Stock Options and Restricted Stock Units

12 Months Ended

Dec. 31, 2023

Stock Options and Restricted Stock Units

Stock Options and Restricted Stock Units

Note 9: Stock Options and Restricted Stock Units

On May 23, 2014, the shareholders of the Company approved the 2014 Equity Incentive Plan, as amended (the “2014 Plan”). Under the terms of the 2014 Plan, the Company is authorized to issue incentive awards for common stock up to 200,000 shares to employees and other personnel. On June 10, 2016 and June 17, 2020, the shareholders of the Company approved an additional 200,000 and 200,000 awards, respectively, to be issued under the 2014 Plan, bringing the total number of shares to be awarded to 600,000. The awards may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units and performance awards. The 2014 Plan is effective through March 31, 2024. As of December 31, 2023, there were 51,743 shares which remained to be granted under the 2014 Plan. These shares were assumed by the 2023 Plan described below.

On June 7, 2023, the shareholders of the Company approved the 2023 Equity Incentive Plan (the “2023 Plan”).  Under the terms of the 2023 Plan, the Company is authorized to issue incentive awards for common stock up to 300,000 shares to employees and other personnel. The awards may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units and performance awards. The 2023 Plan is effective through April 1, 2033. As of December 31, 2023, there are 337,411 shares which remain to be granted under the 2023 Plan, including 51,743 shares assumed under the 2014 Plan described above.

The following is a summary of stock options issued during the year ended December 31, 2023 and 2022:

	Number of Options Outstanding			Range of Exercise Price		Weighted Average Exercise Price		Aggregate Intrinsic Value
Balance on December 31, 2021		47,167		$	6.80 – 17.40	$	11.81	$	832,254
Options granted		50,250			26.00 – 27.71		26.69		—
Options exercised		(10,000	)		7.76 – 13.21		9.12		185,500
Options forfeited/cancelled		(6,167	)		9.26 – 27.71		27.71		—
Balance on December 31, 2022		81,250		$	6.80 – 27.71	$	20.17	$	462,390
Options granted		30,000			26.98		26.98		—
Options exercised		(2,500	)		7.76		7.76		19,400
Options forfeited/cancelled		(2,000	)		9.26 – 27.71		23.10		—
Balance on December 31, 2023		106,750		$	6.80 – 27.71	$	22.32		176,360

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e. the aggregate difference between the closing price of the Company’s common stock on December 31, 2023 and 2022 of $18.13 and $25.04, respectively, and the exercise price for in-the-money options) that would have been received by the holders if all instruments had been exercised on December 31, 2023 and 2022. As of December 31, 2023, there was $555,000 of unrecognized compensation cost related to stock options, which will be recognized through 2027.

The following is a summary of unvested stock options during the year ended December 31, 2023 and 2022:

	Number of Options Outstanding			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
Balance on December 31, 2021		—		$	12.87	$	5.47
Options granted		50,250			26.69		12.54
Options vested		—			—		—
Options forfeited/cancelled		(6,000	)		27.71		13.53
Balance on December 31, 2022		44,250			26.55		12.41
Options granted		30,000			26.98		13.89
Options vested		(7,500	)		27.71		13.53
Options forfeited/cancelled		(1,500	)		26.00		11.87
Balance on December 31, 2023		65,250			26.78		13.12

The following table summarizes information about stock options outstanding and exercisable on December 31, 2023: 

	Options Outstanding						Options Exercisable
Exercise Price Range	Number		Weighted Average Remaining Contractual Life (in Years)		Weighted Average Exercise Price		Number
$0.01 - 8.00		5,000		1.89		6.80		5,000
$8.01 - 11.00		3,000		4.00		10.25		3,000
$11.01 - 16.00		18,000		4.53		13.12		18,000
$16.01 - 27.00		68,000		8.05		25.42		15,500
$27.01 – 27.71		12,750		8.05		27.71		—
Total		106,750		7.06		22.32		41,500

Of the 106,750 stock options outstanding, 51,542 are non-qualified stock options. All options have been registered with the SEC.

The fair value of common stock options issued during the year ended December 31, 2023 were estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions used:

	Year Ended December 31, 2023
Expected dividend yield		0	%
Expected stock price volatility		47.6	%
Weighted-average risk-free interest rate		3.87	%
Weighted-average expected life of options (in years)		6.25

The following is a summary of restricted stock units issued during the years ended December 31, 2023 and 2022:

	Number of RSUs Outstanding			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Balance on December 31, 2021		17,765		$	25.92	$	523,197
Units granted		48,240			24.99		1,205,525
Units vested/issued		(15,265	)		26.05		377,981
Units forfeited		—			—		—
Balance on December 31, 2022		50,740		$	25.00	$	1,268,500
Units granted		74,832			26.08		1,951,619
Units vested/issued		(21,490	)		25.24		(542,408	)
Units forfeited		(9,250	)		23.87		(220,798	)
Balance on December 31, 2023		94,832			25.90		2,456,149

During the year ended December 31, 2023, the Company granted 74,832 shares of restricted stock units to employees and the Board of Directors, which vest at various intervals over the next 3 years. The average grant date fair value of these grants was $26.08 per share during the year ended December 31, 2023. During the year ended December 31, 2023, 21,490 restricted stock units with an average intrinsic value of $25.24 per share, vested. As of December 31, 2023, there was $1,433,000 of unrecognized compensation cost related to our unvested restricted stock units, which will be recognized through 2026.

During the years ended December 31, 2023 and 2022, the Company recorded compensation expense of $1,365,000 and $763,000, respectively, related to stock options and restricted stock units.