STOCK COMPENSATION - RESTRICTED STOCK AND PERFORMANCE SHARE GRANTS

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

STOCK COMPENSATION - RESTRICTED STOCK AND PERFORMANCE SHARE GRANTS

The Company’s stock incentive plans provide for the making of awards to employees based upon a service condition or through the achievement of performance-related objectives. The Company has issued three types of stock grant awards under these plans: restricted stock with service condition vesting; performance share grants that only vest upon the achievement of specified performance conditions, such as share price, or as Performance Condition Grants; and performance share grants that include threshold, target, and maximum achievement levels based on the achievement of specific performance measures, or Performance Milestone Grants. Performance Condition Grants with market-based conditions are based on the achievement of a target share price. The share price used to calculate fair value for market-based awards is determined using a Monte Carlo simulation. Failure to achieve the target share price will result in the forfeiture of shares. Forfeiture of share awards with service conditions or performance-based restrictions will result in a reversal of previously recognized share-based compensation expense. Forfeiture of share awards with market-based restrictions does not result in a reversal of previously recognized share-based compensation expense.

The following is a summary of the Company’s Performance Condition Grants outstanding as of the three months ended March 31, 2023:


Performance Condition Grants


Target performance						36,020
Maximum performance						112,831

The following is a summary of the Company’s stock grant activity, both time and performance share grants, assuming target achievement for outstanding performance grants for the three months ended March 31, 2023:


			March 31, 2023
Stock Grants Outstanding Beginning of Period at Target Achievement			234,899
New Stock Grants/Additional Shares due to Achievement in Excess of Target			30,318
Vested Grants			(169,621)

Stock Grants Outstanding End of Period at Target Achievement			95,596

Thus far in 2023 no new stock grants have been awarded.

The following is a summary of the assumptions used to determine the fair value for the Company’s outstanding market-based Performance Condition Grants as of March 31, 2023:


($ in thousands except for share prices)
Grant date	12/11/2020	03/18/2021	12/16/2021	03/17/2022	12/14/2022
Vesting end	12/31/2023	03/18/2024	12/16/2024	03/17/2025	12/14/2025
Target share price to achieve award	$17.07	$20.02	$21.58	$20.43	$21.99

Expected volatility	29.25%	30.30%	31.29%	31.54%	32.14%
Risk-free interest rate	0.19%	0.33%	0.92%	2.13%	3.84%

Fair value per share at grant date	$15.59	$18.82	$21.48	$21.75	$26.00
Shares granted	3,628	10,905	3,536	13,338	4,613
Total fair value of award	$57	$205	$76	$290	$120

The unamortized cost associated with unvested stock grants and the weighted average period over which it is expected to be recognized as of March 31, 2023 were $1,067,000 and 18 months, respectively. The fair value of restricted stock with time-based vesting features is based upon the Company’s share price on the date of grant and is expensed over the service period. The fair value of Performance Milestone Grants that cliff vest based on the achievement of performance conditions is based on the share price of the Company’s stock on the day of grant multiplied by the number of shares probable to vest based on the estimated achievement of specific performance measures. Because the ultimate vesting of all performance grants is tied to the achievement of a performance condition, the Company estimates whether the performance condition will be met and over what period of time. Ultimately, the Company will adjust stock compensation costs according to the actual outcome of the performance condition.

Under the Non-Employee Director Stock Incentive Plan, or NDSI Plan, each non-employee director receives a portion of his or her annual compensation in stock. The stock is granted at the end of each quarter based on the quarter-end stock price.

The following table summarizes stock compensation costs for the Company's 1998 Stock Incentive Plan, or the Employee Plan, and NDSI Plan for the following periods:


($ in thousands)	Three Months Ended March 31,
Employee Plan:	2023		2022
Expensed	$	468	$	1,067
Capitalized	153		170
	621		1,237
NDSI Plan - Expensed	153		152
Total Stock Compensation Costs	$	774	$	1,389