Benefit Plans

401(k) Plan. The Bank maintains an Employee Savings Plan (the “401(k) Plan”) which qualifies under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, employees may contribute from 1% to 100% of their compensation, up to the dollar limit imposed by the IRS for tax purposes. In 2018, 2017 and 2016, the Bank matched 100% of contributions for the first three percent contributed and 50% on the next two percent contributed. Contributions made to the 401(k) Plan by the Bank amounted to $2.5 million for 2018, $1.4 million for 2017, and $959,000 for 2016.

Pacific Premier Bancorp, Inc. 2004 Long-Term Incentive Plan (the “2004 Plan”). The 2004 Plan was approved by the Corporation’s stockholders in May 2004. The 2004 Plan authorized the granting of incentive stock options, nonstatutory stock options, stock appreciation rights and restricted stock (collectively “Awards”) equal to 525,500 shares of the common stock of the Corporation for issuances to executive, key employees, officers and directors. The 2004 Plan was in effect for a period of ten years starting in February 25, 2004, the date the 2004 Plan was adopted. Awards granted under the 2004 Plan were made at an exercise price equal to the fair market value of the stock on the date of grant. The Awards granted pursuant to the 2004 Plan vest at a rate of 33.3% per year. The 2004 Plan terminated in February 2014.

Heritage Oaks Bancorp, Inc. 2005 Equity Based Compensation Plan (the “2005 Plan”). The 2005 Plan was acquired from Heritage Oaks Bancorp, Inc. on April 1, 2017. The 2005 Plan authorized the granting of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units and Performance Share Cash Only Awards. As of December 31, 2016, no further grants can be made from this plan, however, Pacific Premier assumed all unvested and unexercised awards.

Pacific Premier Bancorp, Inc. 2012 Long-Term Incentive Plan (the “2012 Plan”)—The 2012 Plan was approved by the Corporation’s stockholders in May 2012. The 2012 Plan authorizes the granting of Awards equal to 620,000 shares of the common stock of the Corporation for issuances to executives, key employees, officers, and directors. The 2012 Plan will be in effect for a period of ten years from May 30, 2012, the date the 2012 Plan was adopted. Awards granted under the 2012 Plan will be made at an exercise price equal to the fair market value of the stock on the date of grant. Awards granted to officers and employees may include incentive stock options, non-qualified stock options, restricted stock, restricted stock units, and stock appreciation rights. The awards have vesting periods ranging from one to three years, where such vesting may occur in either three equal annual installments or one lump sum at the end of the third year. In May 2014, the Corporation’s stockholders approved an amendment to the 2012 Plan to increase the shares available under the plan by 800,000 shares to total 1,420,000 shares. In May 2015, the Corporation’s stockholders approved an amendment to the 2012 Plan to permit the grant of performance-based awards, including equity compensation awards that may not be subject to the deduction limitation of Section 162(m) of the Internal Revenue Code. The performance-based awards include (i) both performance-based equity compensation awards and performance-based cash bonus payments and (ii) restricted stock units. In May 2017, the Corporation’s stockholders approved an amendment to the 2012 Plan to increase the shares available under the plan by 3,580,000 shares to total 5,000,000 shares.

Heritage Oaks Bancorp, Inc. 2015 Equity Based Compensation Plan (the “2015 Plan”). The 2015 Plan was acquired from Heritage Oaks Bancorp, Inc. on April 1, 2017. The 2015 plan was approved by the Corporation’s stockholders in May 2015. The 2015 Plan authorized the Company to grant various types of share-based compensation awards to the Company’s employees and Board of Directors such as stock options, restricted stock awards, and restricted stock units. Under the 2015 Equity Incentive Plan a maximum of 2,500,000 shares of the Company’s common stock were made to be issued. Shares issued under this plan, other than stock options and stock appreciation rights, were counted against the plan on a two shares for every one share actually issued basis. Awards that were canceled, expired, forfeited, fail to vest, or otherwise resulted in issued shares not being delivered to the grantee, were made available for the issuance of future share-based compensation awards. Additionally, under this plan, no one individual was to be granted shares in aggregate that exceed more than 250,000 shares during any calendar year. The 2015 Plan is still active and Pacific Premier assumed all unvested and unexercised awards.

