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Note 13 - Stock Option Plan and Non-Employee Director Compensation Plan
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Stock Option Plan and Non-Employee Director Compensation Plan

Note 13 - Stock Option Plan and Non-Employee Director Compensation Plan

QNB has a stock option plan (the 2015 Plan) administered by a committee which consists of three or more members of QNB’s Board of Directors. The 2015 Plan provides for the granting of either (i) Non-Qualified Stock Options (NQSOs) or (ii) Incentive Stock Options (ISOs). The exercise price of an option, as defined by the 2015 Plan, is the fair market value of QNB’s common stock at the date of grant. The 2015 Plan provides for the exercise either in cash or in securities of the Company or in any combination thereof. The 2015 Plan, which expires March 15, 2025, authorizes the issuance of 300,000 shares. The time period by which any option is exercisable under this Plan is determined by the Committee but shall not commence before the expiration of six months after the date of grant. The 2015 Plan was amended, effective January 1, 2023, to increase the maximum term of any options granted under the plan from five years to ten years, and to also require that awards granted under the Plan will vest 20% each consecutive year commencing on the first anniversary date of the award unless otherwise specified in an award agreement. There were 212,550 options granted, 70,175 options forfeited, 20,825 options exercised and 121,550 options outstanding under the 2015 Plan as of December 31, 2023.

As of December 31, 2023, there was approximately $154,000 of unrecognized compensation cost related to unvested stock option awards granted. That cost is expected to be recognized over the next 50 months.

 

Stock option activity during 2023, 2022, and 2021 was as follows:

 

 

 

Number
of options

 

 

Weighted
average
exercise
price

 

 

Weighted
average
remaining
contractual
term
(in years)

 

 

Aggregate
intrinsic
value

 

Outstanding at December 31, 2020

 

 

116,550

 

 

$

37.42

 

 

 

 

 

 

 

Exercised

 

 

(19,025

)

 

 

30.97

 

 

 

 

 

 

 

Forfeited

 

 

(8,575

)

 

 

35.27

 

 

 

 

 

 

 

Granted

 

 

25,000

 

 

 

32.50

 

 

 

 

 

 

 

Outstanding at December 31, 2021

 

 

113,950

 

 

 

37.58

 

 

 

 

 

 

 

Exercised

 

 

—

 

 

 

—

 

 

 

 

 

 

 

Forfeited

 

 

(34,150

)

 

 

37.07

 

 

 

 

 

 

 

Granted

 

 

29,350

 

 

 

37.26

 

 

 

 

 

 

 

Outstanding at December 31, 2022

 

 

109,150

 

 

 

37.65

 

 

 

 

 

 

 

Exercised

 

 

—

 

 

 

—

 

 

 

 

 

 

 

Forfeited

 

 

(22,600

)

 

 

43.15

 

 

 

 

 

 

 

Granted

 

 

35,000

 

 

 

29.51

 

 

 

 

 

 

 

Outstanding at December 31, 2023

 

 

121,550

 

 

$

34.29

 

 

 

3.83

 

 

$

—

 

Exercisable at December 31, 2023

 

 

41,375

 

 

$

37.37

 

 

 

0.60

 

 

$

—

 

 

As of December 31, 2023, outstanding stock options consist of the following:

 

 

 

Options
outstanding

 

 

Exercise
price

 

 

Remaining life
(in years)

 

 

Options
exercisable

 

 

Exercise
price

 

 

 

 

35,000

 

 

$

29.51

 

 

 

9.13

 

 

 

—

 

 

$

—

 

 

 

 

19,825

 

 

 

32.50

 

 

 

2.13

 

 

 

—

 

 

 

—

 

 

 

 

19,650

 

 

 

36.50

 

 

 

1.13

 

 

 

19,650

 

 

 

36.50

 

 

 

 

25,350

 

 

 

37.26

 

 

 

3.13

 

 

 

—

 

 

 

—

 

 

 

 

21,725

 

 

 

38.15

 

 

 

0.13

 

 

 

21,725

 

 

 

38.15

 

Outstanding at December 31, 2023

 

 

121,550

 

 

$

34.29

 

 

 

3.83

 

 

 

41,375

 

 

$

37.37

 

 

The intrinsic value related to total stock options exercised during 2023, 2022, and 2021 are as follows:

 

 

 

2023

 

 

2022

 

 

2021

 

Intrinsic value of stock options exercised

 

$

—

 

 

$

—

 

 

$

31

 

 

The QNB Corp. 2023 Non-Employee Director Compensation Plan was approved by shareholders on May 23, 2023 (The "Director Compensation Plan"). The Director Compensation Plan authorized the issuance of 50,000 shares, is effective January 1, 2023 and expires on January 1, 2033. The Plan requires each non-employee director of the QNB, or any subsidiary of QNB designated by the Board (including QNB Bank), to receive $8,000 of their total annual compensation for service as a director in the form of the QNB’s common stock. Under the Director Compensation Plan, commencing with the six-month period ended June 30, 2023, each non-employee director will receive, in addition to any cash compensation otherwise payable, a semi-annual grant of such number of shares of the QNB’s common stock determined by dividing (i) the Semi-Annual Stock Payment Amount of $4,000 by (ii) the market value of a share of common stock determined as of June 30 or December 31 of any year, as applicable. Payments will be made under the Director Compensation Plan only to non-employee directors in office on the applicable payment date. As of December 31, 2023, 1,740 shares were issued to non-employee directors and there were 48,260 shares remaining under the Director Compensation Plan. Stock-based compensation expense related to the Director Compensation Plan was $80,000 for the for the year ended December 31, 2023.