Princeton Bancorp, Inc.BPRN
Princeton Bancorp, Inc. Stock Compensation Disclosure
Note 16 – Stock-Based Compensation
In 2012, the Bank adopted The Bank of Princeton 2012 Equity Incentive Plan (the “2012 Plan”), which was approved by our board of directors in February 2012 and by our stockholders in May 2012. The 2012 Plan enabled the board of directors to grant stock options or restricted shares of common stock to employees, directors, consultants and other individuals who provide services to the Bank. The shares subject to or related to options under the 2012 Plan are authorized and unissued shares of the Bank. In 2013, the Bank’s board of directors and stockholders approved an amendment to the 2012 Plan that increased the maximum number of shares that may be subject to options under the 2012 Plan from 100,000 to 600,000, all of which may be issued as Incentive Stock Options or as
Non-Qualified
Stock Options. Vesting periods range from immediate to four years from the date of grant. No incentive stock options may be granted under the 2012 Plan after April 30, 2023. In 2014, the Bank adopted an amendment to each of the 2007 Plan and to the 2012 Plan, which amendments were approved by our Board of Directors, to provide that all outstanding options under the 2007 Plan and the 2012 Plan will become fully vested and exercisable upon a change in control of the Bank and to further specify the consideration that may be exchanged with respect to outstanding awards upon any such change in control.
In 2018, the Bank adopted The Bank of Princeton 2018 Equity Incentive Plan (the “2018 Plan”), which was approved by our board of directors in February 2018 and by our stockholders in May 2018. The 2018 Plan enabled the board of directors to grant stock options, restricted stock, or restricted stock units to employees, directors, consultants and other individuals who provide services to the Bank. At December 31, 2024 there were 215,025 shares remaining available for issuance under the 2018 Plan.
The expected life of stock options granted is generally derived from historical experience. Expected volatilities are general based on the average of three peers’ historical volatilities due to the limited liquidity of the Company’s stock in the Company market. The Company uses an estimated forfeiture rate due to limited historical data. At the time of the grant, the Company had not declared any cash dividend therefore no dividend yield was used. The risk-free rate for periods within the contractual term of the share option is based on the U.S. Treasury for a comparable term.
The following is a summary of the status of the Company’s stock option activity and related information for the year ended December 31, 2024:
Number of Stock Options |
Weighted Average Exercise Price |
Weighted Avg. Remaining Contractual Life |
Aggregate Intrinsic Value |
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| Balance at January 1, 2024 |
279,750 | $ | 22.83 | |||||||||||||
| Granted |
— | — | ||||||||||||||
| Exercised |
(51,800 | ) | 15.26 | |||||||||||||
| Forfeited |
— | — | ||||||||||||||
| Expired |
— | — | ||||||||||||||
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| Balance at December 31, 2024 |
227,950 | $ | 24.56 | 1.63 Years | $ | 2,250,316 | ||||||||||
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| Exercisable at December 31, 2024 |
227,950 | $ | 24.56 | 1.63 Years | $ | 2,250,316 | ||||||||||
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The following is a summary of the status of the Bank’s stock option activity and related information for the year ended December 31, 2023:
Number of Stock Options |
Weighted Average Exercise Price |
Weighted Avg. Remaining Contractual Life |
Average Intrinsic Value |
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| Balance at January 1, 2023 |
330,650 | $ | 21.45 | |||||||||||||
| Granted |
— | — | ||||||||||||||
| Exercised |
(50,900 | ) | 13.87 | |||||||||||||
| Forfeited |
— | — | ||||||||||||||
| Expired |
— | — | ||||||||||||||
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| Balance at December 31, 2023 |
279,750 | $ | 22.83 | 2.25 Years | $ | 3,654,453 | ||||||||||
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| Exercisable at December 31, 2023 |
279,750 | $ | 22.83 | 2.25 Years | $ | 3,654,453 | ||||||||||
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The Company granted 31,858 restricted stock units (“RSU’s”) during 2024, with a fair value of $34.50, which reflected the market value of the Company’s common stock on the date of the grant. Of the 31,858 RSU’s granted during 2024, 9,000 RSU’s have a vesting period of one year and the remaining 22,858 RSU’s vest over the next three years. At December 31, 2024, 53,859 RSU’s with a fair value of $33.40 granted to executive management have not vested.
The Company granted 30,661 restricted stock units (“RSU’s”) during 2023, with a fair value of $32.49, which reflected the market value of the Company’s common stock on the date of the grant. Of the 30,661 RSU’s granted during 2023, 7,250 RSU’s have a vesting period of one year and the remaining 19,182 RSU’s vest over the next three years. At December 31, 2023, 48,887 RSU’s with a fair value of $30.64 granted to executive management have not vested.
Stock option expenses included in salaries and employee benefits expense in the consolidated statements of income were $706,000 and $575,000 (which consist of RSUs) for the years ended December 31, 2024 and 2023, respectively. A tax benefit was recognized of $198,000 and $161,000 for the years ended December 31, 2024 and 2023, respectively. Stock option expenses recorded within other expenses were $306,000 for the year ended December 31, 2024. Stock option expenses recorded within other expenses were $231,000 for the year ended December 31, 2023. A tax benefit was recognized of $64,000 for the year ended December 31, 2023. At December 31, 2024, there was approximately $1.8 million of unrecognized expenses related to outstanding stock options and RSU’s, which will be recognized over a period of approximately 1.67 years.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.