Stock-Based Compensation Plans

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation Plans

(7) Stock-Based Compensation Plans.

The Company has two Stock Option Plans (the 2006 Stock Incentive Plan and the 2016 Equity Incentive Option Plan) under which options for shares of common stock were granted to directors, officers and key employees. The 2016 plan permits the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units, or stock awards. The options awarded under the plans have similar characteristics. All stock options are non-qualified and expire ten years from the date of grant. Stock based compensation awarded to directors, officers and employees are exercisable immediately or become exercisable in cumulative installments of 20% or 25% at the end of each year following the date of grant. When stock options are exercised the Company issues new shares after receipt of exercise proceeds and taxes due, if any, from the grantee.

The Company utilizes the Black-Scholes valuation model for estimating fair value of stock compensation for options awarded to officers and employees. Each grant is evaluated based upon assumptions at the time of grant. The assumptions were no dividend yield, expected volatility between 29% and 41%, risk-free interest rate of 1.0% to 2.9% and expected life of 3.0 to 7.0 years.

The dividend yield of zero is based on the fact that the Company does not pay cash dividends and has no present intention to pay cash dividends. Expected volatility is estimated based on the Company’s historical experience over a period equivalent to the expected life in years. The risk-free interest rate is based on the U.S. Treasury constant maturity interest rate at the date of grant with a term consistent with the expected life of the options granted. The expected life calculation is based on the observed and expected time to exercise options by the employees.

In March 2020, 20,520 shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next five years. The number of common shares available for future issuance was 455,870 at March 31, 2020. In March 2020, 11,448 shares of stock were granted to employees rather than stock options as in prior years.

The Company recorded the following stock compensation expense in its consolidated statements of income (in thousands):

	Three Months ended
	March 31,
	2020		2019
Stock option grants	$	24		29
Restricted stock awards granted in 2020		47		—
Employee stock grant		530		—
Annual director stock award		—		—
	$	601		29

A summary of changes in outstanding options is presented below (in thousands, except share and per share amounts):

			Weighted		Weighted	Weighted
	Number		Average		Average	Average
	Of		Exercise		Remaining	Grant Date
Options	Shares		Price		Term (yrs)	Fair Value(000's)
Outstanding at January 1, 2020		132,504	$	33.82	5.8	$	1,631
Granted		—	$	—		$	—
Exercised		—	$	—		$	—
Outstanding at March 31, 2020		132,504	$	33.82	5.5	$	1,631
Exercisable at March 31, 2020		114,189	$	32.11	5.1	$	1,333
Vested during three months ended
March 31, 2020		—				$	—

The aggregate intrinsic value of exercisable in-the-money options was $1,318,000 and the aggregate intrinsic value of outstanding in-the-money options was $1,339,000 based on the market closing price of $43.00 on March 31, 2020 less exercise prices.

The unrecognized compensation cost of options granted to FRP employees but not yet vested as of March 31, 2020 was $266,000, which is expected to be recognized over a weighted-average period of 3.4 years.

A summary of changes in restricted stock awards is presented below (in thousands, except share and per share amounts):

			Weighted		Weighted	Weighted
	Number		Average		Average	Average
	Of		Exercise		Remaining	Grant Date
Restricted stock	Shares		Price		Term (yrs)	Fair Value(000's)
Outstanding at January 1, 2020		0
Granted		20,520	$	46.30		$	950
Outstanding at March 31, 2020		20,520	$	46.30	4.2	$	950

Total compensation cost of restricted stock granted but not yet vested as of March 31, 2020 was $903,000 which is expected to be recognized over a weighted-average period of 4.2 years.