MainStreet Bancshares, Inc. Stock Compensation Disclosure
Note 18. Stock Based Compensation Plan
ASC Topic 718, Compensation – Stock Compensation, requires the Company to recognize expense related to the fair value of share-based compensation awards in net income. Total compensation expense for restricted stock recorded for the years ended December 31, 2024, December 31, 2023, and December 31, 2022 were $2.8 million, $2.5 million, and $2.5 million, respectively.
On July 17, 2019, the Board of Directors of the Company adopted, and the Company’s shareholders subsequently approved, the MainStreet Bank 2019 Equity Incentive Plan (the “2019 Plan”), to provide officers, other selected employees and directors of the Company with additional incentives to promote the growth and performance of the Company. During the year ended December 31, 2024, there were 119,681 restricted shares awarded, 1,746 restricted shares were forfeited, and no stock options were awarded under the 2019 Plan. The restricted shares awarded during 2024 vest equally on an annual basis over a , , or year period. As a result of the stockholders’ approval of the 2019 Plan, no additional awards have been or will be made under the Company’s 2016 Plan, although all awards that were outstanding under the 2016 Plan as of July 17, 2019 remained outstanding in accordance with their terms.
A summary of the status of the Bank’s nonvested restricted stock shares as of December 31, 2024 and changes during the year ended December 31, 2024 is presented below:
| Nonvested Restricted Stock Shares | Shares | Weighted Average Grant Date Fair Value | ||||||
| Nonvested at January 1, 2024 | 228,300 | $ | 24.15 | |||||
| Granted | 119,681 | 21.55 | ||||||
| Vested | (108,518 | ) | 22.48 | |||||
| Forfeited | (1,746 | ) | 21.96 | |||||
| Nonvested at December 31, 2024 | 237,717 | $ | 23.62 | |||||
As of December 31, 2024, there was $3.0 million of total unrecognized compensation cost related to nonvested restricted stock awards. The cost is expected to be recognized over approximately years. The total fair value of shares vested during the years ended December 31, 2024, 2023, and 2022 was $2.0 million, $2.9 million, and $2.0 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 14, 2025 | Showing above |
| 2023 | Mar 20, 2024 | |
| 2022 | Mar 23, 2023 | |
| 2021 | Mar 23, 2022 | |
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.