Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Under the Peoples Bancorp Inc. Fourth Amended and Restated 2006 Equity Plan (the “2006 Equity Plan”), Peoples may grant, among other awards, nonqualified stock options, incentive stock options, restricted common share awards, stock appreciation rights, performance units and unrestricted common share awards to employees and non-employee directors. The total number of common shares available under the 2006 Equity Plan is 1,493,297. The maximum number of common shares that can be issued for incentive stock options is 750,000 common shares. Since February 2009, Peoples has granted restricted common shares to employees, and periodically to non-employee directors, subject to the terms and conditions prescribed by the 2006 Equity Plan. In general, common shares issued in connection with stock-based awards are issued from treasury shares to the extent available. If no treasury shares are available, common shares are issued from authorized but unissued common shares.

Restricted Common Shares

Under the 2006 Equity Plan, Peoples may award restricted common shares to officers, key employees and non-employee directors. In general, the restrictions on the restricted common shares awarded to employees expire after periods ranging from one to five years. Since 2018, common shares awarded to non-employee directors have vested immediately upon grant with no restrictions. In 2023, Peoples granted an aggregate of 188,372 restricted common shares subject to performance-based vesting to officers and key employees with restrictions that will lapse three years after the grant date; provided that in order for the restricted common shares to vest in full, Peoples must have reported positive net income and maintained a well-capitalized status by regulatory standards for each of the three fiscal years preceding the vesting date. During 2023, Peoples granted, to certain key employees, an aggregate of 71,276 restricted common shares subject to time-based vesting, the majority of which will vest three years after the grant date.

The following summarizes the changes to Peoples’ outstanding restricted common shares for the year ended December 31, 2023:


	Time-Based Vesting			Performance-Based Vesting
	Number of Common Shares	Weighted-Average Grant Date Fair Value		Number of Common Shares	Weighted-Average Grant Date Fair Value
Outstanding at January 1	138,522	$	27.25	295,565	$	32.20
Awarded	71,276	26.40		188,372	30.30
Released	(60,420)	22.26		(70,458)	32.91
Forfeited	(6,959)	30.52		(9,509)	31.11
Outstanding at December 31	142,419	$	28.78	403,970	$	31.21

The total intrinsic value of restricted common shares released was $3.7 million, $3.7 million and $2.6 million in 2023, 2022 and 2021, respectively.

Stock-Based Compensation

Peoples recognizes stock-based compensation expense, which is included as a component of Peoples’ salaries and employee benefit costs, for restricted common shares, as well as purchases made by participants in the employee stock purchase plan. For restricted common shares, Peoples recognizes stock-based compensation based on the estimated fair value of the awards expected to vest on the grant date. The estimated fair value is then expensed over the vesting period, which is normally three years. Peoples also has an employee stock purchase plan whereby employees can purchase Peoples’ common shares at a discount of up to 15%. The following summarizes the amount of stock-based compensation and related tax benefit recognized for the years ended December 31:


(Dollars in thousands)	2023		2022		2021
Employee stock-based compensation expense:
Restricted common share grant expense	$	5,337	$	3,707	$	3,436
Employee stock purchase plan expense	140		112		79

Total employee stock-based compensation expense	5,477		3,819		3,515
Non-employee director stock-based compensation expense	548		506		375
Total stock-based compensation expense	6,025		4,325		3,890
Recognized tax benefit	(1,402)		(1,007)		(867)
Net expense recognized	$	4,623	$	3,318	$	3,023

Restricted common shares were the primary form of stock-based compensation awards granted by Peoples in 2023, 2022 and 2021. The fair value of restricted common share awards on the grant date is the market price of Peoples’ common shares. Total unrecognized stock-based compensation related to unvested restricted common share awards was $5.3 million at December 31, 2023, which will be recognized over a weighted-average period of 2.0 years. In 2021, the Board of Directors granted 4,347 unrestricted common shares to non-employee directors, with related stock-based compensation of $135,000.