Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

The Company recorded total stock-based compensation expense of $3.0 million, $2.3 million, and $2.5 million for the years ended December 31, 2022, 2021, and 2020, respectively. The Company recognized $0.7 million, $0.5 million, and $0.6 million of income tax benefits related to stock-based compensation expense in its income statement for the years ended December 31, 2022, 2021, and 2020, respectively.

At December 31, 2022, 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, 2022, the Equity Plan had 348,087 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 Plan's 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 and unrestricted stock, restricted performance stock, and performance units. For the last several years, the only equity-based compensation granted by the Company has been shares of restricted stock, as it relates to employees, and unrestricted stock as it relates to non-employee directors.

Recent restricted stock awards to employees typically include service-related 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 unrestricted common shares to each non-employee director (currently 12 in total) in June of each year. These grants were each valued at approximately $32,000 in 2022. Compensation expense associated with these director awards is recognized on the date of the award since there are no vesting conditions. On June 1, 2022, the Company granted 10,344 shares of common stock to non-employee directors (862 shares per director), at a fair market value of $37.12 per share, which was the closing price of the Company’s common stock on that date, which resulted in $384,000 in expense. On June 1, 2021, the Company granted 7,050 shares of common stock to non-employee directors (705 shares per director), at a fair market value of $45.41 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 2020, 2021, and 2022 related to the Company’s outstanding restricted stock:


	Long-Term Restricted Stock
	Shares	Grant Date Fair Value
Nonvested at January 1, 2020	159,366	$	36.79
Granted during the period	68,704	26.96
Vested during the period	(55,965)	33.91


Nonvested at December 31, 2020	172,105	33.80
Granted during the period	104,414	40.56
Vested during the period	(63,369)	39.82
Forfeited or expired during the period	(6,819)	37.32

Nonvested at December 31, 2021	206,331	35.25
Granted during the period	95,960	38.09
Vested during the period	(70,110)	36.69
Forfeited or expired during the period	(9,169)	32.62

Nonvested at December 31, 2022	223,012	36.14

Total unrecognized compensation expense as of December 31, 2022 amounted to $4.7 million with a weighted average remaining term of 2.1 years. The Company expects to record $2.5 million of compensation expense in the next twelve months related to these nonvested awards that are outstanding at December 31, 2022.