Stock-Based Incentive Plan

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

The Corporation has a shareholder approved 2013 Long-Term Incentive Plan, which replaced the expired 2003 Long-Term Incentive Plan. In December 2018, the Corporation's Board of Directors approved an Amended and Restated Univest 2013 Long-Term Incentive Plan to permit the issuance of restricted stock units.

During 2019, the Corporation issued to directors and employees (“grantees”) restricted stock units rather than restricted stock awards or stock options, which were issued to grantees in prior reporting periods. Restricted stock units differ from restricted stock awards in that Corporation stock is not issued to grantees at the date of the grant and the grantee does not have voting or dividend rights during the vesting period.

Under the Amended and Restated Univest 2013 Long-Term Incentive Plan, the Corporation may grant up to 3,698,974 options and restricted stock to employees and non-employee directors. The number of shares of common stock available for issuance under the plan is subject to adjustment, as described in the plan. This includes, in the event of any merger, reorganization, consolidation, recapitalization, stock dividend, or other change in corporate structure affecting the stock, substitution or adjustment shall be made in the aggregate number of shares reserved for issuance under the plan, in the number and option price of shares subject to outstanding options granted under the plan and in the number and price of shares subject to other awards, as described in the plan. As a result of the Corporation's 2017 common stock issuance, 330,625 additional shares became available for issuance. The plan provides for the issuance of options to purchase common shares at prices not less than 100 percent of the fair market value on the date of option grant and have a contractual term of ten years; and for restricted stock awards and units valued at not less than 100 percent of the fair market value at the date of grant. There were 2,530,015 share awards available for future grants at December 31, 2019 under the plan. At December 31, 2019, there were 508,111 options to purchase common stock and 209,378 unvested restricted stock awards and units outstanding under the plan.

The following is a summary of the Corporation’s stock option activity and related information for the year ended December 31, 2019:


(Dollars in thousands, except per share data)	Shares Under Option	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value at December 31, 2019
Outstanding at December 31, 2018	597,405	$	23.98

Expired	(11,256)	24.23
Forfeited	(9,000)	26.33
Exercised	(69,038)	17.43
Outstanding at December 31, 2019	508,111	24.83		6.6	$	1,492
Exercisable at December 31, 2019	344,850	23.14		6.0	1,492

The following is a summary of nonvested stock options at December 31, 2019 including changes during the year:


(Dollars in thousands, except per share data)	Nonvested Stock Options	Weighted Average Grant Date Fair Value
Nonvested stock options at December 31, 2018	344,230	$	6.48

Vested	(171,969)	6.42
Forfeited	(9,000)	6.43
Nonvested stock options at December 31, 2019	163,261	6.54

The Corporation's estimate of the fair value of a stock option is based on expectations derived from historical experience and may not necessarily equate to its market value when fully vested. The life of the option is based on historical factors which include the contractual term, vesting period, exercise behavior and employee turnover. The risk-free rate for periods within the expected term of the option is based on the U.S. Treasury strip rate in effect at the time of grant. Expected volatility is based on the historical volatility of the Corporation’s stock over the expected life of the grant.

The following aggregated assumptions were used to estimate the fair value of options granted for the periods indicated. The Corporation did not issue stock options during the year ended December 31, 2019.


	For the Years Ended December 31,
	2018		2017
Expected option life in years	6.6		6.9
Risk free interest rate	2.80	%	2.30	%
Expected dividend yield	2.81	%	2.84	%
Expected volatility	27.15	%	29.75	%
Fair value of options	$6.46		$6.72

In the following tables, issued restricted stock units have been combined with restricted stock awards, as the determination of the value at the grant date and methodology for recording stock-based compensation expense is the same for restricted stock units and restricted stock awards. The following is a summary of nonvested restricted stock awards and nonvested restricted stock units at December 31, 2019 including changes during the year:


(Dollars in thousands, except per share data)	Nonvested Stock Awards and Units	Weighted Average Grant Date Fair Value
Nonvested share awards at December 31, 2018	157,579	$	25.33
Granted	114,729	25.65
Vested	(44,807)	21.65
Cancelled	(18,123)	19.95
Nonvested share awards and units at December 31, 2019	209,378	26.76

Certain information regarding restricted stock awards and units is summarized below for the periods indicated:


	For the Years Ended December 31,
(Dollars in thousands, except per share data)	2019		2018		2017
Restricted stock awards and units granted	114,729		59,953		61,823
Weighted average grant date fair value	$	25.65	$	28.39	$	28.08
Intrinsic value of awards vested	$	1,119	$	2,709	$	2,954

The total unrecognized compensation expense and the weighted average period over which unrecognized compensation expense is expected to be recognized related to nonvested stock options and nonvested restricted stock awards and units at December 31, 2019 is presented below:


(Dollars in thousands)	Unrecognized Compensation Cost		Weighted-Average Period Remaining (Years)
Stock options	$	448	1.1
Restricted stock awards and units	2,644		1.9
	$	3,092	1.8

The following table presents information related to the Corporation’s compensation expense related to stock incentive plans recognized for the periods indicated:


	For the Years Ended December 31,
(Dollars in thousands)	2019		2018		2017
Stock-based compensation expense:
Stock options	$	716	$	1,020	$	910
Restricted stock awards and units	1,632		1,537		2,256
Employee stock purchase plan	74		68		64
Total	$	2,422	$	2,625	$	3,230
Tax benefit on nonqualified stock option expense, restricted stock awards and disqualifying dispositions of incentive stock options	$	518	$	620	$	1,432

There were no significant modifications or accelerations to options, restricted stock awards or restricted stock units during the period 2017 through 2019. The Corporation typically issues shares for stock option exercises and grants of restricted stock awards from its treasury stock.