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, 2017, 411,900 options for the purchase of common shares, and 123,479 restricted stock units were outstanding, and 527,651 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, 2017, 46,500 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, 2017 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, 2016		592,250		$	12.63	to	$	23.21	$	17.12
Options granted		—			—	to		—		—		—
Options exercised		(133,850	)	$	14.54	to	$	22.54	$	18.07
Options forfeited		—			—	to		—		—
Outstanding at September 30, 2017		458,400		$	12.63	to	$	23.21	$	16.85

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, 2017:


	Currently Exercisable		Currently Not Exercisable		Total Outstanding
Number of options		431,100		27,300		458,400
Weighted average exercise price	$	16.61	$	20.54	$	16.85
Intrinsic value (in thousands)	$	10,406	$	552	$	10,958
Weighted average remaining contractual term (yrs.)		4.0		6.1		4.1

The 27,300 options that are currently not exercisable as of September 30, 2017 are expected to vest, on a weighted-average basis, over the next 1.1 years, and the Company is expected to recognize $157,000 of pre-tax compensation costs related to these options as they vest. The Company did not modify any option grants during 2016 or the nine months ended September 30, 2017.

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
	Number of RSUs			Weighted Average Fair Value on Date of Grant		Number of RSUs			Weighted Average Fair Value on Date of Grant
Outstanding at December 31, 2016		68,450					47,426
RSUs granted		29,669		$	35.36		17,939		$	32.95
Additional market plus service condition RSUs vested							6,269
RSUs added through dividend credits		939					—
RSUs released		(28,397	)				(18,805	)
RSUs forfeited/expired		(11	)				—
Outstanding at September 30, 2017		70,650					52,829

The 70,650 of service condition vesting RSUs outstanding as of September 30, 2017 include a feature whereby each RSU outstanding is credited with a dividend amount equal to any common stock cash dividend declared and paid, and the credited amount is divided by the closing price of the Company’s stock on the dividend payable date to arrive at an additional amount of RSUs outstanding under the original grant. The 70,650 of service condition vesting RSUs outstanding as of September 30, 2017 are expected to vest, and be released, on a weighted-average basis, over the next 1.5 years. The Company expects to recognize $1,686,000 of pre-tax compensation costs related to these service condition vesting RSUs between September 30, 2017 and their vesting dates. The Company did not modify any service condition vesting RSUs during 2016 or the nine months ended September 30, 2017.

The 52,829 of market plus service condition vesting RSUs outstanding as of September 30, 2017 are expected to vest, and be released, on a weighted-average basis, over the next 1.6 years. The Company expects to recognize $839,000 of pre-tax compensation costs related to these RSUs between September 30, 2017 and their vesting dates. As of September 30, 2017, 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 79,243 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. The Company did not modify any market plus service condition vesting RSUs during 2016 or the nine months ended September 30, 2017.