NOTE 20 - Share-based Compensation Plans

ASC Topic 718 requires that the grant date fair value of equity awards to employees be recognized as compensation expense over the period during which an employee is required to provide service in exchange for such awards.

The following table summarizes the impact of the Company’s share-based payment plans in the financial statements for the period shown:


	Year Ended		Year Ended
	December 31,		December 31,
	2019		2018
Total cost of stock grant plan during the year	$	196	$	11
Total cost of stock option plan during the year		142		7
Total cost of share-based payment plans during the year	$	338	$	18

Amount of related income tax benefit recognized in income	$	91	$	5

The Company adopted the FFBW, Inc. 2018 Equity Incentive Plan (the “2018 Equity Incentive Plan”) in 2018. In November 2018, the Company’s stockholders approved the 2018 Equity Incentive Plan which authorized the issuance of up to 129,605 restricted stock awards and up to 324,012 stock options. As of December 31, 2019 there were 35,363 restricted stock awards and 101,923 options available for future grants. Shares granted under the 2018 Equity Incentive Plan may be authorized but unissued, currently held or, to the extent permitted by applicable law, subsequently acquired by the Company as treasury shares, including shares purchased in the open market or in private transactions. Forfeited or canceled shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of stock available for delivery under the Plan.

Options are granted with an exercise price equal to no less than the market price of the Company’s shares at the date of grant: those option awards generally vest pro-rata over five years of service and have 10‑year contractual terms. Restricted shares typically vest pro-rata over a five year period, 20% per year beginning one year from the issuance date.

The following table summarizes stock options activity for the years ended December 31, 2019 and 2018:


				Weighted
				Average
		Weighted		Remaining	Aggregate
		Average		Contractual	Intrinsic
	Number of	Exercise		Term (in	Value (in
	Options	Price		years)	thousands)
Options outstanding as of December 31, 2018	192,089	$	10.81
Granted	30,000		10.64
Exercised	—		—
Expired or canceled	—		—
Forfeited	—		—
Options outstanding as of December 31, 2019	222,089	$	10.79	9.01	$	169,446
Options exercisable as of December 31, 2019	38,414	$	10.81	8.95	$	28,426


				Weighted
				Average
		Weighted		Remaining	Aggregate
		Average		Contractual	Intrinsic
	Number of	Exercise		Term (in	Value (in
	Options	Price		years)	thousands)
Options outstanding as of December 31, 2017	—	$	—
Granted	192,089		10.81
Exercised	—		—
Expired or canceled	—		—
Forfeited	—		—
Options outstanding as of December 31, 2018	192,089	$	10.81	9.95	$	—
Options exercisable as of December 31, 2018	—	$	—	—	$	—

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model based on certain assumptions. Since the Company does not have sufficient historical fair value estimates of its stock, the Company calculates expected volatility using the historical volatility of the Dow Jones U.S. Financial Services Index. The risk-free interest rate for periods within the contractual term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life of options is estimated based on the assumption that options will be exercised evenly throughout their life after vesting and represents the period of time that options granted are expected to remain outstanding.


		Weighted
		Average
	Number of	Grant Date Fair
	Options	Value
Nonvested options outstanding as of December 31, 2018	192,089	$	3.40
Granted	30,000		2.90
Vested	(38,414)		3.40
Forfeited	—		—
Options outstanding as of December 31, 2019	183,675	$	3.32

		Weighted
		Average
	Number of	Grant Date Fair
	Options	Value
Nonvested options outstanding as of December 31, 2017	—	$	—
Granted	192,089		3.40
Exercised	—		—
Forfeited	—		—
Options outstanding as of December 31, 2018	192,089	$	3.40

The following assumptions were used for options granted during the year ended December 31, 2019:


	For the Year Ended
	December 31,
	2019
Risk-free interest rate		2.30	%
Expected volatility		18.38	%
Expected dividend yield		0	%
Expected life of options (years)		7.5
Weighted average fair value per option of options granted during the year	$	2.90

The following is a summary of changes in restricted shares for the year ended December 31, 2019 and 2018:


		Weighted
		Average
	Number of	Grant Date Fair
	Shares	Value
Nonvested shares outstanding as of December 31, 2018	84,242	$	10.82
Granted	10,000		10.64
Vested	(16,842)		10.82
Forfeited	—		—
Shares outstanding as of December 31, 2019	77,400	$	10.79

		Weighted
		Average
	Number of	Grant Date Fair
	Shares	Value
Nonvested shares outstanding as of December 31, 2017	—	$	—
Granted	84,242		10.82
Exercised	—		—
Forfeited	—		—
Shares outstanding as of December 31, 2018	84,242	$	10.82

As of December 31, 2019, there was $1.4 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements (including share option and non-vested share awards) granted under the 2018 Equity Incentive Plan. At December 31, 2019, the weighted-average period over which the unrecognized compensation expense is expected to be recognized was approximately 2.5 years.