Note 17 - Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Stock-Based Compensation

Note 17. Stock-Based Compensation

The Company’s Board of Directors adopted in February 2010, and the stockholders approved in May 2010, the QCR Holdings, Inc. 2010 Equity Incentive Plan (“2010 Equity Incentive Plan”). The Company’s Board of Directors adopted in February 2013, and the stockholders approved in May 2013, the QCR Holdings, Inc. 2013 Equity Incentive Plan (“2013 Equity Incentive Plan”). The Company’s Board of Directors adopted in February 2016, and the stockholders approved in May 2016, the QCR Holdings, Inc. 2016 Equity Incentive Plan (“2016 Equity Incentive Plan”). Up to 350,000, 350,000, and 400,000 shares of common stock, respectively, may be issued to employees and directors of the Company and its subsidiaries pursuant to equity incentive awards granted under these plans.

The 2010 Equity Incentive Plan, the 2013 Equity Incentive Plan and the 2016 Equity Incentive Plan (collectively, the “Equity Plans”) are administered by the Compensation Committee of the Board of Directors (the “Committee”). As of December 31, 2023, there were 55,554 remaining shares of common stock available for the grant of future awards under the Equity Plans; however, such future awards may be granted only under the 2016 Equity Incentive Plan.

The number and exercise price of options granted under the Equity Plans are determined by the Committee at the time the option is granted. In no event can the exercise price be less than the value of the common stock at the date of the grant for stock options. All options have a 10-year life and will vest and become exercisable from 3-to-7 years after the date of the grant. The value of restricted stock awards is estimated by using the market price of the Company’s common stock at the date of grant.

Stock-based compensation expense was reflected in the Consolidated Financial Statements as follows for the years ended December 31, 2023, 2022, and 2021.

	2023		2022		2021
	(dollars in thousands)
Stock options	$	286	$	246	$	270
Restricted stock awards		2,084		1,967		1,864
Stock purchase plan		308		225		218
	$	2,678	$	2,438	$	2,352

Note 17. Stock-Based Compensation (continued)

Stock options:

A summary of the stock option plans as of December 31, 2023, 2022, and 2021 and changes during the years then ended is presented below:

	December 31,
	2023				2022				2021
			Weighted				Weighted				Weighted
			Average				Average				Average
			Exercise				Exercise				Exercise
	Shares		Price		Shares		Price		Shares		Price
Outstanding, beginning		346,678	$	27.60		367,998	$	24.46		407,763	$	22.24
Granted		25,000		53.31		22,400		53.87		22,150		43.61
Exercised		(81,354)		19.45		(41,695)		14.07		(60,317)		15.76
Forfeited		(175)		15.65		(2,025)		26.72		(1,598)		38.50
Outstanding, ending		290,149		32.11		346,678		27.60		367,998		24.46
Exercisable, ending		233,967				295,077				318,266
Weighted average fair value per option granted	$	16.36			$	13.97			$	10.85

A further summary of options outstanding as of December 31, 2023 is presented below:

	Options Outstanding
		Weighted			Options Exercisable
		Average	Weighted			Weighted
		Remaining	Average			Average
Range of	Number	Contractual	Exercise		Number	Exercise
Exercise Prices	Outstanding	Life	Price		Exercisable	Price
$17.10 to $17.86	96,500	0.62	$	17.32	96,460	$	17.32
$21.71 to $22.64	52,716	2.08		22.64	52,716		22.64
$29.77 to $36.00	14,212	5.16		36.00	14,212		36.00
$40.00 to $41.95	20,049	6.06		40.10	15,515		40.13
$42.65 to $48.50	59,572	4.82		43.86	49,254		43.91
$53.31 to $56.26	47,100	8.70		53.57	5,850		53.87
	290,149				234,007

Note 17. Stock-Based Compensation (continued)

Restricted stock and unit awards:

A summary of changes in the Company’s nonvested restricted stock, restricted stock unit and performance stock unit awards as of December 31, 2023, 2022 and 2021 is presented below:

	December 31,
	2023		2022		2021
Outstanding, beginning		84,115		97,107		102,489
Granted*		51,157		35,525		38,360
Released		(43,331)		(47,766)		(43,691)
Forfeited		(3,763)		(751)		(51)
Outstanding, ending		88,178		84,115		97,107
Weighted average fair value per share granted	$	51.64	$	54.20	$	45.18

*  At December 31, 2023, includes 4,500 shares of restricted stock, 80,820 restricted stock units.

At December 31, 2022, includes 8,527 shares of restricted stock and 64,494 restricted stock units.

At December 31, 2021, includes 12,412 shares of restricted stock and 25,948 restricted stock units.

The total grant value of restricted stock, restricted stock unit and performance share unit awards that were released during the years ended December 31, 2023, 2022 and 2021 was $2.2 million, $2.6 million and $1.9 million, respectively.

Employee stock purchase plan:

On May 19, 2022, the Company’s stockholders approved the QCR Holdings, Inc. 2022 Stock Purchase Plan (the “2022 Purchase Plan”).  The 2022 Purchase Plan has an effective date of July 1, 2022 and a share reserve equal to 350,000 shares plus the shares remaining under the QCR Holdings, Inc. Amended and Restated Employee Stock Purchase Plan immediately prior to its termination on July 1, 2022. As of January 1, 2024, there were 345,801 shares of common stock available for issuance under the 2022 Purchase Plan. For each six-month offering period, the Board of Directors will determine how many of the total number of available shares will be offered. The purchase price is the lesser of 85% or the fair market value at the date of the grant or the investment date. The investment date, as established by the Board of Directors, is the date common stock is purchased after the end of each calendar quarter during an offering period. The maximum dollar amount any one participant can elect to contribute in a year is $21,250. Additionally, the maximum percentage that any one participant can elect to contribute is 15% of his or her compensation for the years ended December 31, 2023, 2022 and 2021.  Information for the stock purchase plan for the years ended December 31, 2023, 2022 and 2021 is presented below:

	2023		2022		2021
Shares granted		36,964		28,421		28,396
Shares purchased		35,058		27,103		30,543
Weighted average fair value per share granted	$	8.35	$	7.88	$	7.67