Share-based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

The Corporation maintains share-based compensation plans under which it periodically grants share-based awards for a fixed number of shares to directors and certain officers of the Corporation.

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 September 30, 2020, there were 1,440,141 shares reserved for issuance under the Legacy TCF Omnibus Incentive Plan and there were 1,147,952 shares reserved for issuance under the Stock Incentive Plan of 2019.

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, including the merger-related share-based compensation expense was $11.9 million and $33.6 million for the three and nine months ended September 30, 2020, respectively, and $9.8 million and $13.6 million for the same period in 2019, respectively. The excess tax realized from share-based compensation transactions during the three and nine months ended September 30, 2020 was an expense of $897 thousand and $2.0 million, respectively, and a benefit of $743 thousand and $2.0 million for the same period in 2019, 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 new employees hired after the merger or employees who previously were employees of Legacy TCF. At September 30, 2020, there were 407,323 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 satisfaction of a service condition and/or performance target level, as applicable, the TRSUs are converted into shares of TCF Financial's common stock on a one-to-one basis and the PRSUs are converted into shares of TCF Financial's common stock in accordance with the achievement of the performance target (ranging from 0% to 150% of the granted PRSUs). Compensation expense related to RSUs is recognized over the expected requisite performance or service period, as applicable.

A summary of the activity for RSUs at and for the nine months ended September 30, 2020 is presented below:



	Number of Units		Weighted-average Grant Date Fair Value Per Unit
Outstanding at December 31, 2019	1,511,820		$	44.49
Granted	1,465,165		24.59
Forfeited/canceled	(45,388	)	28.93
Vested	(601,651	)	43.99
Outstanding at September 30, 2020	2,329,946		$	32.41

Unrecognized compensation expense related to RSUs totaled $52.1 million at September 30, 2020 and is expected to be recognized over the remaining weighted-average period of 2.7 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, 2019	888,305		$	40.67
Granted	54,040		25.91
Forfeited/canceled	(7,959	)	39.91
Vested	(379,485	)	41.11
Outstanding at September 30, 2020	554,901		$	38.63

At September 30, 2020, there were no shares of performance-based restricted stock awards outstanding. Unrecognized stock compensation expense for restricted stock awards was $11.5 million at September 30, 2020 with a weighted-average remaining amortization period of 1.9 years.

The following table provides information regarding total expense for restricted stock awards:



	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2020		2019		2020		2019
Restricted stock expense related to employees⁽¹⁾	$	7,600	$	4,779	$	17,995	$	9,455
Restricted stock expense related to directors⁽²⁾	352		391		566		709
Total restricted stock expense	$	7,952	$	5,170	$	18,561	$	10,164


⁽¹⁾	Included in "Compensation and employee benefits" in the Consolidated Statements of Income.


⁽²⁾	Included in "Other noninterest expense" in the Consolidated Statements of Income.

Stock Options

A summary of activity for the Corporation's stock options at and for the nine months ended September 30, 2020 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, 2019	120,809		$	39.63	495,165		$	29.48
Exercised	—		—		(82,276	)	22.03
Forfeited/canceled	(3,659	)	38.18		—		—
Expired	—		—		(74,626	)	38.89
Vested	(57,262	)	38.38		57,262		38.38
Outstanding at September 30, 2020	59,888		$	40.92	395,525		$	30.55
Exercisable/vested at September 30, 2020					395,525		$	30.55

The weighted-average remaining contractual term was 4.1 years for all outstanding stock options and 3.9 years for exercisable stock options at September 30, 2020.