STOCK INCENTIVE PLANS

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

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 2,004,895 and 1,182,197 restricted stock units during the nine months ended September 30, 2020 and 2019, respectively, including 571,932 and 353,656 performance-based restricted stock units during those same periods, respectively. As of September 30, 2020, we had available up to 5,525,700 shares of common stock to issue under this Plan, which includes 4,640,000 additional shares registered during the third quarter of 2020.

The unvested restricted stock unit 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 13.1


	Nine Months Ended September 30,
	2020			2019
	Units	Weighted Average Grant Price per Share		Units	Weighted Average Grant Price per Share
Unvested units outstanding at beginning of period	2,858,357	$	12.56	2,556,174	$	13.51
Granted	2,004,895	5.95		1,182,197	10.94
Net adjustment due to performance	47,290	13.00		—	—
Vested	(592,602)	14.50		(655,208)	13.15
Forfeited/expired	(169,552)	13.05		(325,253)	12.72
Dividend reinvestment	173,990	6.99		80,738	11.62
Unvested units outstanding at end of period	4,322,378	9.45		2,838,648	12.54

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

TABLE 13.2


(in millions)	Nine Months Ended September 30,
	2020		2019
Stock-based compensation expense	$	13	$	8
Tax benefit related to stock-based compensation expense	3		2
Fair value of units vested	4		7

As of September 30, 2020, there was $13.8 million of unrecognized compensation cost related to unvested restricted stock units, including $0.9 million that is subject to accelerated vesting under the Plan’s immediate vesting upon retirement. Stock-based compensation expense increased $5.4 million, or 65% for the nine months ended September 30, 2020, compared to the same period of 2019, as we made a change to long-term stock-based compensation retirement vesting that resulted in accelerated grant date expense recognition for certain 2020 awards, with full expense recognition on grant date instead of recognizing the same expense amount over a 36-month vesting period. These awards are not released until the three-year service period is complete or the specified performance criteria is met over the three-year period.

The components of the restricted stock units as of September 30, 2020 are as follows:

TABLE 13.3


(dollars in millions)	Service- Based Units		Performance- Based Units		Total
Unvested restricted stock units	2,987,784		1,334,594		4,322,378
Unrecognized compensation expense	$	11	$	3	$	14
Intrinsic value	$	20	$	9	$	29
Weighted average remaining life (in years)	1.86		1.31		1.69

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.

As of September 30, 2020, we had 207,030 stock options outstanding and exercisable at a weighted average exercise price per share of $8.42, compared to 397,628 stock options outstanding and exercisable at a weighted average exercise price per share of $8.10 as of September 30, 2019.

The intrinsic value of outstanding and exercisable stock options at September 30, 2020 was $0.1 million. The aggregate intrinsic value represents the amount by which the fair value of underlying stock exceeds the option exercise price.