Benefit Plans

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Benefit Plans

Note 16 – 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 99% of their compensation, up to the dollar limit imposed by the IRS for tax purposes. In 2022, 2021, and 2020, 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 $5.1 million for 2022, $4.9 million for 2021, and $4.1 million for 2020.

Heritage Oaks Bancorp, Inc. 2005 Equity Based Compensation Plan (the “2005 Plan”) and Heritage Oaks Bancorp, Inc. 2015 Equity Based Compensation Plan (the “2015 Plan”). The 2005 Plan and 2015 Plan were 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 the 2005 Plan. The 2015 Plan authorized the granting of various types of share-based compensation awards to the employees and Board of Directors such as stock options, restricted stock awards, and restricted stock units. The Company's Board of Directors has determined that, effective May 23, 2022, the 2015 Plan is terminated such that no further awards can be made from the 2015 Plan.

Pacific Premier Bancorp, Inc. Amended and Restated 2022 Long-Term Incentive Plan (the “2022 Plan”). On May 23, 2022, the Corporation’s stockholders approved the Company’s Amended and Restated 2022 Long-Term Incentive Plan (the “2022 Plan”), which restates the 2012 Long-Term Incentive Plan (the “2012 Plan”) previously in place in order to increase shares available under the 2012 Plan by 2,000,000 shares to total 7,000,000 shares of the common stock of the Corporation reserved for issuance to executive officers, employees, non-employee directors, consultants, or independent contractors. The maximum aggregate number of shares of common stock with respect to one or more awards that may be granted to any one person during any one calendar year shall be 400,000 shares or 30,000 shares in the case of non-employee directors. The 2022 Plan will be in effect for a period of ten years from May 23, 2022, the date the 2022 Plan was adopted. Awards granted may include incentive stock options, non-qualified stock options, restricted stock, restricted stock units including performance-based units, and stock appreciation rights. The awards generally have vesting periods ranging from one to five years, where such vesting may occur in either equal annual installments or one lump sum at the end of the vesting term. As of May 23, 2022, the 2022 Plan will be the only active equity plan pursuant to which we can grant equity awards to incentivize our employees. As of December 31, 2022, the total number of shares available to grant was 2.9 million. 

Stock Options

As of December 31, 2022, there were 4,589 options outstanding on the 2005 Plan with zero available for future awards. As of December 31, 2022, there were 149,818 options outstanding on the 2022 Plan with 2,864,547 available for future awards. As of December 31, 2022, there were 5,344 options outstanding on the 2015 Plan with zero available for future awards. Below is a summary of the stock option activity in the 2005 Plan, 2015 Plan and 2022 Plan (collectively, the “Plans”) for the year ended December 31, 2022:

	2022
(Dollars in thousands, except per share data)	Number of Stock Options Outstanding	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic value
Outstanding at January 1, 2022	213,077	$	16.64
Granted	—	—
Exercised	(53,326)	16.36
Forfeited and expired	—	—
Outstanding at December 31, 2022	159,751	$	16.74	1.94	$	2,368
Vested and exercisable at December 31, 2022	159,751	$	16.74	1.94	$	2,368

The total intrinsic value of options exercised during the years ended December 31, 2022, 2021, and 2020 was $2.4 million, $2.4 million, and $1.7 million, respectively.

There was no compensation expense related to stock options for the years ended December 31, 2022 and 2021. The amount charged against compensation expense in relation to the stock options was $8,000 for 2020. At December 31, 2022, there was no unrecognized compensation expense related to the options.

Restricted Stock Awards and Restricted Stock Units

Below is a summary of the activity for restricted stock and restricted stock units in the Plans for the year ended December 31, 2022:

	2022
	Shares	Weighted Average Grant-Date Fair Value Per Share
Unvested at the beginning of the year	1,365,778	$	31.81
Granted	926,923	35.98
Vested	(576,914)	30.31
Forfeited	(109,341)	35.01
Unvested at the end of the year	1,606,446	$	34.22

The total grant date fair value of awards was $31.0 million for 2022 awards. At December 31, 2022, unrecognized compensation expense related to restricted stock award and restricted stock units is approximately $38.6 million, which is expected to be recognized over a weighted-average period of 2.73 years.

Compensation expense for the years ended December 31, 2022, 2021, and 2020 related to the above restricted stock grants amounted to $18.9 million, $13.3 million, and $10.8 million, respectively. Restricted stock awards and restricted stock units with a service condition for vesting are valued at the closing stock price on the date of grant and are expensed to stock-based compensation expense ratably under the straight-line attribution method over the requisite service period. Restricted stock units with a performance condition for vesting are valued at the closing stock price on the date of grant and the expense is estimated based on the share percentage payout expected to be achieved at vesting over a three-year performance period. The Company evaluates the probable outcome of the performance conditions quarterly and makes cumulative adjustments for current and prior periods in compensation expense in the period of change. Restricted stock units with a market condition for vesting are valued using a Monte Carlo valuation model and are expensed to stock-based compensation expense over a three-year performance period. The previously recognized compensation expense for awards with a market condition will reverse only if the requisite service is not rendered. For accounting on stock-based compensation plans, see Note 1 – Description of Business and Summary of Significant Accounting Policies for more information.

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, Independence Bank, Heritage Oaks Bancorp, Inc, and Grandpoint Capital, Inc. The SERP is unfunded.

The expense incurred for the Salary Continuation Plan and SERP for each of the last three years ended December 31, 2022, 2021, and 2020 was $485,000, $503,000, and $511,000, respectively, resulting in a deferred compensation liability of $9.6 million and $10.0 million as of the years ended 2022 and 2021, respectively. In addition, with the acquisition of Plaza Bancorp, Inc., the Company acquired a deferred compensation plan that was funded and resulted in a deferred compensation liability in the amount of $1.3 million and $1.7 million as of the years ended December 31, 2022 and 2021, respectively.

With the acquisition of Opus Bank in June 2020, the Company inherited a terminated non-qualified deferred compensation plan originally funded through the purchase of bank owned life insurance plans. Final distributions under this plan were made in January 2021.

As of December 31, 2022 and 2021, the total deferred compensation liabilities recorded in other liabilities on the consolidated statements of condition for these plans were $10.9 million and $11.7 million, respectively.