Stock-Based Compensation Plans

3 Months Ended

Sep. 30, 2023

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 31.5% and 41.2%, risk-free interest rate of 2.0% to 2.9% and expected life of 5.0 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 2023, 7,980 shares of restricted stock were granted to employees that will vest over the next four years. In January 2023, 15,032 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 2023, 2,272 shares of restricted stock were granted to employees under the terms of the 2021 long-term incentive plan. 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 March 2023 and March 2022, 928 and 865 shares of stock, respectively, were granted to employees. The number of common shares available for future issuance was 343,677 at September 30, 2023.

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

	Three Months ended				Nine months ended
	September 30,				September 30,
	2023		2022		2023		2022
Stock option grants	$	16		18		49		52
Restricted stock awards		255		258		773		550
Employee stock grant		—		—		50		50
Annual director stock award		—		—		600		650
	$	271		276		1,472		1,302

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, 2023		88,295		$	40.33	4.4	$	1,271
Exercised		(17,735	)	$	45.27		$	(190	)
Outstanding at September 30, 2023		70,560		$	39.09	3.3	$	1,081
Exercisable at September 30, 2023		66,570		$	38.68	3.2	$	1,015
Vested during nine months ended September 30, 2023		—					$	—

The aggregate intrinsic value of exercisable in-the-money options was $1,018,000 and the aggregate intrinsic value of outstanding in-the-money options was $1,050,000 based on the market closing price of $53.97 on September 29, 2023 less exercise prices.

The unrecognized compensation cost of options granted to FRP employees but not yet vested as of September 30, 2023 was $11,000, which is expected to be recognized over a weighted-average period of two months.

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			Grant Date		Remaining	Grant Date
Restricted stock	Shares			Fair Value		Term (yrs)	Fair Value(000's)
Non-vested at January 1, 2023		50,496		$	50.42	3.0	$	2,546
Time-based awards granted		7,980			53.86			430
Performance-based awards granted		17,304			53.92			933
Vested		(6,211	)		46.49			(289	)
Non-vested at September 30, 2023		69,569		$	52.03	2.8	$	3,620

Total unrecognized compensation cost of restricted stock granted but not yet vested as of September 30, 2023 was $2,725,000 which is expected to be recognized over a weighted-average period of 3.1 years.