Stock-Based Compensation

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

At the 2016 annual meeting, stockholders approved the Shore Bancshares, Inc. 2016 Stock and Incentive Plan (“2016 Equity Plan”), replacing the Shore Bancshares, Inc. 2006 Stock and Incentive Plan (“2006 Equity Plan”), which expired on that date. The Company may issue shares of common stock or grant other equity-based awards pursuant to the 2016 Equity Plan. Stock-based awards granted to date generally are time-based, vest in equal installments on each anniversary of the grant date and range over a one- to five-year period of time, and, in the case of stock options, expire 10 years from the grant date. As part of the 2016 Equity Plan, a performance equity incentive award program, known as the “Long-term incentive plan” allows participating officers of the Company to earn incentive awards of performance share/restricted stock units if certain pre-determined targets are achieved at the end of a three-year performance cycle. Stock-based compensation expense based on the grant date fair value is recognized ratably over the requisite service period for all awards and reflects forfeitures as they occur. The 2016 Equity Plan originally reserved 750,000 shares of common stock for grant, and 190,166 shares remained available for grant at September 30, 2024.

The Company assumed 3,977 shares of restricted stock and 90,783 of restricted stock units at a fair market value of $11.56 per share as a result of the merger with TCFC. The vesting period for the outstanding restricted stock grants is between three and five years. Restricted stock units and performance stock units vesting period is between one to three years. The recipients of the restricted stock units and performance stock units do not have any stockholder rights, including voting, dividend, or liquidation rights, with respect to the shares underlying awarded restricted stock units until the recipient becomes the record holder of those shares.

The following table summarizes restricted stock award and restricted stock unit activity for the Company under the 2016 Equity Plan for the nine months ended September 30, 2024.


	Restricted Stock			Restricted Stock Units			Performance Stock Units
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Nonvested at beginning of period	45,322	$	15.42	165,055	$	11.56	—	$	—

Granted	51,610	11.39		53,279	11.31		43,651	11.32
Vested	(44,655)	15.33		(79,553)	11.56		—	—
Forfeited	—	—		(3,256)	11.56		—	—
Nonvested at end of period	52,277	$	11.52	135,525	$	11.46	43,651	$	11.32

The fair value of restricted stock awards that vested during the three months ended September 30, 2024 and 2023 was $241 thousand and $12 thousand, respectively. The fair value of restricted stock units vested during the three months ended September 30, 2024 and 2023 was $505 thousand and $122 thousand respectively. The fair value of restricted stock awards vested during the nine months ended September 30, 2024 and 2023 was $577 thousand and $535 thousand, respectively. The fair value of restricted stock units that vested during the nine months ended September 30, 2024 and 2023 was $907 thousand and $122 thousand, respectively. There were no performance stock units that vested during the three and nine months ended September 30, 2024 and 2023.