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Share-based Compensation
12 Months Ended
Dec. 31, 2017
Share-based Compensation [Abstract]  
Share-based Compensation
Note 22 - Share-based Compensation
General Description of Share-based Plans
Synovus has a long-term incentive plan under which the Compensation Committee of the Board of Directors has the authority to grant share-based awards to Synovus employees. The 2013 Omnibus Plan authorizes 8.6 million common share equivalents available for grant, where grants of options count as one share equivalent and grants of full value awards (e.g., restricted share units, market restricted share units, and performance share units) count as two share equivalents. Any restricted share units that are forfeited and options that expire unexercised will again become available for issuance under the Plan. At December 31, 2017, Synovus had a total of 5.7 million common share equivalents of its authorized but unissued common stock reserved for future grants under the 2013 Omnibus Plan. The Plan permits grants of share-based compensation including stock options, restricted share units, market restricted share units, and performance share units. The grants generally include vesting periods ranging from three to five years and contractual terms of ten years. As further discussed below, market restricted share units and performance share units are granted at a defined target level and are compared annually to required market and performance metrics to determine actual units vested and compensation expense. Synovus has historically issued new shares to satisfy share option exercises and share unit conversions. Dividend equivalents are paid on outstanding restricted share units, market restricted share units, and performance share units in the form of additional restricted share units that vest over the same vesting period or the vesting period left on the original restricted share unit grant.
During 2017, Synovus awarded 242,804 restricted share units to employees and non-employee directors and granted 78,174 market restricted share units and 72,825 performance share units to senior management. The weighted average grant date fair value of the awarded restricted share units, market restricted share units, and performance share units was $41.82, $43.52, and $41.61, per share, respectively. During 2016, Synovus awarded 350,458 restricted share units to employees and non-employee directors and granted 93,913 market restricted share units and 83,529 performance share units to senior management. The weighted average grant date fair value of the awarded restricted share units, market restricted share units, and performance share units was $26.43, $26.93, and $25.95, per share, respectively. During 2015, Synovus awarded 321,874 restricted share units to employees and non-employee directors and granted 82,152 market restricted share units and 82,152 performance share units to senior management. The weighted average grant date fair value of the awarded restricted share units, market restricted share units, and performance share units was $28.09, $29.39, and $28.06, per share, respectively. The restricted share units and the market restricted share units granted during 2017, 2016, and 2015 contain a service-based vesting period of three years with most awards vesting pro-rata over three years.
Share-based Compensation Expense
Total share-based compensation expense was $14.2 million, $13.6 million, and $12.6 million for 2017, 2016, and 2015, respectively. The total income tax benefit recognized in the consolidated statements of income related to share-based compensation expense was approximately $5.2 million, $5.0 million, and $4.6 million for 2017, 2016, and 2015, respectively. No share-based compensation costs have been capitalized for the years ended December 31, 2017, 2016, and 2015. As of December 31, 2017, unrecognized compensation cost related to the unvested portion of share-based compensation arrangements involving shares of Synovus stock was approximately $17.5 million.
Stock Options
There were no stock option grants in 2017, 2016, or 2015. A summary of stock option activity and changes during the years ended December 31, 2017, 2016, and 2015 is presented below.
Stock Options
 
 
 
 
 
 
2017
 
2016
 
2015
 
Shares
 
Weighted-Average Exercise Price
 
Shares
 
Weighted-Average Exercise Price
 
Shares
 
Weighted-Average Exercise Price
Outstanding at beginning of year
973,361

 
$
17.76

 
1,741,975

 
$
37.88

 
2,550,046

 
$
45.11

Options exercised
(197,631
)
 
17.41

 
(297,225
)
 
17.35

 
(338,808
)
 
16.72

Options forfeited

 

 
(1,597
)
 
17.64

 
(12,825
)
 
17.17

Options expired/canceled

 

 
(469,792
)
 
92.62

 
(456,438
)
 
94.56

Options outstanding at end of year
775,730

 
$
17.85

 
973,361

 
$
17.76

 
1,741,975

 
$
37.88

Options exercisable at end of year
775,730

 
$
17.85

 
973,361

 
$
17.76

 
1,504,783

 
$
41.08

 
 
