Stock-based Compensation

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Stock-Based Compensation

8.     Stock-Based Compensation

The Company has a long-term incentive compensation program for certain Company executive officers that includes grants of performance-based restricted stock units (“PRSUs”) in addition to time-based restricted stock units (“RSU”). Under the terms of the PRSU Agreement, the number of PRSUs that may be earned depends on the extent to which performance goals for the award are achieved over a three-year performance period, as determined by the Compensation Committee of the Board. As of September 30, 2023, PRSUs granted in 2023 and 2022 are being accrued at target and PRSUs granted in 2021 are being accrued above target. The different levels of accrual are commensurate with the projected performance of the respective grant. As of September 30, 2023, 746,765 shares were available for future issuance under the 2014 Omnibus Plan.

For the three months ended September 30, 2023 and 2022, the Company’s net income, as reported, included $1.0 million and $0.7 million, respectively, of stock-based compensation costs, including the benefit or expense of phantom stock awards, and $0.3 million and $0.2 million of income tax benefit respectively, related to the stock-based compensation plans. For the nine months ended September 30, 2023 and 2022, the Company’s net income, as reported, included $4.6 million and $5.6 million, respectively, of stock-based compensation costs, including the benefit or expense of phantom stock awards, and $1.2 million and $1.5 million of income tax benefit, respectively, related to the stock-based compensation plans.

During the three months ended September 30, 2023 and 2022, the Company did not grant any RSU or PRSUs. During the nine months ended September 30, 2023 and 2022, the Company granted 235,850 and 212,811 of RSU awards and 79,050 and 63,250 of PRSU awards, respectively.  

The Company uses the fair value of the common stock on the date of award to measure compensation cost for restricted stock unit awards and performance restricted stock units. Compensation cost is recognized over the vesting period of the award using the straight-line method. Forfeitures are recorded in the period they occur.

The following table summarizes the Company’s RSU and PRSU awards under the 2014 Omnibus Plan for the nine months ended September 30, 2023:

	RSU Awards			PRSU Awards
		Weighted-Average			Weighted-Average
		Grant-Date			Grant-Date
	Shares	Fair Value		Shares	Fair Value
Non-vested awards at December 31, 2022	275,588	$	22.30	68,800	$	20.90
Granted	235,850		19.84	79,050		19.99
Vested	(222,757)		21.19	(59,870)		20.03
Forfeited	(2,840)		22.14	—		—
Non-vested awards at September 30, 2023	285,841	$	21.14	87,980	$	20.67
Vested but unissued at September 30, 2023	253,468	$	20.78	148,505	$	20.80

As of September 30, 2023, there was $5.0 million of total unrecognized compensation cost related to RSU and PRSU awards granted. That cost is expected to be recognized over a weighted-average period of 2.7 years. The total fair value of awards vested for the three months ended September 30, 2023 and 2022, was $0.3 million, and $1,000, respectively. The total fair value of awards vested for the nine months ended September 30, 2023 and 2022 was $5.5 million and $7.1 million, respectively. The vested but unissued RSU and PRSU awards consist of awards made to employees and directors who are eligible for retirement. According to the terms of these awards, which provide for vesting upon retirement, these employees and directors have no risk of forfeiture. These shares will be issued at the original contractual vesting and settlement dates.

Phantom Stock Plan: The Company maintains a non-qualified phantom stock plan as a supplement to its profit-sharing plan for officers who have achieved the designated level and completed one year of service. The Company adjusts its liability under this plan to the fair value of the shares at the end of each period.

The following table summarizes the Phantom Stock Plan at or for the nine months ended September 30, 2023:

Phantom Stock Plan	Shares	Fair Value		Weighted-Average Fair Value
Outstanding at December 31, 2022	158,410	$	19.38
Granted	21,346			$	17.43
Distributions	(1,132)			$	17.27
Outstanding at September 30, 2023	178,624	$	13.13
Vested at September 30, 2023	178,624	$	13.13

The Company recorded stock-based compensation expense (benefit) for the Phantom Stock Plan of $0.2 million and ($0.3) million for the three months ended September 30, 2023 and 2022, respectively. The total fair value of the distributions from the Phantom Stock Plan was $3,000 and $6,000 for the three months ended September 30, 2023 and 2022, respectively.

The Company recorded stock-based compensation benefit for the Phantom Stock Plan of $1.0 million and $0.7 million for the nine months ended September 30, 2023 and 2022, respectively. The total fair value of the distributions from the Phantom Stock Plan was $20,000 and $23,000 for the nine months ended September 30, 2023, and 2022, respectively.