Note 10. Stock-Based Compensation
Phantom Stock Option Plan and Long-term Incentive Plan
The
Greene County Bancorp, Inc. 2011 Phantom Stock Option and Long Term Incentive
Plan (the “Plan”) was adopted effective July 1, 2011, to promote the long-term
financial success of the Company and its subsidiaries by providing a means to
attract, retain and reward individuals who contribute to such success and to
further align their interests with those of the Company’s shareholders. At
June 30, 2025 and 2024, the Plan had 16,000,000 options authorized, of which, 13,677,694
and 13,026,099 options had been granted, respectively. The Plan is intended to
provide benefits to employees and directors of the Company or any subsidiary as
designated by the Compensation Committee of the Board of Directors of the
Company (“Committee”). A phantom stock option represents the right to
receive a cash payment on the date the award vests. The participant receives an
amount equal to the positive difference between the strike price on the grant
date and the book value of a share of the Company stock on the determination
date, which is the last day of the plan year that is the end of the third plan
year after the grant date of the award, unless otherwise specified by the
Committee. The strike price will be the price established by the Committee,
which will not be less than 100.0% of the book value of a share on a specified
date, as determined under generally accepted accounting principles as of the last day of the quarter ending on or immediately
preceding the valuation date with adjustments made, in the sole discretion of
the Committee, to exclude accumulated other comprehensive income (loss). The
liability for the phantom stock option plan is re-measured at each reporting
period based on the difference between the strike price and the current period
end book value per share of the Company’s common stock, excluding accumulated
other comprehensive income (loss).
A summary of the Company’s phantom stock option activity and related information for its option plan for the years ended June 30, 2025 and 2024 is as follows:
| | | | | | | | |
| |
|
2025
| |
|
|
2024
| |
|
Number of options outstanding at beginning of year
|
| 2,253,535 | |
|
| 2,535,840 | |
|
Options granted
|
| 651,595 | |
|
| 672,095 | |
|
Options forfeited
|
| (14,000 | ) |
|
| (4,000 | ) |
|
Options paid in cash upon vesting
|
| (1,019,540 | ) |
|
| (950,400 | ) |
|
Number of options outstanding at period end
|
| 1,871,590 | |
|
| 2,253,535 | |
| | | | | | | | |
|
(In thousands)
|
|
2025
| |
| |
2024
| |
|
Cash paid out on options vested
|
$ | 4,249 | |
| $ | 4,210 | |
|
Compensation expense recognized
|
| 3,095 | |
| | 3,429 | |
The total liability for the long-term incentive plan was $4.4 million and $5.5 million at June 30, 2025 and 2024, respectively, and is included in accrued expenses and other liabilities.
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.