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Equity Plan
6 Months Ended
Jun. 30, 2022
Equity Plan  
Equity Plan

10) Equity Plan

The Company maintained an Amended and Restated 2004 Equity Plan (the “2004 Plan”) for directors, officers, and key employees. The 2004 Plan was terminated on May 23, 2013. On May 23, 2013, the Company’s shareholders approved the 2013 Equity Incentive Plan (the “2013 Plan”). On May 21, 2020, the shareholders approved an amendment

to the Heritage Commerce Corp 2013 Equity Incentive Plan to increase the number of shares available from 3,000,000 to 5,000,000 shares. The equity plans provide for the grant of incentive and nonqualified stock options and restricted stock. The equity plans provide that the option price for both incentive and nonqualified stock options will be determined by the Board of Directors at no less than the fair value at the date of grant. Options granted vest on a schedule determined by the Board of Directors at the time of grant. Generally, options vest over four years. All options expire no later than ten years from the date of grant. Restricted stock is subject to time vesting. For the six months ended June 30, 2022, the Company granted 370,000 shares of nonqualified stock options and 201,811 shares of restricted stock for the six months ended June 30, 2022. There were 1,433,941 shares available for the issuance of equity awards under the 2013 Plan as of June 30, 2022.

Stock option activity under the equity plans is as follows:

    

    

    

Weighted

    

 

Weighted

Average

 

Average

Remaining

Aggregate

 

Number

Exercise

Contractual

Intrinsic

 

Total Stock Options

of Shares

Price

Life (Years)

Value

 

Outstanding at January 1, 2022

 

2,584,632

$

10.00

Granted

 

370,000

$

11.03

Exercised

 

(137,652)

$

6.17

Forfeited or expired

 

(52,410)

$

12.78

Outstanding at June 30, 2022

 

2,764,570

$

10.27

 

5.79

$

4,134,577

Vested or expected to vest

 

2,598,696

 

5.79

$

3,886,502

Exercisable at June 30, 2022

 

1,954,421

 

4.46

$

3,905,368

Information related to the equity plans for the periods indicated:

    

Six Months Ended

 

June 30, 

2022

2021

Intrinsic value of options exercised

$

706,376

$

679,403

Cash received from option exercise

$

848,739

$

784,264

Tax benefit (expense) realized from option exercises

$

52,952

$

57,215

Weighted average fair value of options granted

$

2.18

$

2.33

As of June 30, 2022, there was $1,629,000 of total unrecognized compensation cost related to nonvested stock options granted under the equity plans. That cost is expected to be recognized over a weighted-average period of approximately 2.98 years.

Restricted stock activity under the equity plans is as follows:

Weighted

 

Average Grant

 

Number

Date Fair

 

Total Restricted Stock Award

    

of Shares

    

Value

 

Nonvested shares at January 1, 2022

 

298,566

$

11.03

Granted

 

201,811

$

11.09

Vested

 

(173,347)

$

11.98

Forfeited or expired

(12,506)

$

10.93

Nonvested shares at June 30, 2022

 

314,524

$

11.04

As of June 30, 2022, there was $3,261,000 of total unrecognized compensation cost related to nonvested restricted stock awards granted under the equity plans. The cost is expected to be recognized over a weighted-average period of approximately 2.15 years.