2020 Annual Report

Bridgewater Bancshares, Inc. and Subsidiaries Notes to Consolidated Financial Statements (dollars in thousands, except share data)

Compensation expense associated with the restricted stock awards is recognized on a straight-line basis over the period that the restrictions associated with the awards lapse based on the total cost of the award at the grant date. For the years ended December 31, 2020 and 2019, the Company recognized compensation expense for restricted stock awards of $441 and $31, respectively. No compensation expense was recognized for restricted stock awards for the year ended December 31, 2018.

As of December 31, 2020, there was $1,349 of total unrecognized compensation cost related to nonvested restricted stock awards granted under the 2019 EIP that is expected to be recognized over a period of four years.

In addition, during the year ended December 31, 2020, the Company issued 29,050 shares of common stock to directors as a part of their compensation for their annual services on the Company’s board of directors. The aggregate value of the shares issued to directors of $303 was included in stock based compensation expense in the accompanying consolidated statements of shareholders’ equity. Restricted Stock Units In 2020, the Company granted 205,666 restricted stock units with a grant date fair value of $12.27. Restricted stock units granted out of the 2019 EIP represent the right to receive one share of Company stock upon vesting and vest in equal annual installments on the first four anniversaries of the date of the grant. Nonvested restricted stock units have no voting or dividend rights and are not considered outstanding until vesting. Compensation expense associated with the restricted stock units is recognized on a straight-line basis over the period that the restrictions associated with the units lapse based on the total cost of the unit at the grant date. For the year ended December 31, 2020, the Company recognized compensation expense for restricted stock units of $43. No compensation expense was recognized for restricted stock units for the years ended December 31, 2019 and 2018. As of December 31, 2020, there was $2,505 of total unrecognized compensation cost related to nonvested restricted stock units granted under the 2019 EIP that is expected to be recognized over a period of four years. No restricted stock units vested during 2020. Note 18: Profit Sharing Plan The Company has a combined profit sharing 401(k) plan which provides that an annual contribution, up to 100% of each participating employee’s total pay, may be contributed to the plan. Employees are eligible to participate after meeting certain eligibility requirements as defined in the plan and are allowed to make pre-tax contributions up to the maximum amount allowed by the Internal Revenue Service. The terms of the 401(k) plan require employer match contributions equal to 100% of the employee contributions up to 4% of pay. In addition, the terms of the plan allow for discretionary contributions as determined by the Company and approved by the Board of Directors. The employer match contributions for the 401(k) plan were $743, $603, and $483 for the years ended December 31, 2020, 2019 and 2018, respectively. The total employer profit sharing contributions to the plan were $533, $473, and $328 for the years ended December 31, 2020, 2019 and 2018, respectively. Note 19: Deferred Compensation Plan In 2013, the Company implemented a deferred compensation plan for certain employees which allows the Company to make a discretionary contribution to the account of any employee designated as a participant in the plan based upon the participant’s performance for the calendar year. Company contributions to the plan vest on the fourth anniversary of the last day of the calendar year for which the contribution was made to the plan and accrue interest at a rate equal to the Bank’s return on average equity for the immediately preceding calendar year. Distribution of amounts

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