ALERUS FINANCIAL CORP Stock Compensation Disclosure

NOTE 17 Share-Based Compensation Plan

 

On May 6, 2019, the Company’s stockholders approved the Alerus Financial Corporation 2019 Equity Incentive Plan (the “2019 Equity Incentive Plan”). This plan allows the Compensation Committee of the Board (the “Compensation Committee”) the ability to grant a wide variety of equity awards, including stock options, stock appreciation rights, stock awards, 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 vest on the earlier of the first anniversary of the grant date and the next annual meeting of stockholders. The plan authorizes the issuance of up to 1,100,000 shares of common stock. As of  December 31, 2025, 565,718 shares of common stock are still available for issue under the plan.

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The compensation expense relating to awards under these plans was $2.7 million in 2025, $1.7 million in 2024, and $1.6 million in 2023. The number of unvested shares outstanding was 119,261 and 145,802 as of December 31, 2025 and 2024, respectively. The number of unvested units outstanding was 177,207 and 143,747 as of December 31, 2025 and 2024, respectively.

 

The following table presents the activity in the stock plans for the years ended December 31, 2025, and 2024 was as follows:

 

		Year ended December 31,
		2025								2024
						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			289,549			$	22.00				231,657			$	22.96
Granted			123,055				20.16				127,463				21.11
Vested			(76,384	)			22.66				(64,740	)			23.89
Forfeited or cancelled			(39,752	)			24.97				(4,831	)			22.59
Outstanding at end of period			296,468			$	20.61				289,549			$	22.00

 

As of December 31, 2025 and 2024, there was $3.0 million and $2.9 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 2.1 and 2.2 years, as of December 31, 2025 and 2024, respectively.