Note E - Stock-based Compensation

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

NOTE E: STOCK-BASED COMPENSATION

The Company maintains a stock incentive plan (the “Plan”) under which incentive and nonqualified stock options and other stock awards may be granted. Under the Plan, 750,000 shares are reserved for the issuance of stock awards to directors, officers, key employees, and others. The stock option exercise price and the restricted stock value under the Plan shall not be less than 85% of the fair market value of the Company’s common stock on the date the award is granted. The fair market value is determined by the closing price of the Company’s common stock, on its primary exchange, on the same date that the option or award is granted.

In January 2020, the Company granted 7,000 shares of common stock to certain key employees. These stock awards have a grant date fair value of $56.45 per share, based on the closing price of the Company’s stock on the date of grant, and vest on the fourth anniversary date in January 2024.

In March 2020, the Company granted 2,608 shares of common stock to non-employee directors. These stock awards have a grant date fair value of $30.75 per share, based on the closing price of the Company’s stock on the date of grant, and vested immediately.

In April 2020, the Company granted 242 shares of common stock to a new non-employee director upon his election to the board of directors. This stock award has a grant date fair value of $41.40 per share, based on the closing price of the Company’s stock on the date of grant, and vested immediately.

In August 2020, the Company granted 13,332 shares of common stock to certain key employees. These stock awards have a grant date fair value of $30.25 per share, based on the closing price of the Company’s stock on the date of grant, and vests on the fourth anniversary date in August 2024. During August 2020, the Company also granted 40,000 shares of common stock to the Company’s Chief Executive Officer which have a grant date fair value of $35.37 per share, based on the closing price of the Company’s stock on the date of grant. This award will vest in installments of 5,000 shares each in 2022, 2023, 2024 and 2027, and 10,000 shares each in 2025 and 2026.

The total grant date fair value of stock vested during the first nine months of 2020 was approximately $636,000. Total pre-tax stock-based compensation expense, recognized in salaries, wages and benefits during the first nine months of 2020, was approximately $430,000 and includes approximately $90,000 recognized as a result of the grant of shares to each non-employee director. The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately $0.06 during the first nine months of 2020. As of September 30, 2020, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $2,318,000, which is being amortized on a straight-line basis over the remaining vesting period. As a result, the Company expects to recognize approximately $130,000 in additional compensation expense related to unvested stock awards during the remainder of 2020 and to recognize approximately $513,000, $513,000, $358,000, $271,000, $200,000, $200,000 and $133,000 in additional compensation expense related to unvested stock awards during the years 2021, 2022, 2023, 2024, 2025, 2026 and 2027, respectively.

The total grant date fair value of stock vested during the first nine months of 2019 was approximately $685,000. Total pre-tax stock-based compensation expense recognized in salaries, wages and benefits during the first nine months of 2019 was approximately $736,000 and includes approximately $100,000 recognized as a result of the grant of shares to each non-employee director during the first nine months of 2019. The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately $0.09 during the first nine months of 2019. As of September 30, 2019, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $1,228,000, which was being amortized on a straight-line basis over the remaining vesting period.

A summary of the status of the Company’s non-vested restricted stock as of September 30, 2020 and changes during the nine months ended September 30, 2020, is as follows:

	Restricted Stock
	Number of Shares			Weighted- Average Grant Date Fair Value
Non-vested at January 1, 2020		55,459		$	24.35
Granted		63,182			36.46
Canceled/forfeited/expired		(11,714	)		41.01
Vested		(36,184	)		17.58
Non-vested at September 30, 2020		70,743		$	35.86