Stock-Based Compensation

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION (Dollars In Thousands, Except Share and Per Share Amounts)

Arrow has established three stock-based compensation plans: a Long Term Incentive Plan, an Employee Stock Purchase Plan (ESPP) and an Employee Stock Ownership Plan (ESOP). All share and per share data have been adjusted for the September 23, 2022 3% stock dividend.

Long Term Incentive Plan

The Long Term Incentive Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock, restricted stock units, performance units and performance shares. The Compensation Committee of the Board of Directors administers the Long Term Incentive Plan.

Stock Options - Options may be granted at a price no less than the greater of the par value or fair market value of such shares on the date on which such option is granted, and generally expire ten years from the date of grant.  The options usually vest over a four-year period.

The following table summarizes information about stock option activity for the year to date period ended September 30, 2022:

	Shares			Weighted Average Exercise Price
Outstanding at January 1, 2022	278,899			$	27.62
Granted	58,710			34.79
Exercised	(17,803)			20.56
Forfeited	(18,844)			30.71
Outstanding at September 30, 2022	300,962			29.24
Vested at Period-End	178,250			27.56
Expected to Vest	122,712			31.68
Stock Options Granted
Weighted Average Grant Date Information:
Fair Value of Options Granted	$	7.43
Fair Value Assumptions:
Dividend Yield	2.90		%
Expected Volatility	27.15		%
Risk Free Interest Rate	1.69		%
Expected Lives (in years)	8.56

The following table presents information on the amounts expensed related to stock options for the three and nine month periods ended September 30, 2022 and 2021:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Amount expensed	$	79	$	71	$	233	$	212

Restricted Stock Units - The Company grants restricted stock units which gives the recipient the right to receive shares of Company stock upon vesting. The fair value of each restricted stock unit is the market value of Company stock on the date of grant. 100% of the restricted stock unit awards vest three years from the grant date. Once vested, the restricted stock units become vested units and are no longer forfeitable. Vested units settle upon retirement of the recipient. Unvested restricted stock unit awards will generally be forfeited if the recipient ceases to be employed by the Company, with limited exceptions.

The following table summarizes information about restricted stock unit activity for the periods ended September 30, 2022 and 2021:

	Restricted Stock Units	Weighted Average Grant Date Fair Value
Non-vested at January 1, 2022	13,599	$	29.27
Granted	4,312	34.79
Vested	(4,391)	28.17
Non-vested at September 30, 2022	13,520	31.38
Non-vested at January 1, 2021	12,373	29.81
Granted	5,026	27.71
Vested	(3,800)	28.95
Non-vested at September 30, 2021	13,599	29.27

The following table presents information on the amounts expensed related to restricted stock units for the periods ended September 30, 2022 and 2021:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Amount expensed	$	35	$	32	$	105	$	98

Employee Stock Purchase Plan

Arrow sponsors an ESPP under which employees may purchase Arrow's common stock at a discount below market price. The current amount of the discount is 5%. Under current accounting guidance, a stock purchase plan with a discount of 5% or less is not considered a compensatory plan.

Employee Stock Ownership Plan

Arrow maintains an ESOP, pursuant to which substantially all employees of Arrow and its subsidiaries are eligible to participate upon satisfaction of applicable service requirements. The Company makes cash contributions to the ESOP each year.