Share-based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Before the Merger, Chemical and Legacy TCF granted share-based awards under their respective share-based compensation plans, including the Chemical Stock Incentive Plan of 2019 (the "Stock Incentive Plan of 2019”") and the TCF Financial 2015 Omnibus Incentive Plan (the "Legacy TCF Omnibus Incentive Plan"). At December 31, 2019, there were 1,808,804 shares reserved for issuance under the Stock Incentive Plan of 2019 and there were 2,271,524 shares reserved for issuance under the Legacy TCF Omnibus Incentive Plan.

In connection with the Merger, each equity award granted under Legacy TCF’s equity plans, including the Legacy TCF Omnibus Incentive Plan, was legally assumed by the combined company and adjusted so that its holder is entitled to receive a number of shares of TCF Financial's common stock equal to the product of (a) the number of shares of Legacy TCF common stock subject to such award multiplied by (b) the Exchange Ratio and (c) rounded, as applicable, to the nearest whole share, and otherwise subject to the same terms and conditions (including, without limitation, with respect to vesting conditions (taking into account any vesting that occurred at the Merger Date) and cash dividend equivalent rights). For any Legacy TCF equity awards that were subject to performance-based vesting at multiple achievement levels, the number of shares of Legacy TCF common stock underlying such award was calculated and fixed as of the Merger Date assuming achievement of the applicable performance conditions at the greater of target level performance or the actual level of achievement of Legacy TCF’s performance results through the latest practicable date before the Merger Date. Such awards converted into service-based vesting awards with the applicable vesting date to be the last day of the original performance period. For purposes of Legacy TCF equity awards for which performance was achievable at a single level, the performance condition was deemed satisfied as of the Merger Date.

In connection with the Merger, all outstanding stock options, performance-based restricted stock units and time-vesting restricted stock units of Chemical (collectively, the "Chemical equity awards") which were outstanding immediately before the Merger Date continue to be awards in respect of TCF Financial common stock following the Merger, subject to the same terms and conditions that were applicable to such awards before the Merger Date, except with respect to performance-based restricted stock units. The performance-based restricted stock units for which performance results had not been measured were measured as of the latest practicable date before the Merger Date and the number of performance-based restricted stock units was fixed at the greater of the target (100%) performance level or actual performance (the “Chemical earned awards”) and such Chemical earned awards will continue to vest based on the executive’s continued service through the end of the applicable performance period.

The fair value of share-based awards is recognized as compensation expense over the requisite service or performance period. Compensation expense for share-based awards was $15.2 million, $16.5 million and $12.7 million for the years ended December 31, 2019, 2018 and 2017, respectively. The excess tax benefit realized from share-based compensation transactions during the years ended December 31, 2019, 2018 and 2017 was a benefit of $2.3 million, $2.6 million and $2.8 million, respectively.

Restricted Stock Units

The Corporation can grant performance-based restricted stock units ("PRSUs") and time-based restricted stock units ("TRSUs") (collectively referred to as "RSUs") under the Stock Incentive Plan of 2019 and the Legacy TCF Omnibus Incentive Plan; provided that, RSUs granted under the Legacy TCF Omnibus Incentive Plan may only be granted to former employees of Legacy TCF. At December 31, 2019, there were no PRSUs outstanding dependent on achieving certain performance target levels and the grantee completing the requisite service period. The TRSUs vest upon satisfaction of a service condition. Upon achievement of the performance target level and/or satisfaction of a service condition, as applicable, the RSUs are converted into shares of TCF Financial's common stock on a one-to-one basis.

