Note 10 - Stock-based Compensation

12 Months Ended

Dec. 31, 2025

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

NOTE 10 – STOCK-BASED COMPENSATION

Stock-based compensation plans are used to provide directors and employees with an increased incentive to contribute to our long-term performance and growth, to align the interests of directors and employees with the interests of our shareholders through the opportunity for increased stock ownership and to attract and retain directors and employees. Stock-based compensation, reported as noninterest expense in the Consolidated Statements of Income, totaled $3.5 million, $3.3 million and $3.4 million in 2025, 2024 and 2023, respectively. The Stock Incentive Plan of 2023 that was approved by shareholders in May, 2023. 

Under the Stock Incentive Plan of 2023, incentive awards may include, but are not limited to, stock options, restricted stock, stock appreciation rights and stock awards. Incentive awards that are stock options or stock appreciation rights are granted with an exercise price not less than the closing price of our common stock on the date of grant.  Price, vesting and expiration date parameters are determined by Mercantile’s Compensation Committee on a grant-by-grant basis.  No payments are required from employees for restricted stock awards.  The restricted stock awards granted during the years 2023 through 2025 fully vest after three years and, in the case of performance-based restricted stock issued to executive officers in 2023 through 2025, are subject to the attainment of pre-determined performance goals.  At year-end 2025, there were approximately 292,600 shares authorized for future incentive awards.

A summary of restricted stock activity during the year ended December 31, 2025 is as follows:

				Weighted
				Average
	Shares			Fair Value
Nonvested at beginning of year		228,646		$	35.84
Grants		84,685			50.34
Vested		(109,158	)		32.10
Forfeited		(4,771	)		42.70
Nonvested at end of year		199,402		$	43.31

Of the restricted stock shares granted in 2025 and 2023, a total of 16,589 shares and 25,239 shares, respectively, are performance-based awards made to our Named Executive Officers at the target level and are subject to the attainment of pre-determined performance goals. There were no shares granted in 2024.  

We periodically grant shares of common stock to our Corporate and Bank Board Directors for retainer payments with the related expense being recorded over the period of the Directors' service, as summarized below:

			Total Cost
Grant Year	Shares Granted		(in thousands)		Covered Period
2022		11,166	$	359	June 1, 2022 - May 31, 2023
2023		11,529		350	June 1, 2023 - May 31, 2024
2024		11,316		423	June 1, 2024 - May 31, 2025
2025		10,007		444	June 1, 2025 - May 31, 2026