Share-Based Compensation Plan

12 Months Ended

Dec. 31, 2023

Share-Based Compensation Plan

Share-Based Compensation Plan

NOTE 17 Share-Based Compensation Plan

On May 6, 2019, the Company’s stockholders approved the Alerus Financial Corporation 2019 Equity Incentive Plan. This plan allows the compensation committee the ability to grant a wide variety of equity awards, including stock options, stock appreciation rights, restricted stock, restricted stock units, and cash incentive awards in such forms and amounts as it deems appropriate to accomplish the goals of the plan. Since inception, all awards issued under the plan have been restricted stock and restricted stock units. Any shares subject to an award that is cancelled, forfeited, or expires prior to exercise or realization, either in full or in part, shall again become available for issuance under the plan. However, shares subject to an award shall not again be made available for issuance or delivery under the plan if such shares are (a) tendered in payment of the exercise price of a stock option, (b) delivered to, or withheld by, the Company to satisfy any tax withholding obligation, or (c) covered by a stock-settled stock appreciation right or other awards that were not issued upon the settlement of the award. Restricted stock units issued do not participate in dividends and recipients are not entitled to vote these restricted stock units until shares of the Company’s common stock are delivered after vesting of the restricted stock units. Shares vest, become exercisable and contain such other terms and conditions as determined by the compensation committee and set forth in individual agreements with the participant receiving the award. Awards issued to Company directors are not subject to any service requirements and vest immediately. The plan authorizes the issuance of up to 1,100,000 shares of common stock. As of December 31, 2023, 779,307 shares of common stock are still available for issue under the plan.

The compensation expense relating to awards under these plans was $1.6 million in 2023, $1.9 million in 2022, and $3.1 million in 2021. The number of unvested shares outstanding was 120,497 and 128,267 as of December 31, 2023 and 2022, respectively. The number of unvested units outstanding was 111,160 and 110,219 as of December 31, 2023 and 2022, respectively.

The following table presents the activity in the stock plans for the years ended December 31, 2023, and 2022 was as follows:

	Year ended December 31,
	2023			2022
		Weighted-			Weighted-
		Average Grant			Average Grant
	Awards	Date Fair Value		Awards	Date Fair Value
Restricted Stock and Restricted Stock Unit Awards
Outstanding at beginning of period	238,486	$	23.65	260,850	$	21.04
Granted	117,706		19.95	102,265		25.44
Vested	(98,138)		21.44	(113,562)		19.25
Forfeited or cancelled	(26,397)		21.33	(11,067)		23.90
Outstanding at end of period	231,657	$	22.96	238,486	$	23.65

As of December 31, 2023 and 2022, there was $2.7 million and $2.5 million, respectively, of unrecognized compensation expense related to non-vested awards granted under the plans. The expense is expected to be recognized over a weighted-average period of 2.3 and 2.7 years, as of December 31, 2023 and 2022, respectively.