

Weighted

  

Weighted

 
      

average

  

average

 
      

exercise

  

Grant Date

 
  

Shares

  

price

  

Fair Value

 
             

Options outstanding at January 1, 2021

  20,631  $25.30  $3.46 

Options granted

  -   -   - 

Options exercised

  -   -   - 

Options forfeited or expired

  -   -   - 

Options outstanding, end of year

  20,631  $25.30  $3.36 
             

Options exercisable at December 31, 2021

  8,631  $22.60  $3.22 

 

The exercise prices for options outstanding and exercisable at the end of 2021 ranged from $20.86 to $25.65 per share. The weighted average remaining contractual life of options outstanding and exercisable at the end of 2021 was approximately 4.81 years.

 

The intrinsic value of all outstanding stock options and exercisable stock options was $34,000 and $82,000 respectively, at  December 31, 2021 and December 31, 2020. The aggregate intrinsic values of outstanding and exercisable options at  December 31, 2021 were calculated based on the closing market price of the Company’s common stock on December 31, 2021 of $26.49 per share less the exercise price.

 

Information pertaining to options outstanding at December 31, 2021 was as follows:

 

Exercise price of stock options:

  

Number of options outstanding at year-end

  

Number of options exercisable at year-end

  

Average remaining contractual life (in years)

 
$27.25   12,000   -   7.44 
$25.65   3,000   3,000   6.51 
$20.86   3,306   3,306   5.36 
$21.13   2,325   2,325   4.02 

 

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. ChoiceOne uses historical data to estimate the volatility of the market price of ChoiceOne stock and employee terminations within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. As of December 31, 2021, there was $4,000 in unrecognized compensation expense related to stock options.

 

ChoiceOne has granted restricted stock units to a select group of employees under the Stock Incentive Plan of 2012. Restricted stock units outstanding as of December 31, 2021 vest on the three year anniversary of the grant date. Certain additional vesting provisions apply. Each restricted stock unit, once vested, is settled by delivery of one share of ChoiceOne common stock. ChoiceOne recognized compensation expense of $320,000, $157,000, and $349,000 in 2021, 2020, and 2019, respectively, in connection with restricted stock units for current participants during these years. 

 

A summary of the activity for restricted stock units outstanding during the year ended December 31, 2021 is presented below:

 

Outstanding Stock Awards

 

Shares

  

Per Share

 

Outstanding at January 1, 2021

  18,989  $28.20 

Granted

  19,575   28.50 

Vested

  -    

Forfeited

  (2,880)  28.20 

Outstanding at December 31, 2021

  35,684  $28.36 

 

At  December 31, 2021, there were 35,684 restricted stock units outstanding with an approximate stock value of $945,000 based on ChoiceOne’s  December 31, 2021 stock price. At  December 31, 2020, there were 18,989 restricted stock units outstanding with an approximate stock value of $585,000 based on ChoiceOne’s  December 31, 2020 stock price. As a result of the merger with County, all unvested stock awards granted prior to October 1, 2019 vested upon completion of the merger.  The grant date fair value of restricted stock units granted was $558,000 and $306,000 in 2021 and 2020, respectively.  The cost is expected to be recognized over a weighted average period of 1.63 years.  As of December 31, 2021, there was $503,000 of unrecognized compensation cost related to unvested shares granted.