STOCK INCENTIVE PLANS

Restricted Stock

We issue restricted stock awards to key employees under our Incentive Compensation Plan (Plan). We issue time-based awards and performance-based awards under this Plan, both of which are based on a three-year vesting period. The grant date fair value of the time-based awards is equal to the price of our common stock on the grant date. The fair value of the performance-based awards is based on a Monte-Carlo simulation valuation of our common stock as of the grant date. The assumptions used for this valuation include stock price volatility, risk-free interest rate and dividend yield.

We issued 283,037 and 251,379 performance-based restricted stock units during the first nine months of 2018 and 2017. For performance-based restricted stock awards granted in 2018, we incorporated a new metric in which recipients will earn shares totaling between 0% and 175% of the number of units issued, based on our return on average tangible assets (ROATA) relative to a specified peer group of financial institutions over the three-year period. The result calculated using ROATA will then be adjusted by 75% to 125%, based on our total shareholder return (TSR) relative to the specified peer group of financial institutions. For performance-based restricted stock awards granted from 2014 through 2017, the recipients will earn shares, totaling between 0% and 175% of the number of units issued, based on our TSR relative to a specified peer group of financial institutions over the three-year period. These market-based restricted stock award units are included in the table below based on where we expect them to vest, regardless of the actual vesting percentages.

As of September 30, 2018, we had available up to 2,333,089 shares of common stock to issue under this Plan.

The following table details our issuance of restricted stock units and the aggregate weighted average grant date fair values under these plans for the years indicated.

TABLE 11.1



	Nine Months Ended September 30,
(dollars in thousands)	2018		2017
Restricted stock units	958,720		713,998
Weighted average grant date fair values	$	12,665	$	10,474

The unvested restricted stock awards are eligible to receive cash dividends or dividend equivalents which are ultimately used to purchase additional shares of stock and are subject to forfeiture if the requisite service period is not completed or the specified performance criteria are not met. These awards are subject to certain accelerated vesting provisions upon retirement, death, disability or in the event of a change of control as defined in the award agreements.

The following table summarizes the activity relating to restricted stock units during the periods indicated:

TABLE 11.2



	Nine Months Ended September 30,
	2018				2017
	Units		Weighted Average Grant Price per Share		Units		Weighted Average Grant Price per Share
Unvested units outstanding at beginning of period	1,975,862		$	13.64	1,836,363		$	12.97
Granted	958,720		13.21		713,998		14.67
Vested	(257,712	)	13.18		(594,560	)	12.84
Forfeited/expired	(209,438	)	13.36		(27,109	)	13.94
Dividend reinvestment	60,938		13.72		46,969		13.79
Unvested units outstanding at end of period	2,528,370		13.55		1,975,661		13.63

The following table provides certain information related to restricted stock units:

TABLE 11.3



(in thousands)	Nine Months Ended September 30,
	2018		2017
Stock-based compensation expense	$	7,310	$	6,088
Tax benefit related to stock-based compensation expense	1,535		2,131
Fair value of units vested	3,472		8,046

As of September 30, 2018, there was $16.3 million of unrecognized compensation cost related to unvested restricted stock units, including $1.0 million that is subject to accelerated vesting under the Plan’s immediate vesting upon retirement. The components of the restricted stock units as of September 30, 2018 are as follows:

TABLE 11.4



(dollars in thousands)	Service- Based Units		Performance- Based Units		Total
Unvested restricted stock units	1,455,391		1,072,979		2,528,370
Unrecognized compensation expense	$	10,770	$	5,514	$	16,284
Intrinsic value	$	18,513	$	13,648	$	32,161
Weighted average remaining life (in years)	2.09		1.19		1.71

Stock Options

All outstanding stock options were assumed from acquisitions and are fully vested. Upon consummation of our acquisitions, all outstanding stock options issued by the acquired companies were converted into equivalent FNB stock options. We issue shares of treasury stock or authorized but unissued shares to satisfy stock options exercised.

The following table summarizes the activity relating to stock options during the periods indicated:

TABLE 11.5



	Nine Months Ended September 30,
	2018				2017
	Shares		Weighted Average Exercise Price per Share		Shares		Weighted Average Exercise Price per Share
Options outstanding at beginning of period	722,650		$	7.96	892,532		$	8.95
Assumed from acquisitions	—		—		207,645		8.92
Exercised	(214,781	)	7.91		(163,455	)	9.41
Forfeited/expired	(4,834	)	11.65		(56,687	)	11.16
Options outstanding and exercisable at end of period	503,035		7.97		880,035		8.72

The intrinsic value of outstanding and exercisable stock options at September 30, 2018 was $2.4 million. The aggregate intrinsic value represents the amount by which the fair value of underlying stock exceeds the option exercise price.