PEOPLES FINANCIAL SERVICES CORP. Stock Compensation Disclosure
17. Stock plans:
In May 2017, the Company’s stockholders approved the 2017 equity incentive plan (“2017 Plan”). In May 2023, the Company’s stockholders approved the 2023 equity incentive plan (“2023 Plan”). The 2017 Plan and 2023 Plan authorize grants of stock options, stock appreciation rights, cash awards, performance awards, restricted stock and restricted stock units. Under the 2017 Plan and 2023 Plan, the compensation committee of the Company’s board of directors has the authority to, among other things:
| ● | Select the persons to be granted awards under the Plan; |
| ● | Determine the type, size and term of awards; |
| ● | Determine whether such performance objectives and conditions have been met; and |
| ● | Accelerate the vesting or exercisability of an award. |
Persons eligible to receive awards under the 2017 Plan and 2023 Plan include directors, officers, employees, consultants and other service providers of the Company and its subsidiaries.
On July 1, 2024, as a result of the FNCB merger, the Company assumed those outstanding and unvested restricted stock
awards that had been granted under the FNCB 2023 Equity Incentive Plan after September 27, 2023, the date of the definitive Agreement and Plan of Merger between Peoples and FNCB. As of December 31, 2025. these awards will be expensed over the remaining life of 40 months.
As of December 31, 2025, 17,104 shares of the Company’s common stock were available for grant as awards pursuant to the 2023 Plan. While the 2017 Plan will remain in effect in accordance with its terms to govern outstanding awards under that plan, the Company intends to make future grants under the 2023 Plan. If any outstanding 2017 Plan awards are forfeited by the holder or canceled by the Company, the underlying shares would be available for re-grant to others under the 2023 Plan.
In 2025, the Company granted 36,338 time based restricted stock unit awards and 41,892 performance based restricted stock unit awards, under the 2023 Plan. In 2024, the Company granted 8,895 time based restricted stock award and 23,243 performance based restricted stock awards, under the 2023 Plan.
The non-performance restricted stock award and restricted stock unit awards made in 2025 vest equally over either or seven years. The non-performance stock grants made in 2024 and 2023 vest equally over three years. The performance-based restricted stock units vest over fiscal years and include conditions based on the Company’s three-year cumulative diluted earnings per share and three-year average return on tangible common equity that determines the number of restricted stock units that may vest.
The activity related to the 2017 and 2023 Plans for each of the years ended December 31, 2025, 2024 and 2023 is as follows:
(Dollars in thousands) | | 2025 | | 2024 | | 2023 |
|
Nonvested, January 1 |
| 38,574 |
| 58,631 |
| 39,470 | |
Assumed in merger |
| 16,890 | |||||
Granted shares | 65,141 |
| 8,894 |
| 23,428 | ||
Vested shares |
| (24,663) | (31,067) | (16,791) | |||
(Forfeited) surrendered shares | (3,942) | (14,774) | 12,524 | ||||
Nonvested, December 31 |
| 75,110 |
| 38,574 |
| 58,631 |
The Company expenses the fair value of all-share based compensation over the requisite service period commencing at grant date. The fair value of restricted stock is expensed on a straight-line basis. Compensation is recognized over the vesting period and adjusted based on the performance criteria. The Company classifies share-based compensation for employees within “salaries and employee benefits expense” on the consolidated statements of income and comprehensive income.
The Company recognized expense for awards granted under the 2017 and 2023 Plans of $1.0 in 2025, $0.6 million 2024 and $0.9 million 2023. As of December 31, 2025, the Company had $2.5 million of unrecognized compensation expense associated with restricted stock awards. The remaining cost is expected to be recognized over a weighted average vesting period of 3.8 years.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 28, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 15, 2023 | |
| 2021 | Mar 16, 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.