A summary of the activity for RSUs for the years ended December 31, 2019, 2018 and 2017 is presented below:



	Number of Units		Weighted-average Grant Date Fair Value Per Unit
Outstanding at December 31, 2016	228,867		$	12.86
Outstanding at December 31, 2016 as adjusted for conversion	116,289		25.31
Granted	67,130		37.72
Outstanding at December 31, 2017	360,988		15.17
Outstanding at December 31, 2017 as adjusted for conversion	183,419		29.86
Granted	60,181		43.78
Forfeited/canceled	(10,411	)	28.59
Vested	(26,609	)	28.81
Outstanding at December 31, 2018	406,575		17.33
Outstanding at December 31, 2018 as adjusted for conversion	206,580		34.11
Granted	638,138		41.99
Acquired in the Merger⁽¹⁾	879,779		47.36
Forfeited/canceled	(26,347	)	43.43
Vested	(186,330	)	38.11
Outstanding at December 31, 2019	1,511,820		44.49


(1)	Inclusive of certain Legacy TCF PRSUs which were converted at their maximum payout into 55,022 TRSUs with a weighted-average grant date fair value per unit of $42.06.

Unrecognized compensation expense related to RSUs totaled $42.6 million at December 31, 2019 and is expected to be recognized over the remaining weighted-average period of 2.2 years.

Restricted Stock Awards

The Corporation's restricted stock award transactions were as follows:



	Number of Awards		Weighted-Average Grant Date Fair Value Per Award
Outstanding at December 31, 2016	3,536,175		$	12.81
Outstanding at December 31, 2016 as adjusted for conversion	1,796,678		25.21
Granted	296,404		32.42
Forfeited/canceled	(293,174	)	22.39
Vested	(458,772	)	26.86
Outstanding at December 31, 2017	2,639,663		$	13.65
Outstanding at December 31, 2017 as adjusted for conversion	1,341,136		26.86
Granted	387,909		42.61
Forfeited/canceled	(119,366	)	29.77
Vested	(446,447	)	24.09
Outstanding at December 31, 2018	2,289,446		16.70
Outstanding at December 31, 2018 as adjusted for conversion	1,163,232		32.87
Granted	269,915		40.82
Forfeited/canceled	(136,489	)	34.18
Vested	(408,353	)	34.37
Outstanding at December 31, 2019	888,305		$	40.67

At December 31, 2019, there were no shares of performance-based restricted stock awards outstanding. Unrecognized stock compensation expense for restricted stock awards was $18.5 million at December 31, 2019 with a weighted-average remaining amortization period of 2.4 years.

Stock Options

A summary of activity for the Corporation's stock options is presented below:



	Non-Vested Stock Options Outstanding				Stock Options Outstanding
	Number of Options		Weighted-average Exercise Price		Number of Options		Weighted-average Exercise Price
Outstanding at December 31, 2016	—		$	—	404,000		$	15.75
Outstanding at December 31, 2016 as adjusted for conversion	—		—		205,272		31.00
Exercised	—		—		(19,308	)	31.00
Outstanding at December 31, 2017	—		—		366,000		15.75
Outstanding at December 31, 2017 as adjusted for conversion					185,964		31.00
Exercised	—		—		(185,964	)	31.00
Outstanding at December 31, 2018	—		—		—		—
Acquired in the Merger⁽¹⁾	127,906		39.38		520,379		29.48
Exercised	—		—		(25,602	)	30.10
Forfeited/canceled	(5,953	)	32.81		—		—
Expired	—		—		(756	)	32.81
Vested	(1,144	)	46.95		1,144		46.95
Outstanding at December 31, 2019	120,809		$	39.63	495,165		$	29.48
Exercisable/vested at December 31, 2019					495,165		$	29.48

(1) Options acquired in the Merger expire ten years from the date of grant and vest ratably over a five-year period.

The weighted-average remaining contractual term was 3.87 years for all stock options outstanding and 3.25 years for all exercisable stock options at December 31, 2019. The intrinsic value of all outstanding in-the-money stock options and exercisable in-the-money stock options was $10.1 million and $9.0 million, respectively, at December 31, 2019. The aggregate intrinsic values of outstanding and exercisable options at December 31, 2019 were calculated based on the closing market price of TCF Financial's common stock on December 31, 2019 of $46.80 per share less the exercise price. Options with intrinsic values less than zero, or "out-of-the-money" options, are not included in the aggregate intrinsic value reported.

During the year ended December 31, 2019, $771 thousand cash was received from option exercises.

At December 31, 2019, unrecognized compensation expense related to stock options totaled $586 thousand and is expected to be recognized over a remaining weighted average period of 1.7 years.