Note 7 - Stock-based Compensation

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

7. STOCK-BASED COMPENSATION

In May 2022, the Company’s shareholders approved the 2022 Equity Incentive Plan (the “2022 Plan”), which provides for the grant of up to 576,550 shares of common stock, including 126,550 shares that remained available for grant under the 2013 Stock Option Plan when the 2022 Plan was adopted. The 2022 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. The frequency, amount and terms of stock-based awards may be determined by the Board of Directors or its compensation committee, consistent with the terms and purposes of the 2022 plan.

In May 2013, the Company established the 2013 Stock Option Plan for which 174,417 shares of common stock are reserved. With the establishment of the Company’s 2022 Equity Incentive Plan, no further options may be issued under the 2013 Stock Option Plan, though options previously granted continue to be outstanding and governed by the plan.

No options were granted during the three months ended March 31, 2023 and 2022.

A summary of the activity within the 2013 Plan follows: 

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years		Intrinsic Value
Options outstanding at January 1, 2023		189,917		$	21.14
Options exercised		(15,500	)		18.83
Options outstanding at March 31, 2023		174,417		$	21.35		3.7	$	2,216,840
Options exercisable at March 31, 2023		144,567		$	21.29		3.5	$	1,846,121
Expected to vest after March 31, 2023		26,187		$	21.66		4.6	$	324,773

A summary of the activity within the 2022 Plan follows: 

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in Years		Intrinsic Value
Options outstanding at March 31, 2023		117,200		31.00		9.1	$	358,632
Options exercisable at March 31, 2023		-		-		-		-
Expected to vest after March 31, 2023		102,820	$	31.00		9.1	$	314,628

As of March 31, 2023, there was $80,478 of total unrecognized compensation cost related to non-vested, share-based compensation under the 2013 plan. That cost is expected to be recognized over a weighted average period of 0.6 years. As of March 31, 2023, there was $893,000 of total unrecognized compensation cost related to non-vested stock options, share-based compensation under the 2022 plan. That cost is expected to be recognized over a weighted average period of 4.2 years.

The total fair value of options vested during the three months ended March 31, 2023 and 2022 was $7,000 and $101,000, respectively. The total intrinsic value of options at time of exercise was $331,000 and $858,000 for the three months ended March 31, 2023 and 2022, respectively.

Compensation cost related to stock options recognized in operating results under the stock option plans was $87,000 and $58,000 for the three months ended March 31, 2023 and 2022, respectively. The associated income tax benefit recognized was $7,000 and $4,000 for the three months ended March 31, 2023 and 2022, respectively. 

Cash received from option exercises under the 2013 plan for the three months ended March 31, 2023 and 2022 were $137,000 and $131,000, respectively. The tax benefit realized for the tax deductions from option exercise totaled $49,000 and $40,000 for the three months ended March 31, 2023 and 2022, respectively. 

During the three months ended September 30, 2022 the Company granted 1,650 shares of restricted stock with a fair value of $31 per share and a one year vesting period. Compensation costs related to these shares during the three months ended March 31, 2023 totaled $12,000.  As of March 31, 2023, there was $17,000 of total unrecognized compensation cost related to restricted stock. That cost is expected to be recognized over a weighted average period of 0.4 years.