The Pacific Premier Bancorp, Inc. 2004 Long-Term Incentive Plan, Heritages Oaks Bancorp, Inc. 2005 Equity Based Compensation Plan, Pacific Premier Bancorp, Inc. 2012 Long-Term Incentive Plan and the Heritage Oaks Bancorp, Inc. 2015 Equity Based Compensation Plan are collectively the “Plans.”

Stock Options

As of December 31, 2018, there are 40,105 options outstanding on the 2004 Plan with zero available for grant. As of December 31, 2018, there are 35,950 options outstanding on the 2005 Plan with zero available for grant. As of December 31, 2018, there are 578,063 options outstanding on the 2012 Plan with 3,272,558 available for grant. As of December 31, 2018, there are 27,815 options outstanding on the 2015 Plan with 652,866 available for grant. Below is a summary of the stock option activity in the Plans for the year ended December 31, 2018:



	2018
	Number of Stock Options Outstanding		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic value
					(in years)	(dollars in thousands)
Outstanding at January 1, 2018	954,523		$	13.89
Granted	—		—
Exercised	(255,178	)	9.71
Forfeited and Expired	(17,412	)	21.53
Outstanding at December 31, 2018	681,933		$	15.26	5.26	$	6,962
Vested and Exercisable at December 31, 2018	635,396		$	15.11	5.04	$	6,715

The total intrinsic value of options exercised during the years ended December 31, 2018, 2017 and 2016 was $8.4 million, $7.7 million and $2.0 million, respectively.

The amount charged against compensation expense in relation to the stock options was $571,000 for 2018, $927,000 for 2017 and $883,000 for 2016. At December 31, 2018, unrecognized compensation expense related to the options is approximately $134,000.

Restricted Stock Awards and Restricted Stock Units

Below is a summary of the restricted stock activity in the Plans for the years ended December 31, 2018:



	2018
	Shares		Weighted Average Grant-Date Fair Value per share
Unvested at the beginning of the year	446,843		$	29.61
Granted	328,358		41.92
Vested	(125,038	)	28.53
Forfeited	(14,086	)	38.18
Unvested at the end of the year	636,077		$	35.98

Compensation expense for the year ended December 31, 2018, 2017 and 2016 related to the above restricted stock grants amounted to $8.5 million, $5.0 million and $2.0 million, respectively. Restricted stock awards and units are valued at the closing stock price on the date of grant and are expensed to stock based compensation expense over the period for which the related service is performed. The total grant date fair value of awards was $12.8 million for 2018 awards. At December 31, 2018, unrecognized compensation expense related to restricted stock award and units is approximately $13.0 million, which expected to be recognized over a weighted-average period of 1.92 years.

Other Plans

Salary Continuation Plan. The Bank implemented a non-qualified supplemental retirement plan in 2006 (the “Salary Continuation Plan”) for certain executive officers of the Bank. The Salary Continuation Plan is unfunded.

Deferred Compensation Plans. The Bank implemented a non-qualified supplemental retirement plan in 2006 (the “Supplemental Executive Retirement Plan” or “SERP”) for certain executive officers of the Bank. The Bank has acquired additional SERPs through the acquisitions of San Diego Trust Bank (“SDTB”), Independence Bank (“IDPK”) and HEOP. The SERP is unfunded. The expense incurred for the SERP for each of the last three years was $827,000, $721,000 and $573,000 resulting in a deferred compensation liability of $10.9 million and $8.3 million as of the years ended 2018 and 2017. In addition, with the acquisition of PLZZ, the Company acquired a deferred compensation plan that is unfunded and results in a deferred compensation asset and liability both in the amount of $1.6 million and $2.0 million as of the years ended 2018 and 2017.

The amounts expensed in 2018, 2017 and 2016 for all of these plans amounted to $827,000, $721,000 and $573,000 respectively. As of December 31, 2018, 2017 and 2016, $10.9 million, $8.4 million, and $5.7 million, respectively, were recorded in other liabilities on the consolidated statements of condition for each of these plans.