 
 
 
 
 
 
 
 
 
 

The aggregate intrinsic value for outstanding and exercisable stock options at December 31, 2017 was $23.8 million and their weighted average remaining contractual life was 4.18 years.
The intrinsic value of stock options exercised during the years ended December 31, 2017, 2016, and 2015 was $5.1 million, $4.7 million, and $4.4 million, respectively. Cash received from option exercises of common stock for the years ended December 31, 2017, 2016, and 2015 was $3.4 million, $5.2 million, and $5.6 million, respectively. The total grant date fair value of stock options vested during 2016 and 2015 was $7.4 million and $6.5 million, respectively. During 2016, 317,524 stock options with a weighted average exercise price of $93.62 and contractual expiration dates in 2017 and 2018 were canceled without replacement awards. The cancellation resulted in a deferred tax asset write-off totaling $1.7 million, which was recorded as a reduction of additional paid-in capital. Due to the implementation of ASU 2016-09 effective January 1, 2017, if the canceled stock options had remained outstanding through their original contractual expiration dates, the corresponding deferred tax asset write-off totaling $1.7 million would have been recorded as a component of income tax expense during the years ending December 31, 2017 and 2018.
Restricted Share Units, Market Restricted Share Units, and Performance Share Units
Compensation expense is measured based on the grant date fair value of restricted share units, market restricted share units, and performance share units. The fair value of restricted share units and performance share units is equal to the market price of common stock on the grant date. The fair value of market restricted share units granted was estimated on the date of grant using a Monte Carlo simulation model with the following weighted average assumptions:
 
 
2017
 
2016
 
2015
Risk-free interest rate
 
1.48
%
 
0.81
%
 
1.05
%
Expected stock price volatility
 
22.9

 
25.7

 
26.4

Dividend yield
 
1.2

 
1.8

 
1.4

Simulation period
 
3.0 years

 
3.0 years

 
3.0 years

 
 
 
 
 
 
 

The stock price expected volatility was based on Synovus' historical and implied volatility. The Monte Carlo model estimates fair value based on 100,000 simulations of future share price using a theoretical model of stock price behavior.
A summary of restricted share units outstanding and changes during the years ended December 31, 2017, 2016, and 2015 is presented below (excluding market restricted and performance share units).
Restricted Share Units
 
 
 
 
Share Units
 
Weighted-Average Grant Date Fair Value
Outstanding at December 31, 2014
882,823

 
$
19.81

Granted
321,874

 
28.09
Dividend equivalents granted
9,810

 
28.09
Vested
(428,121
)
 
17.48
Forfeited
(23,619
)
 
24.60
Outstanding at December 31, 2015
762,767

 
24.57

Granted
350,458

 
26.43

Dividend equivalents granted
11,105

 
26.43

Vested
(406,496
)
 
23.10

Forfeited
(12,067
)
 
23.96

Outstanding at December 31, 2016
705,767

 
26.38

Granted
242,804

 
41.82

Dividend equivalents granted
5,839

 
41.82

Vested
(341,825
)
 
26.25

Forfeited
(46,637
)
 
26.28

Outstanding at December 31, 2017
565,948

 
$
33.25

 
 
 
 

The total fair value of restricted share units vested during 2017, 2016, and 2015 was $14.4 million, $11.4 million, and $12.3 million, respectively. As of December 31, 2017, total unrecognized compensation cost related to the foregoing restricted share units was approximately $9.9 million. This cost is expected to be recognized over a weighted average remaining period of 1.43 years.
Synovus granted market restricted share units to senior management during the years ended December 31, 2017, 2016, and 2015. The market restricted share units have a three-year service-based vesting component as well as a total shareholder return multiplier. The number of market restricted share units that will ultimately vest ranges from 75% to 125% of a defined target based on Synovus' total shareholder return (TSR). The total fair value of market restricted share units vested during 2017, 2016, and 2015 was $4.8 million, $2.6 million, and $1.4 million, respectively. At December 31, 2017, total unrecognized compensation cost related to market restricted share units was approximately $3.5 million with a weighted average remaining period of 1.46 years. A summary of market restricted share units outstanding and changes during the years ended December 31, 2017, 2016, and 2015 is presented below.
Market Restricted Share Units
 
