Stock-Based Compensation Plans

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation Plans

7. Stock-Based Compensation Plans.

The Company has two Stock Option Plans (the 2006 Stock Incentive Plan and the 2016 Equity Incentive Option Plan) under which options for shares of common stock were granted to directors, officers and key employees. The 2016 plan permits the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units, or stock awards. The options awarded under the plans have similar characteristics. All stock options are non-qualified and expire ten years from the date of grant. Stock based compensation awarded to directors, officers and employees are exercisable immediately or become exercisable in cumulative installments of 20% or 25% at the end of each year following the date of grant. When stock options are exercised the Company issues new shares after receipt of exercise proceeds and taxes due, if any, from the grantee.

The Company utilizes the Black-Scholes valuation model for estimating fair value of stock compensation for options awarded to officers and employees. Each grant is evaluated based upon assumptions at the time of grant. The assumptions were no dividend yield, expected volatility between 29% and 41%, risk-free interest rate of 1.9% to 2.9% and expected life of 3.0 to 7.0 years.

The dividend yield of zero is based on the fact that the Company does not pay cash dividends and has no present intention to pay cash dividends. Expected volatility is estimated based on the Company’s historical experience over a period equivalent to the expected life in years. The risk-free interest rate is based on the U.S. Treasury constant maturity interest rate at the date of grant with a term consistent with the expected life of the options granted. The expected life calculation is based on the observed and expected time to exercise options by the employees.

In January 2022, 7,448 shares of restricted stock were granted to employees that will vest over the next four years. In January 2022, 14,016 shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next five years. In January 2021, 8,896 shares of restricted stock were granted to employees that will vest over the next four years. In January 2021, 18,882 shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next five years. In March 2020, 20,520 shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next five years. The number of common shares available for future issuance was 367,641 at December 31, 2022. In January 2022, January 2021 and March 2020, 865, 1,098 and 11,448 shares of stock, respectively, were granted to employees rather than stock options as in prior years.

The Company recorded the following Stock compensation expense in its consolidated statements of income (in thousands):

	Years Ended December 31,
	2022		2021		2020
Stock option grants	$	69		69		92
Restricted stock awards		800		492		250
Employee stock grant		50		50		530
Annual director stock award		650		500		500
	$	1,569		1,111		1,372

A Summary of changes in outstanding options is presented below (in thousands, except share and per share amounts):

				Weighted		Weighted		Weighted
	Number			Average		Average		Average
	of			Exercise		Remaining		Grant Date
Options	Shares			Price		Term (yrs)		Fair Value(000's)
Outstanding at
January 1, 2020		132,504		$	33.82		5.8	$	1,631
Exercised		(12,415	)	$	19.23			$	(100	)
Outstanding at
December 31, 2020		120,089		$	35.33		5.3	$	1,531
Exercised		(15,334	)	$	17.54			$	(115	)
Outstanding at
December 31, 2021		104,755		$	37.93		4.8	$	1,416
Exercised		(16,460	)	$	25.07			$	(145	)
Outstanding at
December 31, 2022		88,295		$	40.33		4.4	$	1,271
Exercisable at
December 31, 2022		84,305		$	40.07		4.3	$	1,205
Vested during
twelve months ended
December 31, 2022		4,179						$	69

The following table summarizes information concerning Stock options outstanding at December 31, 2022:

	Shares	Weighted			Weighted
Range of Exercise	under	Average			Average
Prices per Share	Option	Exercise Price			Remaining Life
Non-exercisable:
$43.16 - $45.97	3,990		$	45.97		5.9	Years
Exercisable:
$29.96 - $35.95	22,750			29.62		1.9
$35.96 - $43.15	12,000			38.45		4.0
$43.16 - $45.97	49,555			45.25		5.4
	84,305		$	40.07		4.3	Years
Total	88,295		$	40.33		4.4	Years

The aggregate intrinsic value of exercisable in-the-money options was $1,163,000 and the aggregate intrinsic value of outstanding in-the-money options was $1,194,000 based on the market closing price of $53.86 on December 30, 2022 less exercise prices.

The unrecognized compensation cost of options granted to FRP employees but not yet vested as of December 31, 2022 was $60,000, which is expected to be recognized over a weighted-average period of .9 years.

Gains of $571,000 were realized by option holders during the year ended December 31, 2022.

A Summary of changes in restricted stock awards is presented below (in thousands, except share and per share amounts):

				Weighted		Weighted	Weighted
	Number			Average		Average	Average
	Of			Exercise		Remaining	Grant Date
Restricted stock	Shares			Price		Term (yrs)	Fair Value(000's)
Non-vested at January 1, 2020		0		$	0		$	0
Performance-based awards granted		20,520			46.30			950
Non-vested at December 31, 2020		20,520		$	46.30	3.4	$	950
Time-based awards granted		8,896			45.55			405
Performance-based awards granted		18,882			45.55			860
Vested		(2,224	)		45.55			(101	)
Non-vested at December 31, 2021		46,074		$	45.88	3.1	$	2,114
Time-based awards granted		7,448			57.80			431
Performance-based awards granted		14,016			57.80			810
Vested		(15,679	)		47.56			(746	)
Forfeited		(1,363	)		46.30			(63	)
Non-vested at December 31, 2022		50,496		$	50.42	3.0	$	2,546

Total unrecognized compensation cost of restricted stock granted but not yet vested as of December 31, 2022 was $2,142,000 which is expected to be recognized over a weighted-average period of 3.1 years.