Stock-Based Compensation

3 Months Ended

Mar. 31, 2025

Note 9—Stock-Based Compensation

Restricted Stock Award Plan

At the special meeting of shareholders held on November 25, 2024, the Company’s shareholders approved the Farmers & Merchants Bancorp 2025 Restricted Stock Retirement Plan (the “2025 Plan”). The 2025 Plan provides for the issuance of up to 80,000 shares to directors and employees of the Company and its subsidiaries and affiliates. Compensation expense is recognized over the vesting period of the awards based on the fair value of the stock at issue date. Due to the illiquidity of the stock, the fair value of the stock was determined using a volume weighted average price over a 30-day period as of the grant date, which equaled $1,033.03 per share. The first awards were granted on February 3, 2025 and totaled 30,818 shares. The awards contain a service condition, which requires the employees to provide services during the applicable vesting periods. The awards were comprised of a one-year award for directors and two-year, three-year and four-year awards for employees depending on their roles and responsibilities. The awards vest on a pro-rated basis over the life of the award. Total remaining shares issuable under the 2025 Plan were 49,182 at March 31, 2025. The unvested restricted shares have voting rights and dividend rights; however, the dividends are paid to the holder only if, when and to the extent such unvested restricted shares vest. Dividends on forfeited restricted stock are also forfeited.

The following table summarizes the change in the Company’s nonvested shares for the three months ended March 31, 2025.

	Number of Shares		Weighted Average Fair Value at Grant-Date
Restricted Stock Award
Nonvested shares oustanding, January 1, 2025		-	$	-
Granted		30,818		1,033.03
Vested		-		-
Forfeited		-		-
Nonvested shares outstanding, March 31, 2025		30,818	$	1,033.03

As of March 31, 2025, there was $30.35 million of total unrecognized compensation cost related to nonvested shares granted under the 2025 Plan. The cost is expected to be recognized over a weighted-average period of 2.42 years. No shares vested during the first three months of March 31, 2025.