NOTE 11 – LONG TERM INCENTIVE PLANS

6 Months Ended

Jun. 30, 2023

Retirement Benefits [Abstract]

NOTE 11 – LONG TERM INCENTIVE PLANS

NOTE 11 – LONG TERM INCENTIVE PLANS

Restricted stock

Restricted stock expense was $167 thousand and $243 thousand, respectively; for the three-month periods ended June 30, 2023 and 2022, and $350 thousand and $431 thousand, respectively, for the six-month periods ended June 30, 2023 and 2022. The second quarter of 2022 included an expense of $17 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 $44 thousand, respectively, for the three-month periods ended June 30, 2023 and 2022, and $63 thousand and $78 thousand, respectively; for the six-month periods ended June 30, 2023 and 2022.

Unrecognized compensation cost relating to the awards as of June 30, 2023 and 2022 totaled $0.8 million and $1.5 million, respectively. There were forfeitures of $15 thousand and $0 in the second quarter of June 30, 2023 and 2022, respectively. Year to date forfeitures were $15 thousand and $0 for 2023 and 2022, respectively.

Performance-based restricted stock units

On July 29, 2020, the Compensation Committee granted an additional 14,500 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. These awards vested in first quarter 2023 at 94% of target for achieving below target payout performance.

On June 23, 2021, the Compensation Committee granted an additional 14,800 units under the RSU plan. The performance goal for this tranche 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 ($4.50 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 number of units awarded and the performance goals for this tranche have been adjusted to reflect the two-for-one forward stock split, which was effective on June 30, 2022.

On February 28, 2022, the Compensation Committee granted an additional 13,900 units under the RSU plan. The performance goal for this tranche 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 ($4.50 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, 2025. The number of units awarded and the performance goals for this tranche have been adjusted to reflect the two-for-one forward stock split, which was effective on June 30, 2022.

No performance-based restricted stock units were awarded in 2023 and prior to 2019. The fair value of the awards granted under the RSU plan at the grant date was $394 thousand for those grants awarded in 2022. Compensation expense of $62 thousand and $96 thousand was recorded with respect to these RSUs for the three months ended June 2023 and 2022, and $103 thousand and $193 thousand for the six months ended June 30, 2023 and 2022, respectively. 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 $258 thousand and $271 thousand for the three months ended June 30, 2023 and 2022, and year to date expenses of $574 thousand and $538 thousand for 2023 and 2022, respectively.

Options

Salisbury issued stock options in conjunction with its acquisition of Riverside Bank in 2014. In second quarter 2022, a former Riverside employee exercised 4,050 stock options and a former Riverside Bank executive exercised 7,020 stock options at $8.52 per share. All unexercised stock options issued in conjunction with the acquisition of Riverside Bank expired in January 2023.