Stock-Based Compensation

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

The Company recorded total stock-based compensation expense of $2,540,000, $2,270,000 and $1,569,000 for the years ended December 31, 2020, 2019, and 2018, respectively. The Company recognized $584,000, $522,000, and $367,000 of income tax benefits related to stock-based compensation expense in the income statement for the years ended December 31, 2020, 2019, and 2018, respectively.

At December 31, 2020, the sole equity-based compensation plan for the Company is the First Bancorp 2014 Equity Plan (the "Equity Plan), which was approved by shareholders on May 8, 2014. As of December 31, 2020, the Equity Plan had 549,876 shares remaining available for grant.

The Equity Plan is intended to serve as a means to attract, retain and motivate key employees and directors and to associate the interests of the plans’ participants with those of the Company and its shareholders. The Equity Plan allows for both grants of stock options and other types of equity-based compensation, including stock appreciation rights, restricted stock, restricted performance stock, unrestricted stock, and performance units.

Recent equity awards to employees have been in the form of shares of restricted stock with service vesting conditions only. Compensation expense for these grants is recorded over the requisite service periods. Upon forfeiture, any previously recognized compensation cost is reversed. Upon a change in control (as defined in the Equity Plan), unless the awards remain outstanding or substitute equivalent awards are provided, the awards become immediately vested.

Certain of the Company’s equity grants contain terms that provide for a graded vesting schedule whereby portions of the award vest in increments over the requisite service period. The Company recognizes compensation expense for awards with graded vesting schedules on a straight-line basis over the requisite service period for each incremental award. Compensation expense is based on the estimated number of stock awards that will ultimately vest. Over the past five years, there have been insignificant amounts of forfeitures, and therefore the Company assumes that all awards granted with service conditions only will vest. The Company issues new shares of common stock when options are exercised.

In addition to employee equity awards, the Company's practice is to grant common shares, valued at approximately $32,000, to each non-employee director (currently 11 in total) in June of each year. Compensation expense associated with these director awards is recognized on the date of the award since there are no vesting conditions. On June 1, 2020, the Company granted 14,146 shares of common stock to non-employee directors (1,286 shares per director), at a fair market value of $24.87 per share, which was the closing price of the Company’s common stock on that date, which resulted in $352,000 in expense. On June 1, 2019, the Company granted 9,030 shares of common stock to non-employee directors (903 shares per director), at a fair market value of $35.41 per share, which was the closing price of the Company’s common stock on that date, which resulted in $320,000 in expense.

The expense associated with director grants is classified as "other operating expense" in the Consolidated Statements of Income.

The following table presents information regarding the activity during 2018, 2019, and 2020 related to the Company’s outstanding restricted stock:


	Long-Term Restricted Stock
	Shares	Grant Date Fair Value
Nonvested at January 1, 2018	103,063	$	24.08

Granted during the period	66,060	40.04
Vested during the period	(35,703)	22.82
Forfeited or expired during the period	(4,169)	29.99

Nonvested at December 31, 2018	129,251	$	32.39

Granted during the period	82,826	36.36
Vested during the period	(51,757)	25.02
Forfeited or expired during the period	(954)	41.93

Nonvested at December 31, 2019	159,366	$	36.79

Granted during the period	68,704	26.96
Vested during the period	(55,965)	33.91
Forfeited or expired during the period	—	—

Nonvested at December 31, 2020	172,105	$	33.80

Total unrecognized compensation expense as of December 31, 2020 amounted to $2,554,000 with a weighted average remaining term of 1.8 years. The Company expects to record $1,577,000 of compensation expense in the next twelve months related to these nonvested awards that are outstanding at December 31, 2020.

Prior to 2010, stock options were the primary form of stock-based compensation utilized by the Company. At December 31, 2019 and 2020, there were no stock options outstanding.

The following table presents information regarding the activity since January 1, 2018 related to all of the Company’s stock options outstanding:


	Options Outstanding
	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Contractual Term (years)	Aggregate Intrinsic Value
Balance at January 1, 2018	38,689	$	16.09

Granted	—	—
Exercised	(29,689)	16.61			$	659,743
Forfeited	—	—
Expired	—	—

Balance at December 31, 2018	9,000	$	14.35

Granted	—	—
Exercised	(9,000)	14.35			$	203,963
Forfeited	—	—
Expired	—	—

Balance at December 31, 2019	—	$	—

Granted	—	—
Exercised	—	—			$	—
Forfeited	—	—
Expired	—	—

Outstanding at December 31, 2020	—	$	—	—	$	—

Exercisable at December 31, 2020	—	$	—	—	$	—

In 2019 and 2018, the Company received $129,000 and $324,000, respectively, as a result of stock option exercises.