NOTE 11 - LONG TERM INCENTIVE PLANS

6 Months Ended

Jun. 30, 2021

Retirement Benefits [Abstract]

NOTE 11 - LONG TERM INCENTIVE PLANS

NOTE 11 - LONG TERM INCENTIVE PLANS

Restricted stock

Restricted stock expense was $168 thousand and $135 thousand, respectively; for the three-month periods ended June 30, 2021 and 2020, and $300 thousand and $271 thousand, respectively; for the six-month periods ended June 30, 2021 and 2020. The second quarter of 2021 and 2020 included an expense of $32 thousand for the accelerated vesting of restricted stock awards previously granted to certain Directors, who retired from Salisbury's Board of Directors during the quarter. The tax benefit from restricted stock expense was $30 thousand and $25 thousand, respectively; for the three-month periods ended June 30, 2021 and 2020, and $54 thousand and $49 thousand, respectively; for the six-month periods ended June 30, 2021 and 2020. In second quarter 2021, Salisbury granted a total of 16,550 shares of restricted stock to certain employees and Directors pursuant to its 2017 Long Term Incentive Plan. The fair value of the stock at grant date was approximately $746 thousand. The restricted stock will vest three years from the grant date. Unrecognized compensation cost relating to the awards as of June 30, 2021 and 2020 totaled $1,224 thousand and $1,031 thousand, respectively. There were no forfeitures in the second quarter or year to date for 2021. There were forfeitures of $29 thousand or 700 shares in the second quarter of 2020 and forfeitures of $29 thousand or 700 shares for year to date in 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. 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, vesting will occur no later than March 15, 2023.

On June 23, 2021, the Compensation Committee granted an additional 7,400 units under the RSU plan. The performance goal for this tranche is based on the increase in the Bank's tangible book value by $7.00 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 ($9.00 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 15, 2024.

The fair value of the awards granted under the RSU plan at the grant date was $354 thousand, $264 thousand, and $280 thousand, respectively, for those grants awarded in 2021, 2020 and 2019. Compensation expense of $103 thousand and $24 thousand was recorded with respect to these RSUs for the three months ended June 2021 and 2020, and $174 thousand and $47 thousand for the six months ended June 30, 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 $310 thousand and $189 thousand for the three months ended June 30, 2021 and 2020, and year to date expenses of $548 thousand and $341 thousand for 2021 and 2020, respectively.

Options

Salisbury issued stock options in conjunction with its acquisition of Riverside Bank in 2014. In second quarter 2021 and second quarter 2020, no stock options were exercised. In first quarter 2021 and first quarter 2020, a former Riverside Bank executive exercised 1,755 stock options at $17.04 per share. Also, in first quarter 2020, a former Riverside employee exercised 1,350 stock options at $17.04 per share.