Esquire Financial Holdings, Inc. Stock Compensation Disclosure

NOTE 9 — Employee Benefits

401(k) Plan

A savings plan is maintained under section 401(k) of the Internal Revenue Code and covers substantially all current full-time employees. Newly hired employees can elect to participate in the savings plan after completing one month of service. The Company matched 100% of employee contributions up to 2% of their salary, resulting in total expenses of $345, $276 and $218 in 2024, 2023 and 2022, respectively.

Share Based Payment Plans

The Company issues incentive and non-statutory stock options and restricted stock awards to certain employees and directors pursuant to its equity incentive plans, which have been approved by the stockholders. Share-based awards are granted by the Compensation Committee of the Board of Directors.

The 2019 Equity Incentive Plan authorizes the issuance of up to 300,000 shares of the Company’s common stock. As of December 31, 2024, 36 shares remain available for grant.

The 2021 Equity Incentive Plan authorizes the issuance of up to 400,000 shares of the Company’s common stock.  As of December 31, 2024, a total of 43 shares remain available for grant under the 2021 Equity Incentive Plan of which 43 can be granted as restricted shares.

The 2024 Equity Incentive Plan authorizes the issuance of up to 500,000 shares of the Company’s common stock pursuant to grants of  stock options, restricted stock and restricted stock units, of which: (i) no more than 500,000 shares may be granted as stock options, and (ii) no more than 400,000 shares may be granted as restricted stock awards and restricted stock units, except as set forth in the following sentence. If restricted stock or restricted stock units are granted in excess of the 400,000 limit, for each such share of restricted stock or restricted stock unit so granted, the remaining shares available for grant from the share reserve shall be reduced by three (3) for each one (1) share of restricted stock or restricted stock unit that is granted in excess of such limit. As of December 31, 2024, a total of 476,325 shares remain available for grant under the 2024 Equity Incentive Plan of which 400,000 can be granted as restricted shares.

Under the plans, options are granted with an exercise price equal to the fair value of the Company’s stock at the date of the grant. Options granted vest over three or five years and have ten-year contractual terms. All options provide for accelerated vesting upon a change in control (as defined in the plans). Restricted shares are granted at the fair value on the date of grant and vest over five years with a third vesting after years three, four, and five, or six years with a third vesting after years four, five, and six. Restricted shares have the same voting rights as common stock and nonvested restricted shareholders do not have rights to the accrued dividends until vested.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities are based on peer volatility. The Company uses peer data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on peer data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

The fair value of options granted was determined using the following weighted-average assumptions as of grant date.

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The following table presents a summary of the activity related to options for the year ended December 31, 2024:

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The Company recognized compensation expense related to options of $731, $658 and $463 for the years ended December 31, 2024, 2023 and 2022, respectively. At December 31, 2024, unrecognized compensation cost related to non-vested options was approximately $1,519 and is expected to be recognized over a weighted average period of 2.32 years. The intrinsic value for outstanding options, net of expected forfeitures was $30,642. The intrinsic value for exercisable options at December 31, 2024 was $29,040.

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The following table presents information related to stock options exercises for the years ended December 31:

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The following table presents a summary of the activity related to restricted stock for the year ended December 31, 2024:

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The Company recognized compensation expense related to restricted stock of $3,103, $2,560 and $1,981 for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, there was $10,800 of total unrecognized compensation cost related to non-vested shares granted under the plan. The cost is expected to be recognized over a weighted-average period of 4.08 years.