Stock Incentive Plans

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Note 19 – Stock Incentive Plans

At the Annual Shareholders Meeting on May 21, 2014, shareholders approved the Virginia National Bankshares Corporation 2014 Stock Incentive Plan (“2014 Plan”). The 2014 Plan makes available up to 275,625 shares of the Company’s common stock, as adjusted by prior issued stock dividends, to be issued to plan participants. The 2014 Plan provides for granting of both incentive and nonqualified stock options, as well as restricted stock, unrestricted stock and other stock based awards. No new grants will be issued under the 2005 Stock Incentive Plan ("2005 Plan") as this plan has expired.

For the 2014 Plan and the 2005 Plan (the “Plans”), the option price of incentive options will not be less than the fair value of the stock at the time an option is granted. Nonqualified options may be granted at prices established by the Board of Directors, including prices less than the fair value on the date of grant. Outstanding options generally expire in ten years from the grant date. Stock options generally vest by the fourth or fifth anniversary of the date of the grant.

A summary of the shares issued and available under each of the Plans is shown below as of December 31, 2021. Share data and exercise price range per share have been adjusted to reflect prior stock dividends. Although the 2005 Plan has expired and no new grants will be issued under this plan, there were shares issued before the plan expired which are still outstanding as shown below.


	2014 Plan			2005 Plan
Aggregate shares issuable		275,625			253,575
Options issued, net of forfeited and expired options		(170,106	)		(59,831	)
Unrestricted stock issued		(11,535	)		-
Restricted stock grants issued		(48,017	)		-
Cancelled due to Plan expiration		-			(193,744	)
Remaining available for grant		45,967			-

Stock grants issued and outstanding:
Total vested and unvested shares		59,552			-
Fully vested shares		22,541			-

Option grants issued and outstanding:
Total vested and unvested shares		167,901			1,379
Fully vested shares		57,694			1,379

Exercise price range	$23.75 to $42.62			$	13.69

The Company accounts for all of its stock incentive plans under recognition and measurement accounting principles which require that the compensation cost relating to stock-based payment transactions be recognized in the financial statements. Stock-based compensation arrangements for 2021 and prior years include stock options, unrestricted stock and restricted stock. All stock-based payments to employees are

required to be valued using a fair value method on the date of grant and expensed based on that fair value over the applicable vesting period.

Stock Options

Changes in the stock options outstanding related to all of the Plans are summarized below.


	December 31, 2021
(Dollars in thousands except weighted average data)	Number of Options			Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding at January 1, 2021		146,783		$	33.51	$	184
Issued		23,600			35.94
Exercised		(1,103	)		27.39
Expired		-			-
Outstanding at December 31, 2021		169,280		$	33.89	$	962
Options exercisable at December 31, 2021		59,072		$	37.21	$	211

For the 1,103 options exercised during the year ended December 31, 2021, there was no intrinsic value for options exercised.

For the years ended December 31, 2021 and 2020, the Company recognized $145 thousand and $124 thousand, respectively, in compensation expense for stock options. As of December 31, 2021, there was $851 thousand in unrecognized compensation expense for stock options remaining to be recognized in future reporting periods through 2026. The fair value of any option grant is estimated at the grant date using the Black-Scholes pricing model. There were stock option grants of 23,600 and 66 thousand shares issued during the years ended December 31, 2021 and 2020, respectively and the fair value on each option granted was estimated based on the assumptions noted in the following table:


	For the year ended			For the year ended
	December 31, 2021			December 31, 2020
Expected volatility1		25.16	%		22.97	%
Expected dividends2		3.00	%		5.00	%
Expected term (in years)3	5.5 - 6.3				6.50
Risk-free rate4		1.19	%		0.68	%

1 Based on the monthly historical volatility of the Company’s stock price over the expected life of the options.

2 Calculated as the ratio of historical dividends paid per share of common stock to the stock price on the date of grant.

3 Based on the average of the contractual life and vesting period for the respective option.

4 Based upon an interpolated US Treasury yield curve interest rate that corresponds to the contractual life of the option, in effect at the time of the grant.

Summary information pertaining to options outstanding at December 31, 2021, as adjusted for Stock Dividends, is as follows:


	Options Outstanding					Options Exercisable
Exercise Price	Number of Options Outstanding		Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price		Number of Options Exercisable		Weighted- Average Exercise Price
$13.69 to $20.00		1,379	1.1 Years	$	13.69		1,379	$	13.69
$20.01 to $30.00		66,000	8.5 Years		24.64		13,200		24.64
$30.01 to $40.00		44,420	8.6 Years		36.97		10,008		38.38
$40.01 to $42.62		57,481	6.4 Years		42.62		34,485		42.62
Total		169,280	7.8 Years	$	33.89		59,072	$	37.21

Stock Grants

Restricted stock grants – During 2021, 21,749 shares of restricted stock were granted to employees and non-employee directors, vesting over a four- or five-year period. During 2020, 22,268 shares of restricted stock were granted. In 2021 and 2020, restricted stock grants resulted in an associated expense of $376 thousand and $140 thousand, respectively. As of December 31, 2021, there was $387 thousand in unrecognized compensation expense for restricted stock grants remaining to be recognized in future reporting periods through 2026.


	December 31, 2021
(Dollars in thousands except weighted average data)	Number of Shares			Weighted Average Grant Date Fair Value Per Share		Aggregate Intrinsic Value
Outstanding at January 1, 2021		25,268		$	26.60	$	957
Issued		21,749			30.84		824
Vested		(10,006	)		27.01		(379	)
Nonvested at December 31, 2021		37,011		$	28.98	$	1,402

The weighted average period over which nonvested restricted stock grants are expected to be recognized is 1.6 years.