Stock Compensation Plans

12 Months Ended

Dec. 31, 2020

Stock Compensation Plans

Stock Compensation Plans

Note 20:      Stock Compensation Plans

The Company established the 2003 Stock Option and Incentive Plan (the “2003 Plan”) for employees and directors of the Company and its subsidiaries. Under the plan, stock options or other awards could be granted with respect to 598,224 shares of common stock. On May 15, 2013, the Company’s stockholders approved the Great Southern Bancorp, Inc. 2013 Equity Incentive Plan (the “2013 Plan”). Upon the stockholders’ approval of the 2013 Plan, the Company’s 2003 Plan was frozen. As a result, no new stock options or other awards may be granted under the 2003 Plan; however, existing outstanding awards under the 2003 Plan were not affected. At December 31, 2020, 31,591 options were outstanding under the 2003 Plan.

The Company established the 2013 Stock Option and Incentive Plan (the “2013 Plan”) for employees and directors of the Company and its subsidiaries. Under the plan, stock options or other awards could be granted with respect to 700,000 shares of common stock. On May 9, 2018, the Company’s stockholders approved the Great Southern Bancorp, Inc. 2018 Omnibus Incentive Plan (the “2018 Plan”). Upon the stockholders’ approval of the 2018 Plan, the Company’s 2013 Plan was frozen. As a result, no new stock options or other awards may be granted under the 2013 Plan; however, existing outstanding awards under the 2013 Plan were not affected. At December 31, 2020, 384,866 options were outstanding under the 2013 Plan.

The 2018 Plan provides for the grant from time to time to directors, emeritus directors, officers, employees and advisory directors of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units. The number of shares of Common Stock available for awards under the 2018 Plan is 800,000 (the “2018 Plan Limit”). Shares utilized for awards other than stock options and stock appreciation rights will be counted against the 2018 Plan Limit on a 2.5-to-1 basis. At December 31, 2020, 554,650 options were outstanding under the 2018 Plan.

Stock options may be either incentive stock options or nonqualified stock options, and the option price must be at least equal to the fair value of the Company’s common stock on the date of grant. Options generally are granted for a 10-year term and generally become exercisable in four cumulative annual installments of 25% commencing two years from the date of grant. The Stock Option Committee may accelerate a participant’s right to purchase shares under the plan.

Stock awards may be granted to key officers and employees upon terms and conditions determined solely at the discretion of the Stock Option Committee.

The table below summarizes transactions under the Company’s stock compensation plans, all of which related to stock options granted under such plans:

		Shares	Weighted
	Available	Under	Average
	to Grant	Option	Exercise Price
Balance, January 1, 2018	77,512	682,799	$	38.860
Granted from 2013 Plan	(1,000)	1,000		52.500
Exercised	—	(81,940)		27.597
Forfeited from 2013 Plan	13,773	(13,773)		45.692
Termination of 2013 Plan	(90,285)	—
	—	588,086
Available to grant from 2018 Plan	800,000	—
Granted from 2018 Plan	(185,750)	185,750		55.297
Forfeited from current plan(s)	600	(600)		55.000
Balance, December 31, 2018	614,850	773,236		43.886
Granted from 2018 Plan	(186,400)	186,400		60.086
Exercised	—	(125,894)		33.031
Forfeited from terminated plan(s)	—	(17,424)		44.163
Forfeited from current plan(s)	8,450	(8,450)		55.000
Balance, December 31, 2019	436,900	807,868		49.139
Granted from 2018 Plan	(196,350)	196,350		41.740
Exercised	—	(21,436)		33.805
Forfeited from terminated plan(s)	—	(6,875)		38.849
Forfeited from current plan(s)	4,800	(4,800)		57.513
Balance, December 31, 2020	245,350	971,107	$	48.079

The Company’s stock option grants contain terms that provide for a graded vesting schedule whereby portions of the options vest in increments over the requisite service period. These options typically vest one-fourth at the end of years two, three, four and five from the grant date. As provided for under FASB ASC 718, the Company has elected to recognize compensation expense for options with graded vesting schedules on a straight-line basis over the requisite service period for the entire option grant. In addition, ASC 718 requires companies to recognize compensation expense based on the estimated number of stock options for which service is expected to be rendered. The Company’s historical forfeitures of its share-based awards have not been material.

