Stock Incentive Plans

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Note 19 – Stock Incentive Plans

At the Annual Shareholders Meeting on June 23, 2022, shareholders approved the Virginia National Bankshares Corporation 2022 Stock Incentive Plan. The 2022 Plan made available up to 150,000 shares of the Company’s common stock to be issued to plan participants. The 2014 Plan made 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 2022 Plan and the 2014 Plan provide for granting of both incentive and nonqualified stock options, as well as restricted stock, unrestricted stock and other stock based awards. No new grants can be issued under the 2005 Plan as this plan has expired.

For the 2022 Plan, the option price for any stock options cannot be less that the fair value of the Company’s stock on the grant date. In addition, 95% of the common stock authorized for issuance must have a vesting or exercise schedule of at least one year. For the 2014 Plan and the 2005 Plan, the option price of incentive stock options cannot be less than the fair value of the stock at the time an option is granted and nonqualified stock 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 stock options generally expire 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, 2023. 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.


	2022 Plan			2014 Plan			2005 Plan
Aggregate shares issuable		150,000			275,625			253,575
Options issued, net of forfeited and expired options		(3,400	)		(174,006	)		(59,870	)
Unrestricted stock issued		-			(11,635	)		-
Restricted stock grants issued		(18,932	)		(83,653	)		-
Cancelled due to Plan expiration		-			-			(193,705	)
Remaining available for grant		127,668			6,331			-

Stock grants issued and outstanding:
Total vested and unvested shares		18,932			114,820			-
Fully vested shares		-			52,099			-

Option grants issued and outstanding:
Total vested and unvested shares		3,400			174,201			-
Fully vested shares		-			124,716			-

Exercise price range	$	28.82		$23.75 to $42.62			$	-

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 2023 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, 2023
(Dollars in thousands except weighted average data)	Number of Options			Weighted Average Exercise Price			Aggregate Intrinsic Value
Outstanding at January 1, 2023		168,280		$	33.95		$	830
Issued		11,800			31.95
Exercised		(1,379	)		(13.69	)
Forfeited		(4,500	)		(35.35	)
Expired		-			-
Outstanding at December 31, 2023		174,201		$	33.94		$	664
Options exercisable at December 31, 2023		124,716		$	35.88		$	375

For the years ended December 31, 2023 and 2022, the Company recognized $142 thousand and $167 thousand, respectively, in compensation expense for stock options. As of December 31, 2023, there was $163 thousand in unrecognized compensation expense for stock options remaining to be recognized in future reporting periods through 2028. 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 11,800 shares issued during the year ended December 31, 2023. There were no stock option grants issued during the year ended December 31, 2022. The fair value on each option granted during the current year was estimated based on the assumptions noted in the following table:


	For the year ended
	December 31, 2023
Expected volatility1		26.06	%
Expected dividends2		4.00	%
Expected term (in years)3		6.5
Risk-free rate4		4.12	%

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, 2023, 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
$23.75 to $30.00		68,400	6.7 Years	24.86			38,600		24.66
$30.01 to $40.00		48,320	6.9 Years	36.47			28,635		37.46
$40.01 to $42.62		57,481	4.4 Years	42.62			57,481		42.62
Total		174,201	6.0 Years	$	33.94		124,716	$	35.88

Stock Grants

Restricted stock grants – During 2023, 27,332 shares of restricted stock were granted to employees and non-employee directors, vesting over a four-year or five-year period. During 2022, 28,536 shares of restricted stock were granted. In 2023 and 2022, restricted stock grants resulted in an associated expense of $585 thousand and $520 thousand, respectively. As of December 31, 2023, there was $1.5 million in unrecognized compensation expense for restricted stock grants remaining to be recognized in future reporting periods through 2027.


	December 31, 2023
(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, 2023		51,664		$	32.05		$	1,776
Issued		27,332			32.73			940
Vested		(16,275	)		(31.22	)		(560	)
Forfeited		-			-			-
Nonvested at December 31, 2023		62,721		$	32.56		$	2,156

The weighted average period over which nonvested restricted stock grants are expected to be recognized is 1.5 years.