Meridian CorpMRBK
Meridian Corp Stock Compensation Disclosure
Stock-Based Compensation
The Corporation has issued stock options under the Meridian Bank 2004 Stock Option Plan (2004 Plan). The 2004 Plan authorized the Board of Directors to grant options up to an aggregate of 892,182 shares, as adjusted for the 5% stock dividends in 2012, 2014 and 2016, and the two-for-one stock split effective February 28, 2023, to officers, other employees and directors of the Corporation. No additional shares are available for future grants. The shares granted under the 2004 Plan to directors are nonqualified options. The shares granted under the 2004 Plan to officers and other employees are incentive stock options, and are subject to the limitations under Section 422 of the Internal Revenue Code.
The Meridian Bank 2016 Equity Incentive Plan (2016 Plan) was amended on May 25, 2023 to authorize the Board of Directors to grant up to an aggregate of 1,673,800 stock awards that can take different forms. A total of 1,513,000 stock options and 91,776 shares of restricted stock have been granted under the 2016 Plan through December 31, 2025. As of December 31, 2025 there were 208,980 stock awards remaining to be issued after adjusting for 139,956 options previously forfeited and available for future grant. Options granted under the 2016 Plan to directors are nonqualified options, while options granted to officers and other employees are incentive stock options, and are subject to the limitations under Section 422 of the Internal Revenue Code.
Stock Options
Stock-based compensation cost is measured at the grant date, based on the fair value of the award and the cost is recognized as an expense over the vesting period. The fair value of stock option grants is determined using the Black-Scholes pricing model. The assumptions necessary for the calculation of the fair value are expected life of options, annual volatility of stock price, risk-free interest rate and annual dividend yield.
Stock option awards granted under the 2016 Plan have a term that does not exceed 10 years and vest according to each award’s specific vesting schedule. Currently, all option awards granted to date vest 25% upon grant and become fully exercisable after 3 years of service from the grant date.
The following table provides information about stock options outstanding as of December 31, 2025 and 2024:
| Shares | Weighted average exercise price | Weighted average grant date fair value | |||||||||||||||
| Outstanding at December 31, 2023 | 1,099,798 | $ | 11.55 | $ | 3.56 | ||||||||||||
| Exercised | (51,700) | 8.74 | 2.49 | ||||||||||||||
| Granted | 143,250 | 14.46 | 6.36 | ||||||||||||||
| Forfeited | (29,550) | 14.39 | 4.86 | ||||||||||||||
| Outstanding at December 31, 2024 | 1,161,798 | $ | 11.96 | $ | 3.92 | ||||||||||||
| Exercised | (102,530) | 9.38 | 2.87 | ||||||||||||||
| Granted | 147,750 | 14.44 | 6.60 | ||||||||||||||
| Forfeited | (12,250) | 15.47 | 5.16 | ||||||||||||||
| Outstanding at December 31, 2025 | 1,194,768 | $ | 12.45 | $ | 4.33 | ||||||||||||
| Exercisable at December 31, 2025 | 988,070 | 12.14 | 3.97 | ||||||||||||||
| Nonvested at December 31, 2025 | 206,698 | 13.93 | 6.02 | ||||||||||||||
The weighted average remaining contractual life of the outstanding stock options at December 31, 2025 is 6 years. At December 31, 2025 the range of exercise prices is $6.74 to $17.76. The aggregate intrinsic value of options outstanding and exercisable was $6.1 million and $5.4 million, respectively, as of December 31, 2025.
The fair value of each option granted in 2025 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yield of 3.6%, risk-free interest rate of 3.90%, expected life of 5.75 years, and volatility of 33.4% based on an average of the Corporation’s share price since going public. The weighted average fair value of options granted in 2025 was $6.60 per share.
The fair value of each option granted in 2024 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yield of 3.6%, risk-free interest rate of 4.36%, expected life of 5.75 years, and volatility of 33.1% based on an average of the Corporation’s share price since going public. The weighted average fair value of options granted in 2024 was $6.36 per share.
Total stock option compensation cost for the years ended December 31, 2025 and 2024 was $596 thousand and $456 thousand, respectively. During the year ended December 31, 2025 and 2024, the Corporation received $787 thousand and $442 thousand from the exercise of stock options, respectively. The Corporation recognized $52 thousand and $18 thousand in excess tax benefits related to stock compensation cost for the twelve months ended December 31, 2025 and 2024.
In accordance with ASU 2016-09 – Compensation – Stock Compensation (ASU 2016-09), forfeitures are recognized as they occur instead of applying an estimated forfeiture rate to each grant. For purposes of the determination of stock-based compensation expense for the years ended December 31, 2025, and 2024, we recognized the forfeiture of 12,250, and 29,550 of shares of stock options that were previously granted to officers and other employees, respectively.
As of December 31, 2025, there was $1.2 million of unrecognized compensation cost related to issued but nonvested stock options. This cost will be recognized over a weighted average period of 6.2 years. During 2025, the intrinsic value of options exercised was $627 thousand.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 16, 2023 | |
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.