STOCK OPTIONS AND OTHER EQUITY AWARDS

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Note 14 – Stock Options and Other Equity Awards

The MVB Financial Corp. Incentive Stock Plan (the “Plan”) provides for the issuance of stock options, restricted stock awards and RSUs to selected employees and directors. As of December 31, 2020, the Plan had 3.2 million shares authorized and 569,997 shares remaining available for issuance. To date, the Company has awarded both stock options and RSUs to selected employees and directors.

Stock-Based Compensation Expense

Stock-based compensation expense is recognized as salary and employee benefit cost the fair value of the instruments on the date of the grant. The amount that the Company recognized in stock-based compensation expense related to the issuance of stock options and RSUs is presented in the following table:


(Dollars in thousands)	2020		2019		2018
Stock Options	$	950	$	873	$	936
RSUs	1,403		886		331
Total Stock-based compensation expense	$	2,353	$	1,759	$	1,267

Proceeds from stock options exercised were $4.5 million, $2.2 million and $2.1 million during 2020, 2019 and 2018, respectively. During 2020, 2019 and 2018, certain options were exercised in cashless transactions. Shares were forfeited related to exercise price and related tax obligations and the Company paid tax authorities amounts due resulting in a net cash outflow.

Stock Options

Under the provisions of the Plan, the option price per share shall not be less than the fair market value of the common stock on the date of the grant. Stock options expire ten years from the date of the grant. With the exception of 125,000 shares granted in 2017 that vest in four years and expire in ten years, all options granted vest in five years and expire ten years from the date of the grant.

The following summarizes stock options as of and for the year ended December 31, 2020 and 2019 and the changes for the years then ended:


	2020
	Number of Shares	Weighted-Average Exercise Price
Outstanding at beginning of year	1,593,241	$	14.96
Granted	126,250	18.11
Exercised	(305,697)	14.36
Forfeited	(9,750)	16.85
Expired	(7,250)	14.78

Outstanding at end of year	1,396,794	$	15.36

Exercisable at end of year	947,988	$	14.66

Weighted-average fair value of options granted during 2020		$	4.48
Weighted-average fair value of options granted during 2019		$	4.22
Weighted-average fair value of options granted during 2018		$	5.97

The intrinsic value of options exercised during 2020, 2019 and 2018 was $1.9 million, $1.9 million and $0.9 million, respectively.

The fair value for the options was estimated at the date of grant using a Black-Scholes option-pricing model with the following inputs:


	2020		2019		2018
Average risk-free interest rates	0.66	%	2.02	%	2.81	%
Weighted-average life	seven years		seven years		seven years
Expected volatility	30.9	%	21.8	%	18.6	%
Expected dividend yield	2.20	%	0.84	%	0.54	%

The following summarizes information related to the total outstanding and exercisable stock options at December 31, 2020:


Options Outstanding				Options Exercisable
Total Options	Weighted-Average Exercise Price	Intrinsic Value (in millions)	Weighted-Average Remaining Life	Total Options	Weighted-Average Exercise Price	Intrinsic Value (in millions)	Weighted-Average Remaining Life
1,396,794	$15.36	$10.2	5.64	947,988	$14.66	$7.6	4.80

At December 31, 2020, based on stock options outstanding at that time, the total unrecognized pre-tax compensation expense related to unvested stock options was $1.3 million. This cost is expected to be recognized over a weighted-average period of 2.9 years. At December 31, 2020, the fair value of stock options vested during the year was $0.9 million.

Restricted Stock Units

Under the provisions of the Plan, RSUs are similar to restricted stock awards, except the recipient does not receive the stock immediately, but instead receives it according to a vesting plan and distribution schedule after achieving required performance milestones or upon remaining with the Company for a particular length of time. Each RSU that vests entitles the recipient to receive one share of the Company’s common stock on a specified issuance date. The recipient does not have any stockholder rights, including voting, dividend or liquidation rights, with respect to the shares underlying awarded RSUs until the recipient becomes the record holder of those shares.

The Company granted 153,642 RSUs in 2020, 97,911 of which were time-based awards and 55,731 of which were performance-based awards. Time-based RSUs granted in 2020 vest in five equal installments per year over a five-year period, with the exception of time-based grants to members of the board of directors, which vest over a one-year period. Performance-based RSUs vest in one installment at the end of three years, based on set criteria.

A summary of the activity for the Company’s RSUs for the period indicated is presented in the following table:


	2020
	Shares	Weighted-Average Grant Date Fair Value
Balance at beginning of year	160,758	$	16.67
Granted	153,642	13.08
Vested	(53,981)	15.36
Forfeited	(7,383)	16.55
Balance at end of year	253,036	$	14.70

Weighted-average fair value of RSUs granted during 2020		$	13.08
Weighted-average fair value of RSUs granted during 2019		$	15.50
Weighted-average fair value of RSUs granted during 2018		$	19.33

At December 31, 2020, based on RSU awards outstanding at that time, the total unrecognized pre-tax compensation expense related to unvested RSU awards was $2.3 million. This cost is expected to be recognized over a weighted-average period of 2.8 years. At December 31, 2020, the fair value of RSU awards vested during the year was $0.8 million.