NOTE 11 - LONG TERM INCENTIVE PLANS

3 Months Ended

Mar. 31, 2021

Retirement Benefits [Abstract]

NOTE 11 - LONG TERM INCENTIVE PLANS

NOTE 11 - LONG TERM INCENTIVE PLANS

Restricted stock

Expense in first quarter 2021 and 2020 related to employee and directors' stock-based compensation totaled $132 thousand and $136 thousand, respectively. Unrecognized compensation cost relating to the awards as of March 31, 2021 and 2020 totaled $646 thousand and $659 thousand, respectively. There were no forfeitures in the first quarter of 2021 or 2020.

Performance-based restricted stock units

On March 29, 2019, the Compensation Committee granted performance-based restricted stock units (RSU) pursuant to the 2017 Long-Term Incentive Plan to further align compensation with the Bank's performance. This RSU plan replaced the Bank's Phantom Stock Appreciation Units plan (Phantom). Salisbury paid out the final tranche of these awards in January 2021. Salisbury's expense for the Phantom plan was $0 thousand and $36 thousand, respectively, for the three month periods ended March 31, 2021 and 2020.

The performance goal for awards granted under the RSU plan in 2019 is based on the increase in the Bank's tangible book value by $3.50 per share over the performance period for threshold performance. Vesting will range from 75% of target for achieving threshold performance, to 100% of target for achieving target payout performance ($5.00 increase in tangible book value per share) to 150% of target for achieving in excess of target payout performance and, if the performance goals are achieved, vesting will occur no later than March 29, 2022.

On July 29, 2020, the Compensation Committee granted an additional 7,250 units under the RSU plan. The performance goal for this tranche is based on the relative increase in the Bank's tangible book value compared with a pre-determined group of peer banks over the performance period for threshold performance. Vesting will range from 50% of target for achieving threshold performance, to 100% of target for achieving tangible book value growth of at least 50% but less than 55% of the peer group, to 150% of target for achieving in excess of target payout performance and, if the performance goal is achieved.

The fair value of the awards granted under the RSU plan at the grant date was $264 thousand and $280 thousand, respectively, for those grants awarded in 2020 and 2019. Compensation expense of $71 thousand and $23 thousand was recorded with respect to these RSUs for the three months ended March 31, 2021 and 2020, respectively. No performance-based restricted stock units were awarded prior to 2019. The shares noted above are contingently issuable only upon attainment of the minimum performance goal.

Short Term Incentive Plan (STIP)

Salisbury offers a short-term discretionary compensation plan to eligible employees on an annual basis. Under this incentive plan, Salisbury may reward employees with cash compensation if certain pre-determined Bank and individual performance goals have been achieved. The STIP expense, which is included in compensation expenses, totaled $238 thousand and $153 thousand for the three months ended March 31, 2021 and 2020, respectively.

Options

Salisbury issued stock options in conjunction with its acquisition of Riverside Bank in 2014. In the first quarter 2021 and 2020, 1,755 stock options were exercised at $17.04 per share by one former Riverside Bank executive. Also, in the first quarter of 2020, a former Riverside employee exercised 1,350 stock options at $17.04 per share.