The fair value of each option award is estimated on the date of the grant using the Black-Scholes option pricing model with the following assumptions for the years ended December 31, 2020, 2019 and 2018:

	2020			2019			2018
Expected dividends per share	$	1.36		$	1.36		$	1.27
Risk-free interest rate		0.35	%		1.59	%		2.86	%
Expected life of options		5 years			5 years			5 years
Expected volatility		29.32	%		25.15	%		17.61	%
Weighted average fair value of options granted during year	$	7.30		$	11.20		$	8.30

Expected volatilities are based on the historical volatility of the Company’s stock, based on the monthly closing stock price. The expected life of options granted is based on actual historical exercise behavior of all employees and directors and approximates the graded vesting period of the options. Expected dividends are based on the annualized dividends declared at the time of the option grant. The risk-free interest rate is based on the five-year treasury rate on the grant date of the options.

The following table presents the activity related to options under all plans for the year ended December 31, 2020:

			Weighted
		Weighted	Average
		Average	Remaining
		Exercise	Contractual
	Options	Price	Term
Options outstanding, January 1, 2020	807,868	49.139	7.54 years
Granted	196,350	41.740
Exercised	(21,436)	30.805
Forfeited	(11,675)	46.523
Options outstanding, December 31, 2020	971,107	48.079	7.23 years
Options exercisable, December 31, 2020	363,695	42.583	4.95 years

For the years ended December 31, 2020, 2019 and 2018, options granted were 196,350, 186,400, and 186,750, respectively. The total intrinsic value (amount by which the fair value of the underlying stock exceeds the exercise price of an option on exercise date) of options exercised during the years ended December 31, 2020, 2019 and 2018, was $371,000, $3.1 million and $2.2 million, respectively. Cash received from the exercise of options for the years ended December 31, 2020, 2019 and 2018, was $661,000, $4.2 million and $2.2 million, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $257,000, $2.7 million and $1.6 million for the years ended December 31, 2020, 2019 and 2018, respectively. The total intrinsic value of options outstanding at December 31, 2020, 2019 and 2018, was $4.5 million, $11.5 million and $4.7 million, respectively. The total intrinsic value of options exercisable at December 31, 2020, 2019 and 2018, was $2.9 million, $6.6 million and $3.9 million, respectively.

The following table presents the activity related to nonvested options under all plans for the year ended December 31, 2020.

		Weighted	Weighted
		Average	Average
		Exercise	Grant Date
	Options	Price	Fair Value
Nonvested options, January 1, 2020	552,377	54.610	9.509
Granted	196,350	41.740	7.296
Vested this period	(134,140)	50.441	8.662
Nonvested options forfeited	(7,175)	54.655	9.501
Nonvested options, December 31, 2020	607,412	51.370	8.981

At December 31, 2020, there was $4.6 million of total unrecognized compensation cost related to nonvested options granted under the Company’s plans. This compensation cost is expected to be recognized through 2025, with the majority of this expense recognized in 2021 and 2022.

The following table further summarizes information about stock options outstanding at December 31, 2020:

	Options Outstanding
		Weighted			Options Exercisable
		Average	Weighted			Weighted
		Remaining	Average			Average
	Number	Contractual	Exercise		Number	Exercise
Range of Exercise Prices	Outstanding	Term	Price		Exercisable	Price
$16.810 to 29.640	64,043	2.16 years	$	25.598	64,043	$	25.598
$32.590 to 38.610	62,056	3.62 years		33.001	61,181		32.921
$41.300 to 47.800	282,357	8.56 years		41.613	59,816		41.335
$50.710 to 52.500	204,251	6.11 years		51.656	133,496		51.415
$55.000 to 60.150	358,400	8.35 years		57.762	45,159		55.306
	971,107	7.23 years		48.079	363,695		42.583