Share-based Compensation and Employee Benefit Plan

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Share-Based Compensation and Employee Benefit Plan

In 2011, the Company adopted the Patriot National Bancorp, Inc. 2012 Stock Plan (the “2012 Plan”). The 2012 Plan was amended in 2020 and renamed as the Patriot National Bancorp, Inc. 2020 Restricted Stock Award Plan (the “2020 Plan”). A copy of the 2020 Plan was filed as Exhibit 10.1 to the Company’s Amendment No. 1 to Annual Report on Form 10-K/A for the year ended December 31, 2020 filed on April 30, 2021. The 2020 Plan provides an incentive to directors and employees of the Company by the grant of restricted stock awards (“RSA”).On November 10, 2022, the Board of Directors approved the Amendment and Restatement of the 2020 Plan (the “Amended and Restated 2020 Plan”), which was approved and ratified by shareholders of the Company on December 14, 2022.

The 2020 Plan was amended primarily to (i) reduce the total number of shares authorized for issuance thereunder from 3,000,000 shares to 400,000 shares; and (ii) limit the maximum number of shares of Company’s Common Stock granted during a single fiscal year to any non-employee director, together with any cash fees paid to such director, to be no more than a total value of $300,000. As of June 30, 2023, 234,617 shares of stock were available for issuance under the Plan. In accordance with the terms of the Plan, the vesting of RSAs may be accelerated at the discretion of the Compensation Committee of the Board of Directors. The Compensation Committee sets the terms and conditions applicable to the vesting of RSAs. RSAs granted to directors and employees generally vest in quarterly or annual installments over a three, four or five year period from the date of grant.

The following is a summary of the status of the Company’s restricted shares and changes for the three and six months ended June 30, 2023 and 2022:


Three months ended June 30, 2023:	Number of Shares Awarded	Weighted Average Grant Date Fair Value
Unvested at March 31, 2023	22,660	$7.11
Unvested at June 30, 2023	22,660	$7.11

Six months ended June 30, 2023:
Unvested at December 31, 2022	22,660	$7.11


Unvested at June 30, 2023	22,660	$7.11


Three months ended June 30, 2022	Number of Shares Awarded	Weighted Average Grant Date Fair Value
Unvested at March 31, 2022	21,468	$6.48
Granted	2,496	$17.25
Vested	(777)	$18.55

Unvested at June 30, 2022	23,187	$7.24

Six months ended June 30, 2022:
Unvested at December 31, 2021	21,468	$6.48
Granted	2,496	$17.25
Vested	(777)	$18.55

Unvested at June 30, 2022	23,187	$7.24

The Company recognizes compensation expense for all director and employee share-based compensation awards on a straight-line basis over the requisite service period, which is equal to the vesting schedule of each award, for each vesting portion of an award equal to its grant date fair value.

Unrecognized compensation expense attributable to the unvested restricted shares outstanding as of June 30, 2023 amounted to $190,000, which amount is expected to be recognized over the weighted average remaining life of the awards of 2.3 years.

For the three and six months ended June 30, 2023, the Company recognized total share-based compensation expense of $23,000 and $46,000, respectively. The share-based compensation attributable to employees of Patriot amounted to $14,000 and $28,000, respectively. Included in share-based compensation expense attributable to Patriot’s external directors, were $9,000 and $18,000, respectively. The directors received total compensation of $53,000 and $108,000 respectively, which amounts are included in other operating expenses in the consolidated statements of operations.

For the three and six months ended June 30, 2022, the Company recognized total share-based compensation expense of $20,000 and 41,000, respectively. The share-based compensation attributable to employees of Patriot amounted to $8,000 and $16,000, respectively. Included in share-based compensation expense were $12,000 and $25,000 attributable to Patriot’s external directors, who received total compensation of $37,000 and $100,000 for each of those periods, respectively.

Dividends

The Company has not paid any dividends since 2020 and has no present plans to pay dividends.

Retirement Plan

Patriot offers employees participation in the Patriot Bank, N.A. 401(k) Savings Plan (the "401(k) Plan") under Section 401(k) of the Internal Revenue Code, along with the ROTH feature to the Plan. The 401(k) Plan covers substantially all employees who have completed one month of service, are 21 years of age and who elect to participate. Under the terms of the 401(k) Plan, participants can contribute up to the maximum amount allowed, subject to Federal limitations. At its discretion, Patriot may match eligible participating employee contributions at the rate of 50% of the first 6% of the participants’ salary contributed to the 401(k) Plan. During the three and six months ended June 30, 2023, Patriot made matching contributions to the 401(k) Plan of $82,000 and $157,000, respectively. During the three and six months ended June 30, 2022, compensation expense under the 401(k) aggregated $67,000 and $141,000, respectively.