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 granting of the following types of “stock awards” (Awards): incentive stock options, nonstatutory stock options, performance awards, restricted stock, restricted stock unit (RSU) awards and stock appreciation rights. RSUs that vest based solely on the grantee remaining in the service of the Company for a certain amount of time, are referred to as “service condition vesting RSUs”. RSUs that vest based on the grantee remaining in the service of the Company for a certain amount of time and a market condition such as the total return of the Company’s common stock versus the total return of an index of bank stocks, are referred to as “market plus service condition vesting RSUs”. In May 2013, the Company’s shareholders approved an amendment to the 2009 Plan increasing the maximum aggregate number of shares of TriCo’s common stock which may be issued pursuant to or subject to Awards from 650,000 to 1,650,000. The number of shares available for issuance under the 2009 Plan is 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 September 30, 2016, 639,900 options for the purchase of common shares, and 114,139 restricted stock units were outstanding, and 627,536 shares remain available for issuance, 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 September 30, 2016, 169,750 options for the purchase of common shares were 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 the nine months ended September 30, 2016 is summarized in the following table:


									Weighted		Weighted
									Average		Average Fair
	Number			Option Price					Exercise		Value on
	of Shares			per Share					Price		Date of Grant
Outstanding at December 31, 2015		948,350		$	12.63	to	$	25.91	$	17.94
Options granted		—			—	to		—		—		—
Options exercised		132,700		$	14.76	to	$	25.91	$	21.91
Options forfeited		(6,000	)	$	23.21	to	$	23.21	$	23.21
Outstanding at September 30, 2016		809,650		$	12.63	to	$	23.21	$	17.25

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 September 30, 2016:


	Currently		Currently Not		Total
	Exercisable		Exercisable		Outstanding
Number of options		694,350		115,300		809,650
Weighted average exercise price	$	17.24	$	17.29	$	17.25
Intrinsic value (in thousands)	$	6,615	$	1,093	$	7,708
Weighted average remaining contractual term (yrs.)		4.1		6.2		4.4

The 115,300 options that are currently not exercisable as of September 30, 2016 are expected to vest, on a weighted-average basis, over the next 1.1 years, and the Company is expected to recognize $531,000 of pre-tax compensation costs related to these options as they vest. The Company did not modify any option grants during 2015 or the nine months ended September 30, 2016.

Restricted stock unit (RSU) activity is summarized in the following table for the dates indicated:


	Service Condition Vesting RSUs					Market Plus Service Condition Vesting RSUs
				Weighted				Weighted
				Average Fair				Average Fair
	Number			Value on		Number		Value on
	of RSUs			Date of Grant		of RSUs		Date of Grant
Outstanding at December 31, 2015		46,286					32,097
RSUs granted		36,542		$	26.60		18,753	$	24.39
RSUs added through dividend credits		994					—
RSUs released		(20,529	)				—
RSUs forfeited/expired		(4	)				—
Outstanding at September 30, 2016		63,289					50,850

The 63,289 service condition vesting RSUs outstanding as of September 30, 2016 include a feature whereby each RSU award outstanding is adjusted for cash dividends with additional RSUs equal in number to the number of shares of common stock that could be purchased with the cash dividends that would have been paid on the shares underlying the awards on the date the dividend is paid. The 63,289 service condition vesting RSUs outstanding as of September 30, 2016 are expected to vest, and be released, on a weighted-average basis, over the next 1.4 years. The Company is expected to recognize $1,155,000 of pre-tax compensation costs related to these service condition vesting RSUs between September 30, 2016 and their vesting dates. During the nine months ended September 30, 2016, the Company did not modify any service condition vesting RSUs. During 2015 the Company did not modify any service condition vesting RSUs.

The 50,850 market plus service condition vesting RSUs outstanding as of September 30, 2016 are expected to vest, and be released, on a weighted-average basis, over the next 2.2 years. The Company is expected to recognize $635,000 of pre-tax compensation costs related to these RSUs between September 30, 2016 and their vesting dates. As of September 30, 2016, the number of market plus service condition vesting RSUs outstanding that will actually vest, and be released, may be reduced to zero or increased to 76,275 depending on the total return of the Company’s common stock versus the total return of an index of bank stocks from the grant date to the vesting date. During the nine months ended September 30, 2016, the Company did not modify any market plus service condition vesting RSUs. During 2015 the Company did not modify any market plus service condition vesting RSUs.