NOTE 11 – STOCK BASED COMPENSATION

The Company adopted the MetroCity Bankshares, Inc. 2018 Stock Option Plan (the “Prior Option Plan”) effective as of April 18, 2018, and the Prior Option Plan was approved by the Company’s shareholders on May 30, 2018. The Prior Option Plan provided for awards of stock options to officers, employees and directors of the Company. The Board of Directors of the Company determined that it was in the best interests of the Company and its shareholders to amend and restate the Prior Option Plan to provide for the grant of additional types of awards. Acting pursuant to its authority under the Prior Option Plan, the Board of Directors approved and adopted the MetroCity Bankshares, Inc. 2018 Omnibus Incentive Plan (the “2018 Incentive Plan”), which constitutes the amended and restated version of the Prior Option Plan. The Board of Directors has reserved 2,400,000 shares of Company common stock for issuance pursuant to awards granted under the 2018 Incentive Plan, any or all of which may be granted as nonqualified stock options, incentive stock options, restricted stock, restricted stock units, performance awards and other stock-based awards. In the event all or a portion of a stock award is forfeited, cancelled, expires, or is terminated before becoming vested, paid, exercised, converted, or otherwise settled in full, any unissued or forfeited shares again become available for issuance pursuant to awards granted under the 2018 Incentive Plan and do not count against the maximum number of reserved shares. In addition, shares of common stock deducted or withheld to satisfy tax withholding obligations will be added back to the share reserve and will again be available for issuance pursuant to awards granted under the plan. The 2018 Incentive Plan is administered by the Compensation Committee of our Board of Directors (the “Committee”). The determination of award recipients under the 2018 Incentive Plan, and the terms of those awards, will be made by the Committee. At December 31, 2019, 240,000 stock options had been granted and no shares of restricted stock had been issued under the 2018 Incentive Plan.

Stock Options

The fair value of stock options issued during 2018 was determined at their grant date using a Black-Scholes valuation model that utilized the following variables: expected volatility of 21.3%, an expected term of 6.5 years, a 3.0% dividend yield, and risk free rate of 2.9%. The weighted average fair value of each option granted during 2018 was $11.90. The Company did not grant any stock options during the years ended December 31, 2019 and 2017.

A summary of stock option activity for the years ended December 31, 2019, 2018 and 2017 is presented below:


				Weighted
				Average	Aggregate
		Weighted		Remaining	Intrinsic
		Average		Contractual	Value
	Shares	Exercise Price		Term (in years)	(in thousands)
Outstanding at January 1, 2017	260,000	$	2.64
Granted	—		—
Exercised	(260,000)		2.64		$	708
Forfeited	—		—
Outstanding at December 31, 2017	—	$	—
Granted	240,000		12.70
Exercised	—		—
Forfeited	—		—
Outstanding at December 31, 2018	240,000	$	12.70	2.50	$	912
Granted	—		—
Exercised	—		—
Forfeited	—		—
Outstanding at December 31, 2019	240,000	$	12.70	1.50	$	1,154

During the years ended December 31, 2019, 2018 and 2017, the Company recognized compensation expense for stock options of $476,000, $238,000 and $0, respectively. As of December 31, 2019 and 2018, there was $714,000 and $1.2 million of total unrecognized compensation cost related to options granted under the Plan. As of December 31, 2019, the cost is expected to be recognized over a weighted-average period of 1.5 years.

Restricted Stock

The Company has periodically issued restricted stock to its directors, executive officers and certain employees under the 2018 Incentive Plan. Compensation expense for restricted stock is based upon the grant date fair value of the shares and is recognized over the vesting period of the awards. Shares of restricted stock issued to officers and employees vest in equal annual installments on the first three anniversaries of the grant date. Shares of restricted stock issued to directors vest 25% on the grant date and 25% on each of the first three anniversaries of the grant date.

A summary of restricted stock activity for the years ended December 31, 2019, 2018 and 2017 is presented below:


	Years Ended December 31,
	2019			2018			2017
		Weighted			Weighted			Weighted
		Average Grant-			Average Grant-			Average Grant-
	Shares	Date Fair Value		Shares	Date Fair Value		Shares	Date Fair Value
Nonvested shares at beginning of year	278,202	$	7.07	280,310	$	4.39	251,428	$	3.10
Granted	48,724		13.75	181,072		9.85	203,254		5.36
Vested	(157,316)		6.68	(183,180)		5.72	(174,372)		3.67
Forfeited	(406)		9.85	—		—	—		—
Nonvested shares at end of year	169,204	$	9.35	278,202	$	7.07	280,310	$	4.39

During the years ended December 31, 2019, 2018 and 2017, the Company recognized compensation expense for restricted stock of $1.0 million, $1.3 million and $718,000, respectively. As of December 31, 2019 and 2018, there was $1.1 million and $1.5 million of total unrecognized compensation cost related to nonvested shares granted under the Plan. As of December 31, 2019, the unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.8 years. The grant date fair value of shares vested during the years ended December 31, 2019 and 2018 was $1.1 million.