STOCK COMPENSATION - RESTRICTED STOCK AND PERFORMANCE SHARE GRANTS

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

STOCK COMPENSATION - RESTRICTED STOCK AND PERFORMANCE SHARE GRANTS

The Company’s stock incentive plans provide for the making of awards to employees based upon a service condition or through the achievement of performance-related objectives. The Company has issued three types of stock grant awards under these plans: restricted stock with service condition vesting; performance share grants that only vest upon the achievement of specified performance conditions, such as share price, or as Performance Condition Grants; and performance share grants that include threshold, target, and maximum achievement levels based on the achievement of specific performance measures, or Performance Milestone Grants. Performance Condition Grants with market-based conditions are based on the achievement of a target share price. The share price used to calculate vesting for market-based awards is determined using a Monte Carlo simulation. Failure to achieve the target share price will result in the forfeiture of shares. Forfeiture of share awards with service conditions or performance-based restrictions will result in a reversal of previously recognized share-based compensation expense. Forfeiture of share awards with market-based restrictions do not result in a reversal of previously recognized share-based compensation expense.

The following is a summary of the Company’s Performance Condition Grants as of the nine months ended September 30, 2022:


Performance Condition Grants


Target performance						453,747
Maximum performance						342,411

The following is a summary of the Company’s stock grant activity, both time and performance share grants, assuming target achievement for outstanding performance grants for the nine months ended September 30, 2022:


			September 30, 2022
Stock Grants Outstanding Beginning of Period at Target Achievement			683,645
New Stock Grants/Additional Shares due to Achievement in Excess of Target			60,078
Vested Grants			(128,893)
Expired/Forfeited Grants			(240,710)
Stock Grants Outstanding End of Period at Target Achievement			374,120

The following is a summary of the assumptions used to determine the price for the Company’s market-based Performance Condition Grants for the nine months ended September 30, 2022:


($ in thousands except for share prices)
Grant date	12/12/2019	03/11/2020	12/11/2020	03/18/2021	12/16/2021	03/17/2022
Vesting end	12/31/2022	12/31/2022	12/31/2023	03/18/2024	12/16/2024	03/17/2025
Share price at target achievement	$18.80	$16.36	$17.07	$20.02	$21.58	$20.43

Expected volatility	17.28%	18.21%	29.25%	30.30%	31.29%	31.54%
Risk-free interest rate	1.69%	0.58%	0.19%	0.33%	0.92%	2.13%

Simulated Monte Carlo share price	$11.95	$5.87	$15.59	$18.82	$21.48	$21.75
Shares granted	6,327	81,716	3,628	10,905	3,536	13,338
Total fair value of award	$76	$480	$57	$205	$76	$290

The unamortized cost associated with unvested stock grants and the weighted average period over which it is expected to be recognized as of September 30, 2022 were $1,406,000 and 16 months, respectively. The fair value of restricted stock with time-based vesting features is based upon the Company’s share price on the date of grant and is expensed over the service period. The fair value of performance grants that cliff vest based on the achievement of performance conditions is based on the share price of the Company’s stock on the day of grant once the Company determines that it is probable that the award will vest. This fair value is expensed over the service period applicable to these grants. For performance grants that contain a range of shares from zero to a maximum, the Company determined, based on historic and projected results, the probability of (1) achieving the performance objective and (2) the level of achievement. Based on this information, the Company determines the fair value of the award and measures the expense over the service period related to these grants. Because the ultimate vesting of all performance grants is tied to the achievement of a performance condition, the Company estimates whether the performance condition will be met and over what period of time. Ultimately, the Company will adjust stock compensation costs according to the actual outcome of the performance condition.

Under the Non-Employee Director Stock Incentive Plan, or NDSI Plan, each non-employee director receives a portion of his or her annual compensation in stock. The stock is granted at the end of each quarter based on the quarter-end stock price.

The following table summarizes stock compensation costs for the Company's 1998 Stock Incentive Plan, or the Employee Plan, and NDSI Plan for the following periods:


($ in thousands)	Nine Months Ended September 30,
Employee Plan:	2022		2021
Expensed	$	1,646	$	2,774
Capitalized	239		330
	1,885		3,104
NDSI Plan - Expensed	442		388
Total Stock Compensation Costs	$	2,327	$	3,492