Primis Financial Corp. Stock Compensation Disclosure
14. STOCK-BASED COMPENSATION
The 2017 Equity Compensation Plan (the “2017 Plan”) has a maximum number of 750,000 shares reserved for issuance. The purpose of the 2017 Plan is to promote the success of the Company by providing greater incentives to employees, non-employee directors, consultants and advisors to associate their personal financial interests with the long-
term financial success of the Company, including its subsidiaries, and with growth in stockholder value, consistent with the Company’s risk management practices.
A summary of stock option activity for 2024 follows:
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| Weighted |
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Weighted | Average | Aggregate | ||||||||
Average | Remaining | Intrinsic | ||||||||
Exercise | Contractual | Value | ||||||||
Shares | Price | Term | (in thousands) | |||||||
Options outstanding, beginning of period |
| 54,800 | $ | 11.49 |
| 1.7 | $ | 64 | ||
Exercised |
| (19,000) | 11.03 | |||||||
Options outstanding, end of period |
| 35,800 | $ | 11.73 | 1.0 | 4 | ||||
Exercisable at end of period |
| 35,800 | $ | 11.73 | 1.0 | 4 | ||||
There were no stock-based compensation expense associated with stock options for the years ended December 31, 2024, 2023 and 2022. As of December 31, 2024, we do not have any unrecognized compensation expense associated with the stock options.
A summary of time vested restricted stock awards for 2024 follows:
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| Weighted |
| Weighted |
| |||
Average | Average | |||||||
Grant-Date | Remaining | |||||||
Fair Value | Contractual | |||||||
Shares | Per Share | Term | ||||||
Unvested restricted stock outstanding, beginning of period |
| 40,300 | $ | 13.59 | 2.3 |
| ||
Vested |
| (18,400) | 14.26 |
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| ||
Forfeited |
| (1,000) | 9.79 |
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| |||
Unvested restricted stock outstanding, end of period |
| 20,900 | $ | 13.18 |
| 1.8 | ||
Stock-based compensation expense for time vested restricted stock awards totaled $0.3 million, $0.7 million and $0.4 million for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, unrecognized compensation expense associated with time vested restricted stock awards was $0.1 million.
A summary of performance-based restricted stock units (the “Units”) for 2024 follows:
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| Weighted |
| Weighted | |||
Average | Average | ||||||
Grant-Date | Remaining | ||||||
Fair Value | Contractual | ||||||
Shares | Per Share | Term | |||||
Unvested Units outstanding, beginning of period |
| 244,710 | $ | 11.77 |
| 3.1 | |
Vested |
| (11,916) | 12.24 |
|
| ||
Forfeited |
| (9,334) | 10.67 |
| |||
Unvested Units outstanding, end of period |
| 223,460 | 11.79 | 2.1 |
These Units are subject to service and performance conditions. These Units vest based on the achievement of both conditions. Achievement of the performance condition will be determined at the end of the five-year performance period (the “Performance Period”) by evaluating the: 1) Company’s adjusted earnings per share compound annual growth measured for the Performance Period and 2) performance factor achieved. Payouts between performance levels will be determined based on straight line interpolation.
The Company recognized $0.6 million and $0.3 million of stock-based compensation expense during the year ended December 31, 2024 and 2023, respectively as a result of the probability of a portion of the Units vesting. During the year
ended December 31, 2022, the Company did not recognize any stock-based compensation expense associated with these Units because it was not probable that the Units will vest. The potential unrecognized compensation expense associated with these Units was $4.2 million and $4.4 million, as of December 31, 2024 and 2023, respectively.
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.