Note 8 - Shareholders' Equity

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

Note 8: Shareholders’ Equity

The Company grants stock options and restricted performance shares to employees in exchange for employee services, pursuant to the shareholder-approved 2019 Omnibus Equity Incentive Plan. Prior to shareholder approval of the 2019 Omnibus Equity Incentive Plan on April 25, 2019, the Company granted stock options and restricted performance shares under its 1995 Stock Option Plan, which was last amended and restated in 2012. Nonqualified stock option grants (“NQSO”) are granted with an exercise price equal to the fair market value of the related common stock on the grant date. NQSO generally become exercisable in equal annual installments over a three-year period with each installment vesting on the anniversary date of the grant. Each NQSO has a maximum ten-year term. A restricted performance share grant becomes vested after three years of being awarded, provided the Company has attained its performance goals for such three-year period.

The following table summarizes information about stock options granted under the Plan as of December 31, 2021. The intrinsic value is calculated as the difference between the market value as of December 31, 2021 and the exercise price of the shares. The market value as of December 31, 2021 was $57.73 as reported by the NASDAQ Global Select Market:

		Options Outstanding								Options Exercisable
		At December 31, 2021						For the Year Ended December 31, 2021		At December 31, 2021						For the Year Ended December 31, 2021
Range of Exercise Price		Number Outstanding		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price
		(In thousands)				(Years)				(In thousands)				(Years)
	400 -455		34	$	527		3.8	$	42		34	$	527		3.8	$	42
	45 - 50		-		-		-		-		-		-		-		-
	50 - 55		15		67		2.1		53		15		67		2.1		53
	55 - 60		260		161		7.8		57		83		46		5.1		57
	60 - 65		316				6.6		62		258				6.5		62
	65 - 70		168		-		8.1		66		56		-		8		66
	400 -700		793	$	755		7.1		60		446	$	640		6.1		60

The Company applies the Roll-Geske option pricing model (Modified Roll) to determine grant date fair value of stock option grants. This model modifies the Black-Scholes Model to take into account dividends and American options. During the year ended December 31, 2021, 2020 and 2019, the Company granted 193 thousand, 184 thousand and 250 thousand stock options, respectively. The following weighted average assumptions were used in the option pricing to value stock options granted in the periods indicated:

	For the Years Ended December 31,
	2021			2020			2019
Expected volatility (1)		20	%		20	%		20	%
Expected life in years (2)		4.7			3.5			4.7
Risk-free interest rate (3)		0.46	%		1.52	%		2.67	%
Expected dividend yield		2.79	%		2.59	%		2.55	%
Fair value per award	$	7.50		$	8.64		$	10.19

⁽¹⁾ Measured using daily price changes of Company’s stock over respective expected term of the option and the implied volatility derived from the market prices of the Company’s stock and traded options.

⁽²⁾ The number of years that the Company estimates that the options will be outstanding prior to exercise.

⁽³⁾ The risk-free rate over the expected life based on the US Treasury yield curve in effect at the time of the grant.

Employee stock option grants are being expensed by the Company over the grants’ three year vesting period. The Company issues new shares upon the exercise of options. The number of shares authorized to be issued for options at December 31, 2021 is 967 thousand.

A summary of option activity during the year ended December 31, 2021 is presented below:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
	(In thousands)					(Years)
Outstanding at January 1, 2021		693		$	61.25
Granted		193			57.08
Exercised		(53	)		56.82
Forfeited or expired		(40	)		62.14
Outstanding at December 31, 2021		793			60.48		7.1
Exercisable at December 31, 2021		446			60.07		6.1

A summary of the Company’s nonvested option activity during the year ended December 31, 2021 is presented below:

	Shares			Weighted Average Grant Date Fair Value
	(In thousands)
Nonvested at January 1, 2021		373		$	9.39
Granted		193			7.50
Vested		(185	)		9.61
Forfeited		(34	)		8.42
Nonvested at December 31, 2021		347		$	8.31

The estimated grant date fair value for options granted under the Company’s stock option plan during the twelve months ended December 31, 2021, 2020 and 2019 was $7.50, $8.64 and $10.19 per share, respectively. The total remaining unrecognized compensation cost related to nonvested awards as of December 31, 2021 is $2,494 thousand and the weighted average period over which the cost is expected to be recognized is 1.8 years.

The total intrinsic value of options exercised during the twelve months ended December 31, 2021, 2020 and 2019 was $454 thousand, $693 thousand and $3,398 thousand, respectively. The total fair value of Restricted Performance Shares (“RPSs”) that vested during the twelve months ended December 31, 2021, 2020 and 2019 was $527 thousand, $534 thousand and $1,073 thousand, respectively. The total fair value of options vested during the twelve months ended December 31, 2021, 2020 and 2019 was $1,783 thousand, $1,735 thousand and $1,980 thousand, respectively. During the twelve months of 2021, 53 thousand shares were issued due to the exercise of nonqualified stock options resulting in a tax deduction equal to the related share based compensation expense. During the twelve months of 2020, 52 thousand shares were issued due to the exercise of nonqualified stock options resulting in a tax deduction exceeding related share based compensation by $295 thousand. During the twelve months of 2019, 516 thousand shares were issued due to the exercise of nonqualified stock options resulting in a tax deduction exceeding related share based compensation by $1,485 thousand. The excess deductions resulting from the exercise of nonqualified stock options reduced the income tax provision by $-0- thousand in 2021, $87 thousand in 2020 and $435 thousand in 2019.

A summary of the status of the Company’s restricted performance shares as of December 31, 2021 and 2020 and changes during the twelve months ended on those dates, follows:

	2021			2020
	(In thousands)
Outstanding at January 1,		28			27
Granted		13			10
Issued upon vesting		(9	)		(9	)
Forfeited		(2	)		-
Outstanding at December 31,		30			28

As of December 31, 2021 and 2020, the restricted performance shares had a weighted-average contractual life of 1.4 years and 1.3 years, respectively. The compensation cost that was charged against income for the Company’s restricted performance shares granted was $610 thousand, $533 thousand and $758 thousand for the year ended December 31, 2021, 2020 and 2019, respectively. There were no stock appreciation rights or incentive stock options granted in the year ended December 31, 2021 and 2020.

On February 13, 2009, the Company issued a warrant to purchase 246,640 shares of the Company’s common stock at an exercise price of $50.92 per share. The warrants may be exercised in a manner wherein the Company withholds shares of common stock issuable upon exercise of the warrant equal in value to the aggregate exercise price, in which case the warrant holder would not deliver cash for the aggregate exercise price and the Company would issue a number of shares equal to the intrinsic value on the exercise date. On January 29, 2019, the warrants were exercised in a cashless transaction resulting in the issuance of 50,788 shares of the Company’s common stock.

The Company repurchases and retires its common stock in accordance with Board of Directors approved share repurchase programs. At December 31, 2021, 1,750 thousand shares remained available to repurchase under such plans.

Shareholders have authorized two additional classes of stock of one million shares each, to be denominated “Class B Common Stock” and “Preferred Stock,” respectively, in addition to the 150 million shares of common stock presently authorized. At December 31, 2021, no shares of Class B Common Stock or Preferred Stock were outstanding.