OP BancorpOPBK
OP Bancorp Stock Compensation Disclosure
Stock-Based Compensation
The Company has two stock-based compensation plans currently in effect as of December 31, 2024, as described further below. Total compensation cost that has been charged against earnings for these plans was $1.2 million, $1.3 million and $558 thousand for the years ended December 31, 2024, 2023 and 2022, respectively.
2010 Plan: In 2010, the Board of Directors of the Bank approved a new equity incentive plan for granting stock options and restricted stock awards to key employees, officers, and non-employee directors of the Bank (the “2010 Plan”). In 2013, the 2010 Plan was amended and approved by the shareholders to increase the number of shares authorized to be issued under from 1,350,000 shares to 2,500,000 shares of common stock. The 2010 Plan was assumed by the Company in 2016 at the time of the bank holding company reorganization.
The exercise prices of stock options granted under the plan may not be less than 100% of the fair value of the Company’s stock at the date of grant. The options, when granted, vest ratably over five years from the date of the grant and expire after ten years if not exercised. The 2010 Plan expired in August 2020, and no further grants can be made under the 2010 Plan.
Restricted stock awards issued under the 2010 Plan may or may not be subject to vesting provisions. Owners of the restricted stock awards shall have all of the rights of a shareholder including the right to vote the shares and to all dividends (cash or stock). Compensation expense related to restricted stock awards will be recognized over the vesting period of the awards based on the fair value of the Company’s common stock at the issue date.
A summary of the stock options outstanding under the 2010 Plan for the year ended December 31, 2024 is as follows:
| ($ in thousands, except share data) | Number of Options Outstanding | Weighted Average Exercise Price | Aggregate Intrinsic Value | |||||||||||||||||
| Outstanding, as of January 1, 2024 | 60,000 | $ | 8.00 | $ | 177 | |||||||||||||||
| Options granted | — | — | ||||||||||||||||||
| Options exercised | (60,000) | 8.00 | ||||||||||||||||||
| Options forfeited | — | — | ||||||||||||||||||
| Options expired | — | — | ||||||||||||||||||
| Outstanding, as of December 31, 2024 | — | $ | — | $ | — | |||||||||||||||
| Fully vested and expected to vest | — | $ | — | $ | — | |||||||||||||||
| Vested | — | $ | — | $ | — | |||||||||||||||
Information related to stock options exercised under the 2010 Plan for the periods indicated follows:
| Year Ended December 31, | ||||||||||||||||||||
| ($ in thousands) | 2024 | 2023 | 2022 | |||||||||||||||||
| Intrinsic value of options exercised | $ | 144 | $ | 186 | $ | 224 | ||||||||||||||
| Cash received from option exercises | 160 | 720 | 480 | |||||||||||||||||
| Tax provision realized from option exercised | 24 | (3) | — | |||||||||||||||||
A summary of the changes in the Company's non-vested restricted stock awards under the 2010 Plan for the year ended December 31, 2024 is as follows:
| ($ in thousands, except share data) | Shares Issued | Weighted Average Grant Date Fair Value | Aggregate Intrinsic Value | |||||||||||||||||
| Non-vested, as of January 1, 2024 | 10,000 | $ | 9.69 | $ | 110 | |||||||||||||||
| Awards granted | — | — | ||||||||||||||||||
| Awards vested | (10,000) | 9.69 | ||||||||||||||||||
| Awards forfeited | — | — | ||||||||||||||||||
| Non-vested, as of December 31, 2024 | — | $ | — | $ | — | |||||||||||||||
Information related to vested restricted stock awards under the 2010 Plan for the periods indicated follows:
Information related to vested restricted stock under the 2010 Plan for the periods indicated follows:
| Year Ended December 31, | ||||||||||||||||||||
| ($ in thousands) | 2024 | 2023 | 2022 | |||||||||||||||||
| Tax benefit (provision) realized from awards vested | $ | 19 | $ | 4 | $ | — | ||||||||||||||
2021 Plan: In 2021, the Board of Directors of the Company approved a new equity incentive plan for granting stock options and restricted stock awards to key employees, officers, and non-employee directors of the Company and the Bank (the “2021 Plan”). The 2021 Plan was approved by the Company’s shareholders at the 2021 Annual Meeting. The number of shares authorized to be issued under the 2021 Plan was 1,500,000 shares of the Company’s common stock.
The exercise prices of stock options granted under the plan may not be less than 100.00% of the fair value of the Company’s stock at the date of grant. There are no stock options granted under the 2021 Plan as of December 31, 2024.
Restricted stock awards issued under the 2021 Plan may or may not be subject to vesting provisions. Owners of the restricted stock awards shall have all rights of a shareholder including the right to vote the shares and to all dividends (cash or stock). Compensation expense related to restricted stock awards will be recognized over the vesting period of the awards based on the fair value of the Company’s common stock at the issue date.
A summary of the changes in the Company’s non-vested restricted stock awards under the 2021 Plan for the year ended December 31, 2024 is as follows:
| ($ in thousands, except share data) | Shares Issued | Weighted Average Grant Date Fair Value | Aggregate Intrinsic Value | |||||||||||||||||
| Non-vested, as of January 1, 2024 | 278,851 | $ | 11.45 | $ | 3,053 | |||||||||||||||
| Awards granted | 57,566 | 10.88 | ||||||||||||||||||
| Awards vested | (75,829) | 9.73 | ||||||||||||||||||
| Awards forfeited | (10,500) | 12.90 | ||||||||||||||||||
| Non-vested, as of December 31, 2024 | 250,088 | $ | 11.78 | $ | 3,954 | |||||||||||||||
Information related to vested restricted stock awards under the 2021 Plan for the periods indicated follows:
| Year Ended December 31, | ||||||||||||||||||||
| ($ in thousands) | 2024 | 2023 | 2022 | |||||||||||||||||
| Tax provision realized from awards vested | $ | (3) | $ | (34) | $ | 12 | ||||||||||||||
There were 1,078,188 shares available for future grants of either stock options or restricted stock awards under the 2021 Plan as of December 31, 2024. The Company had approximately $1.0 million of unrecognized compensation cost related to unvested restricted stock awards under the 2021 Plan as of December 31, 2024. The Company expects to recognize these costs over a weighted average period of 1.2 years.
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.