LANDMARK BANCORP INC Stock Compensation Disclosure

(18) Stock-Based Compensation

 

Overview. The Company has a stock-based employee compensation plan, which allows for the issuance of stock options, stock appreciation rights, and stock awards (including, among others, restricted common stock, and restricted stock unit awards.), the purpose of which is to provide additional incentive to certain employees, directors, and service providers by facilitating their purchase of a stock interest in the Company. Compensation expense related to prior awards under the Company’s current and former stock-based employee compensation plans is recognized on a straight line basis over the vesting period, which is typically four years. The stock-based compensation cost related to these awards was $359,000, $520,000, and $352,000 for the years ended December 31, 2025, 2024, and 2023, respectively. The Company recognized tax benefits of $177,000, $126,000, and $84,000 for the years ended December 31, 2025, 2024, and 2023, respectively.

 

For stock options, the exercise price may not be less than 100% of the fair market value of the shares on the date of the grant, and no option shall be exercisable after ten years from the grant date. In determining compensation cost, the Black-Scholes option-pricing model is used to estimate the fair value of options on date of grant. The Black-Scholes model is a closed-end model that considers expected volatility, the expected term of the options the risk-free rate for the expected option term, and dividend yield using the assumptions outlined below. Expected volatility is based on historical volatility of the Company’s stock. The Company uses historical exercise behavior and other qualitative factors to estimate the expected term of the options, which represents the period of time that the options granted are expected to be outstanding. The risk-free rate for the expected term is based on U.S. Treasury rates in effect at the time of grant.

 

 

2015 Stock Incentive Plan. On May 20, 2015, our stockholders approved the Landmark Bancorp, Inc., 2015 Stock Incentive Plan (the “2015 Stock Incentive Plan”), which authorized the issuance of equity awards covering 427,585 shares of common stock, as adjusted for subsequent stock dividends. On August 1, 2022, the Compensation Committee awarded 21,334 shares of restricted common stock pursuant to the 2015 Stock Incentive Plan, as adjusted for subsequent stock dividends. The restricted stock awards vest ratably over one or four years and the value was based on a stock price of $20.97 per share on the date such shares were granted, as adjusted for subsequent stock dividends. On August 1, 2023, the Compensation Committee awarded 6,011 shares of restricted common stock pursuant to the 2015 Stock Incentive Plan, as adjusted for subsequent stock dividends and options to acquire 93,896 shares of common stock, as adjusted for subsequent stock dividends. The restricted stock awards vest ratably over one year and the value was based on a stock price of $18.29 per share on the date such shares were granted, as adjusted for subsequent stock dividends. The options vest ratably over four years.

 

On February 29, 2024, the Compensation Committee awarded, effective March 29, 2024, 5,513 shares of restricted common stock pursuant to the 2015 Stock Incentive Plan, as adjusted for subsequent stock dividends and options to acquire 44,100 shares of common stock, as adjusted for subsequent stock dividends. The restricted stock awards vest ratably over four years and the value was based on a stock price of $17.49 per share on the date such shares were granted, as adjusted for subsequent stock dividends. The options vest ratably over four years.

 

2024 Stock Incentive Plan. On May 22, 2024, our stockholders approved the Landmark Bancorp, Inc., 2024 Stock Incentive Plan which authorized the issuance of equity awards covering 551,250 shares of common stock as adjusted for subsequent stock dividends. Upon shareholder approval of the 2024 Stock Incentive Plan, the 2015 Stock Incentive Plan was frozen with respect to future grants.

 

On August 1, 2024, the Compensation Committee awarded 39,883 shares of restricted common stock, as adjusted for subsequent stock dividends. The restricted stock awards vest ratably over one or four years and the value was based on a stock price of $18.19 per share on the date such shares were granted, as adjusted for subsequent stock dividends. During 2025, the Company awarded 1,004 shares of restricted common stock, as adjusted for subsequent stock dividends. A portion of these shares vested immediately with the remainder carrying a four-year cliff vesting. The value of the shares with a four-year cliff vesting was based on a stock price of $24.72 per share on the date such shares were granted, as adjusted for subsequent stock dividends. As of December 31, 2025, there were 510,363 shares of common stock remaining available for issuance under the 2024 Stock Incentive Plan.

 

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

Schedule of Fair Value of Options Assumed  

		Year Ended December 31, 2024
Risk-free interest rate			4.20	%
Expected term			7 years
Expected stock price volatility			27.18	%
Dividend yield			4.36	%

 

A summary of option activity during 2025 is presented below:

Schedule of Share-based Compensation, Stock Options, Activity  

(Dollars in thousands, except per share amounts)						Weighted				Weighted
						average				average
						exercise				remaining		Aggregate
						price				contractual		intrinsic
		Shares				per share				term		value
Outstanding at January 1, 2025			268,726			$	19.44			6.7 years		$	1,235
Granted			-			$	-
Effect of 5% stock dividend			10,053
Forfeited/expired			(51,909	)		$	19.56
Exercised			(15,801	)		$	18.77
Outstanding at December 31, 2025			211,069			$	18.51			6.1 years		$	1,622
Exercisable at December 31, 2025			143,111			$	18.76			5.2 years		$	1,063
Fully vested options at December 31, 2025			143,111			$	18.76			5.2 years		$	1,063

 

 

Additional information about stock options exercised is presented below:

Schedule of Stock Option Exercised Additional Information  

		2025				2024				2023
(Dollars in thousands)		Years ended December 31,
		2025				2024				2023
Intrinsic value of options exercised (on exercise date)		$	435			$	-			$	4
Cash received from options exercised			-				-				52
Excess tax benefit realized from options exercised		$	107			$	-			$	1

 

As of December 31, 2025, there was $179,000 of total unrecognized compensation cost related to the 67,958 outstanding unvested options that will be recognized over the following periods:

Schedule of Share-based Compensation Arrangements by Share-based Payment Award  

(Dollars in thousands)
Year		Amount
2026		$	96
2027			73
2028			10
2029
Total		$	179

 

The fair value of restricted stock on the vesting date was $420,000, $293,000, and $187,000 during the years ended December 31, 2025, 2024, and 2023 respectively. A summary of nonvested restricted common stock activity during 2025 is presented below:

Schedule of Nonvested Share Activity  

		Shares				Weighted average grant date price per share
Nonvested restricted common stock at January 1, 2025			50,509			$	19.77
Granted			985			$	25.59
Vested			(15,743	)		$	19.61
Forfeited			(6,723	)		$	19.05
Effect of 5% stock dividend			1,444
Nonvested restricted common stock at December 31, 2025			30,472			$	18.58

 

As of December 31, 2025, there was $431,000 of total unrecognized compensation cost related to the outstanding nonvested restricted shares that will be recognized over the following periods:

Schedule of Share-based Compensation Arrangements by Share-based Payment Award  

(Dollars in thousands)
Year		Amount
2026		$	191
2027			155
2028			83
2029			2
Total		$	431