NOTE 11 – LONG TERM INCENTIVE PLANS

3 Months Ended

Mar. 31, 2022

Note 11 Long Term Incentive Plans

NOTE 11 – LONG TERM INCENTIVE PLANS

NOTE 11 – LONG TERM INCENTIVE PLANS

Restricted stock

On February 28, 2022, Salisbury granted a total of 14,350 shares of restricted stock to certain employees pursuant to its 2017 Long Term Incentive Plan. The fair value of the stock granted was approximately $813 thousand. Expense in first quarter 2022 and 2021 related to employee and directors’ stock-based compensation totaled $188 thousand and $132 thousand, respectively. Unrecognized compensation cost relating to the awards as of March 31, 2022 and 2021 totaled $1,550 thousand and $646 thousand, respectively. There were no forfeitures in the first quarter of 2022 or 2021.

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). The performance goal for awards granted under the RSU plan in 2019 was based on the increase in the Bank’s tangible book value by $3.50 per share over the performance period for threshold performance. On March 29, 2022, these awards vested at 150% of target for achieving in excess of target payout performance ($5.00 increase in tangible book value per share).

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.

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.

On February 28, 2022, the Compensation Committee of the Board of Directors approved grants of performance-based restricted stock units to its NEOs and other key employees under the Company’s 2017 Long Term Incentive Plan. The Compensation Committee granted a total of 6,950 RSUs, including 3,500 RSUs to NEOs. Richard J. Cantele, Jr., President and Chief Executive Officer received 1,500 target RSUs; John M. Davies, President of NY Region and Chief Lending Officer received 1,000 target RSUs; and Peter Albero, Executive Vice President and Chief Financial Officer received 1,000 target RSUs. The maximum number of shares deliverable upon vesting of RSUs assuming 150% of the TBV growth target is met or exceeded, will be 10,425.

The fair value of the awards granted under the RSU plan at the grant date was $394 thousand and $354 thousand, respectively, for those grants awarded in 2022 and 2021. Compensation expense of $97 thousand and $71 thousand was recorded with respect to all RSUs granted to date for the three months ended March 31, 2022 and 2021, 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 $267 thousand and $238 thousand for the three months ended March 31, 2022 and 2021, respectively.

Options

Salisbury issued stock options in conjunction with its acquisition of Riverside Bank in 2014. In the first quarter 2022, no stock options were exercised. In 2021, 1,755 stock options were exercised at $17.04 per share by one former Riverside Bank executive.