Stock-Based Compensation Plans

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

The Company recorded total stock-based compensation expense of $546,000 and $374,000 for the three months ended September 30, 2019 and 2018, respectively, and $1,748,000 and $1,201,000 for the nine months ended September 30, 2019 and 2018, respectively. Stock-based compensation expense for the Company relates to equity awards granted to employees and directors.

At September 30, 2019, the Company had the following stock-based compensation plans: the First Bancorp 2014 Equity Plan and the First Bancorp 2007 Equity Plan. The Company’s shareholders approved each plan. The First Bancorp 2014 Equity Plan became effective upon the approval of shareholders on May 8, 2014. As of September 30, 2019, the First Bancorp 2014 Equity Plan was the only plan that had shares available for future grants, and there were 675,319 shares remaining available for grant.

The First Bancorp 2014 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 First Bancorp 2014 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 made in the form of shares of restricted stock with service vesting conditions only. Compensation expense for these awards 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 plans), unless the awards remain outstanding or substitute equivalent awards are provided, the awards become immediately vested.

Certain of the Company’s awards 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 options and awards that will ultimately vest. Over the past five years, there have only been minimal 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 award since there are no vesting conditions. 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, and resulted in $320,000 in expense. On June 1, 2018, the Company granted 8,393 shares of common stock to non-employee directors (763 shares per director), at a fair market value of $41.93 per share, which was the closing price of the Company's common stock on that date, and resulted in $352,000 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 for the first nine months of 2019 related to the Company’s outstanding restricted stock:



	Long-Term Restricted Stock
	Number of Units		Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2019	129,251		$	32.39
Granted during the period	82,826		36.36
Vested during the period	(37,961	)	21.69
Forfeited or expired during the period	(954	)	41.93

Nonvested at September 30, 2019	173,162		$	36.58

Total unrecognized compensation expense as of September 30, 2019 amounted to $3,608,000 with a weighted-average remaining term of 2.2 years. The Company expects to record $1,872,000 in compensation expense in the next twelve months, $516,000 of which will be recorded in the remaining quarter of 2019.

Prior to 2010, stock options were the primary form of stock-based compensation utilized by the Company. At September 30, 2019, there were no stock options outstanding. The following table presents information regarding the activity for the first nine months of 2019 related to the Company’s outstanding stock options:



	Options Outstanding
	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Balance at January 1, 2019	9,000		$	14.35

Granted	—		—
Exercised	(9,000	)	14.35
Forfeited	—		—
Expired	—		—

Outstanding at September 30, 2019	—		$	—	0	$	—

Exercisable at September 30, 2019	—		$	—	0	$	—

During both the three months ended September 30, 2019 and 2018, there were no stock option exercises. During the nine months ended September 30, 2019 and 2018, the Company received $129,000 and $324,000, respectively, as a result of stock option exercises.