SOUTHERN FIRST BANCSHARES INC Stock Compensation Disclosure
The Company utilizes certain stock incentive plans as long-term retention programs intended to attract, retain, and provide incentives for key employees and non-employee directors in the form of incentive and non-qualified stock options, restricted stock, and restricted stock units. Shares are granted under plans approved by the Company’s shareholders. As of December 31, 2025, there were shares available for grant under the 2020 Southern First Bancshares, Inc. Equity Incentive Plan.
Compensation cost is recognized for stock options and restricted stock awards issued to employees and non-employee directors and is measured as the fair value of these awards on their date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used as the fair value of restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period for stock option and restricted stock awards.
Stock-based compensation expense was recorded as follows:
| For the years ended December 31, | ||||||||||||
| (dollars in thousands) | 2025 | 2024 | 2023 | |||||||||
| Stock option expense | $ | 33 | 374 | 528 | ||||||||
| Restricted stock grant expense | 2,239 | 1,909 | 1,415 | |||||||||
| Total stock-based compensation expense | $ | 2,272 | 2,283 | 1,943 | ||||||||
Stock Options
All stock options have an exercise price that is equal to the closing fair market value of the Company’s stock on the date the options were granted. Options granted under the plans generally vest over a four-year period and expire years from the grant date. The Company did not grant any stock options during the years ended December 31, 2025, 2024, or 2023.
At December 31, 2025, there was no remaining compensation cost related to nonvested stock option grants. The fair value of stock option grants that vested during 2025, 2024, and 2023 was $, $ and $, respectively.
A summary of the status of the stock option plan and changes for the period is presented below:
| For the years ended December 31, | ||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||
| Shares | Weighted average exercise price | Weighted Average Remaining Contractual Life | Shares | Weighted average exercise price | Weighted Average Remaining Contractual Life | Shares | Weighted average exercise price | Weighted Average Remaining Contractual Life | ||||||||||||||||||||||||||||
| Outstanding at beginning of year | 312,599 | $ | 36.34 | 331,349 | $ | 35.51 | 427,224 | $ | 34.32 | |||||||||||||||||||||||||||
| Granted | ||||||||||||||||||||||||||||||||||||
| Exercised | (68,500 | ) | 29.82 | (15,250 | ) | 17.17 | (27,250 | ) | 20.18 | |||||||||||||||||||||||||||
| Forfeited or expired | (3,500 | ) | 42.30 | (3,500 | ) | 41.55 | (68,625 | ) | 34.15 | |||||||||||||||||||||||||||
| Outstanding at end of year | 240,599 | $ | 38.11 | years | 312,599 | $ | 36.34 | years | 331,349 | $ | 35.51 | years | ||||||||||||||||||||||||
| Options exercisable at year-end | 240,599 | $ | 38.11 | years | 288,849 | $ | 36.00 | years | 267,376 | $ | 34.48 | years | ||||||||||||||||||||||||
| Weighted average fair value of options granted during the year | $ | $ | $ | |||||||||||||||||||||||||||||||||
| Shares available for grant | 204,531 | 258,622 | 319,058 | |||||||||||||||||||||||||||||||||
The aggregate intrinsic value (the difference between the Company’s closing stock price on the last trading day of the year and the exercise price, multiplied by the number of in-the-money options) of and stock options outstanding at December 31, 2025 and 2024 was $ million and $ million, respectively. The aggregate intrinsic value of and stock options exercisable at December 31, 2025 and 2024 was $ million and $ million, respectively.
Restricted Stock Grants
Shares of restricted stock granted to employees under the stock plans are subject to restrictions as to continuous employment for a specified time period following the date of grant. Under the 2020 Southern First Bancshares, Inc. Equity Incentive Plan, the Company may grant both restricted stock awards and restricted stock units. Restricted stock awards are issued and outstanding upon grant and restricted stock units are issued and outstanding upon vesting. During the vesting period, holders of restricted stock awards are entitled to full voting rights and dividends, if and when declared, while holders of restricted stock units have no rights to vote or dividends, if and when declared.
At December 31, 2025, there was $ million of total unrecognized compensation cost related to nonvested restricted stock grants. The cost is expected to be recognized over a weighted-average period of years.
A summary of the status of the Company’s nonvested restricted stock and changes for the years ended December 31, 2025, 2024, and 2023 is as follows:
| December 31, | ||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||
| Restricted Shares | Weighted Average Grant-Date Fair Value | Restricted Shares | Weighted Average Grant-Date Fair Value | Restricted Shares | Weighted Average Grant-Date Fair Value | |||||||||||||||||||
| Nonvested at beginning of year | 139,851 | $ | 40.85 | 109,533 | $ | 44.40 | 80,337 | $ | 52.53 | |||||||||||||||
| Granted | 65,685 | 37.09 | 65,373 | 36.47 | 69,880 | 37.12 | ||||||||||||||||||
| Vested | (44,559 | ) | 41.91 | (30,118 | ) | 44.72 | (21,695 | ) | 48.95 | |||||||||||||||
| Forfeited | (10,594 | ) | 40.74 | (4,937 | ) | 37.95 | (18,989 | ) | 46.83 | |||||||||||||||
| Nonvested at end of year | 150,383 | $ | 38.90 | 139,851 | $ | 40.85 | 109,533 | $ | 44.40 | |||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Mar 5, 2024 | |
| 2022 | Feb 13, 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.