Stock Options and Other Equity-Based Incentive Instruments

12 Months Ended

Dec. 31, 2011

Stock Options and Other Equity-Based Incentive Instruments [Abstract]

Stock Options and Other Equity-Based Incentive Instruments

Note 20 – Stock Options and Other Equity-Based Incentive Instruments

In March 2009, the Company’s Board of Directors adopted the TriCo Bancshares 2009 Equity Incentive Plan (2009 Plan) covering officers, employees, directors of, and consultants to, the Company. The 2009 Plan was approved by the Company’s shareholders in May 2009. The 2009 Plan allows for the grant of the following types of equity awards (“Awards”): incentive stock options, nonstatutory stock options, performance awards, restricted stock, restricted stock unit awards and stock appreciation rights. Subject to certain adjustments, the maximum aggregate number of shares of TriCo’s common stock which may be issued pursuant to or subject to Awards is 650,000. The number of shares available for issuance under the 2009 Plan shall be reduced by: (i) one share for each share of common stock issued pursuant to a stock option or a Stock Appreciation Right and (ii) two shares for each share of common stock issued pursuant to a Performance Award, a Restricted Stock Award or a Restricted Stock Unit Award. When Awards made under the 2009 Plan expire or are forfeited or cancelled, the underlying shares will become available for future Awards under the 2009 Plan. To the extent that a share of common stock pursuant to an Award that counted as two shares against the number of shares again becomes available for issuance under the 2009 Plan, the number of shares of common stock available for issuance under the 2009 Plan shall increase by two shares. Shares awarded and delivered under the 2009 Plan may be authorized but unissued, or reacquired shares. As of December 31, 2011, 399,000 options for the purchase of common shares remain outstanding, and 251,000 remain available for grant, under the 2009 Plan.

In May 2001, the Company adopted the TriCo Bancshares 2001 Stock Option Plan (2001 Plan) covering officers, employees, directors of, and consultants to, the Company. Under the 2001 Plan, the option exercise price cannot be less than the fair market value of the Common Stock at the date of grant except in the case of substitute options. Options for the 2001 Plan expire on the tenth anniversary of the grant date. Vesting schedules under the 2001 Plan are determined individually for each grant. As of December 31, 2011, 851,935 options for the purchase of common shares remain outstanding under the 2001 Plan. As of May 2009, as a result of the shareholder approval of the 2009 Plan, no new options may be granted under the 2001 Plan.

Stock option activity during 2011 is summarized in the following table:

	Number of Shares			Option Price per Share		Weighted Average Exercise Price		Weighted Average Fair Value on Date of Grant
Outstanding at December 31, 2010		1,425,185		$	8.05 to $25.91	$	15.78
Options granted		196,000		$	14.54 to $14.54	$	14.54	$	6.27
Options exercised		(296,250	)	$	8.05 to $  8.20	$	8.20
Options forfeited		(74,000	)	$	13.33 to $25.91	$	19.11
Outstanding at December 31, 2011		1,250,935		$	11.72 to $25.91	$	17.18

The following table shows the number, weighted-average exercise price, intrinsic value, and weighted average remaining contractual life of options exercisable, options not yet exercisable and total options outstanding as of December 31, 2011:

	Currently		Currently Not		Total
(dollars in thousands except exercise price)	Exercisable		Exercisable		Outstanding
Number of options		853,845		397,090		1,250,935
Weighted average exercise price	$	17.62	$	16.23	$	17.18
Intrinsic value (thousands)	$	438	$	19	$	457
Weighted average remaining contractual term (yrs.)		3.66		8.76		5.28

The 397,090 options that are not currently exercisable as of December 31, 2011 are expected to vest, on a weighted-average basis, over the next 3.40 years, and the Company is expected to recognize $2,532,000 of pre-tax compensation costs related to these options as they vest. The Company did not modify any option grants in 2011, 2010, or 2009.

The following table shows the total intrinsic value of options exercised, the total fair value of options vested, total compensation costs for options recognized in income, and total tax benefit recognized in income related to compensation costs for options during the periods indicated:

	Years Ended December 31,
	2011		2010		2009
Intrinsic value of options exercised	$	2,087,000	$	1,429,000	$	323,000
Fair value of options that vested	$	830,000	$	800,000	$	477,000
Total compensation costs for options recognized in income	$	830,000	$	800,000	$	477,000
Total tax benefit recognized in income related to compensation costs for options	$	349,000	$	336,000	$	197,000
Weighted average fair value of grants (per option)	$	6.27	$	7.93	$	4.24

The fair value of the Company’s stock option grants is estimated on the measurement date, which, for the Company, is the date of grant. The fair value of stock options is estimated using the Black-Scholes option-pricing model. The Company estimated expected market price volatility and expected term of the options based on historical data and other factors. The weighted-average assumptions used to determine the fair value of options granted are detailed in the table below:

	Years Ended December 31,
	2011			2010			2009
Assumptions used to value option grants:
Average expected terms (years)		8.8			8.5			9.0
Volatility		51.2	%		49.7	%		46.4	%
Annual rate of dividends		2.48	%		2.05	%		4.12	%
Discount rate		1.70	%		2.82	%		2.85	%