 
 
 
Share Units
 
Weighted-Average Grant Date Fair Value
Outstanding at December 31, 2014
118,186

 
$
24.33

Granted    
82,152

 
29.39

Dividend equivalents granted    
2,221

 
29.05

Quantity change by TSR factor
4,838

 
24.33

Vested
(49,149
)
 
24.34

Outstanding at December 31, 2015
158,248

 
27.02

Granted    
93,913

 
26.93

Dividend equivalents granted    
3,095

 
26.93

Quantity change by TSR factor
9,970

 
26.93

Vested
(82,817
)
 
26.40

Outstanding at December 31, 2016
182,409

 
27.25

Granted    
78,174

 
43.52

Dividend equivalents granted    
2,811

 
43.52

Quantity change by TSR factor
22,182

 
27.25

Vested
(114,013
)
 
26.78

Outstanding at December 31, 2017
171,563

 
$
35.24

 
 
 
 

Synovus granted performance share units to senior management during the years ended December 31, 2017, 2016, and 2015. These units vest upon meeting certain service and performance conditions. Return on average assets (ROAA) performance is evaluated each year over a three-year performance period, with share distribution determined at the end of the three years. The number of performance share units that will ultimately vest ranges from 0% to 150% of a defined target based on Synovus' three-year weighted average ROAA (as defined). The total fair value of performance share units vested during 2017 was $2.9 million. At December 31, 2017, total unrecognized compensation cost related to performance share units was approximately $4.1 million with a weighted average remaining period of 1.44 years. A summary of performance share units outstanding and changes during the years ended December 31, 2017, 2016, and 2015 is presented below.
Performance Share Units
 
 
 
 
Share Units
 
Weighted-Average Grant Date Fair Value
Outstanding at December 31, 2014
67,675

 
$
23.47

Granted    
82,152

 
28.06

Dividend equivalents granted    
1,740

 
28.06

Outstanding at December 31, 2015
151,567

 
26.01

Granted    
83,529

 
25.95

Dividend equivalents granted    
3,384

 
25.95

Outstanding at December 31, 2016
238,480

 
25.99

Granted    
72,825

 
41.61

Dividend equivalents granted    
2,562

 
41.61

Vested
(69,326
)
 
23.47

Outstanding at December 31, 2017
244,541

 
$
31.54

 
 
 
 

Other Information
Cash paid for taxes due on vesting of employee restricted share units and market restricted share units where restricted share units were withheld to cover taxes was $8.0 million, $5.0 million, and $5.1 million for the years ended December 31, 2017, 2016, and 2015, respectively.
During 2017, Synovus recognized $5.0 million of income tax benefits through the income statement from share-based compensation excess tax benefits upon the vesting of restricted share units and exercise of stock options. During 2016, Synovus recognized a share-based compensation net tax deficiency of $790 thousand associated primarily with expired and canceled stock options. The net deficiency was recorded as a reduction of additional paid-in capital within shareholders' equity. During 2015, Synovus recognized a net tax benefit of $1.7 million associated with vesting of restricted share units, exercises of stock options, and expired stock options. The net tax benefit was recorded as an increase of additional paid-in capital.
The following table provides aggregate information regarding grants under all Synovus equity compensation plans at December 31, 2017.

 
 
 
 
Plan Category
 
(a) Number of Securities to be Issued
Upon Vesting of Restricted
Share Units, Market
Restricted Share Units, and Performance Share Units(1)
 
(b) Number of Securities to be Issued
Upon Exercise of Outstanding Options
 
(c) Weighted-Average
Exercise Price of
Outstanding Options in Column (b)
 
(d) Number of Shares Remaining Available for Issuance Excluding Shares Reflected in Columns (a) and (b)
Shareholder approved equity compensation plans for shares of Synovus stock
 
982,052

 
775,730

 
$
17.85

 
5,671,680

 
 
 
 
 
 
 
 
 

(1) Market restricted and performance share units included at defined target levels. Actual shares issued upon vesting may differ based on actual TSR and ROAA over the measurement period.