15. Stock Incentive Plans

Restricted Stock

The Corporation issues restricted stock awards, consisting of both restricted stock and restricted stock units, to key employees under its Incentive Compensation Plans (Plans). Beginning in 2014, the Corporation issues time-based awards and performance-based awards under these Plans, 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 the Corporation’s common stock on the grant date. The fair value of the performance-based awards is based on a Monte-Carlo Simulation valuation of the Corporation’s common stock as of the grant date.

The Corporation issued 119,589 performance-based restricted stock units in 2014. Recipients will earn shares, totaling between 0% and 175% of the number of units issued, based on the Corporation’s total stockholder return relative to a specified peer group of financial institutions over the three-year period. These market-based restricted stock units are included in the table below as if the recipients earned shares equal to 100% of the units issued.

Prior to 2014, more than half of the restricted stock awards granted to management were earned if the Corporation met or exceeded certain financial performance results when compared to its peers. These performance-related awards were expensed ratably from the date that the likelihood of meeting the performance measure was probable through the end of a four-year vesting period. The service-based awards were expensed ratably over a three-year vesting period. The Corporation also issued discretionary service-based awards to certain employees that vested over five years.

During 2014, 2013 and 2012, the Corporation issued 387,165, 361,664 and 321,295 restricted stock awards, respectively; with aggregate weighted average grant date fair values of $5,227, $4,014 and $3,884, respectively, under these Plans. As of December 31, 2014, the Corporation had available up to 2,420,020 shares of common stock to issue under these Plans.

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.

Share-based compensation expense related to restricted stock awards was $3,584, $5,063 and $3,758 for the years ended December 31, 2014, 2013 and 2012, the tax benefit of which was $1,254, $1,772 and $1,315, respectively.

The following table summarizes certain information concerning restricted stock awards:


	2014			Weighted Average Grant Price per Share		2013			Weighted Average Grant Price per Share		2012			Weighted Average Grant Price per Share
Unvested shares outstanding at beginning of year		1,729,033		$	10.23		1,913,073		$	9.17		1,846,115		$	8.44
Granted		387,165			13.50		361,664			11.10		321,295			12.09
Net adjustment due to performance		(36,600	)		12.01		165,545			9.60		28,181			8.31
Vested		(707,074	)		8.81		(734,129	)		7.90		(179,767	)		8.24
Forfeited		(65,399	)		11.72		(37,828	)		10.42		(179,132	)		8.50
Dividend reinvestment		46,968			12.66		60,708			11.82		76,381			11.19

Unvested shares outstanding at end of year		1,354,093			11.86		1,729,033			10.23		1,913,073			9.17

The total fair value of shares vested was $10,713, $8,259 and $2,193 for the years ended December 31, 2014, 2013 and 2012, respectively.

As of December 31, 2014, there was $5,242 of unrecognized compensation cost related to unvested restricted stock awards granted, $28 of which is subject to accelerated vesting under the plan’s immediate vesting upon retirement provision for awards granted prior to the adoption of ASC 718. The components of the restricted stock awards as of December 31, 2014 are as follows:


	Service- Based Awards		Performance- Based Awards		Total
Unvested shares		513,886		840,207		1,354,093
Unrecognized compensation expense	$	3,075	$	2,167	$	5,242
Intrinsic value	$	6,845	$	11,192	$	18,037
Weighted average remaining life (in years)		2.14		1.95		2.02

Stock Options

All outstanding stock options were assumed from acquisitions and are fully vested. Upon consummation of the Corporation’s acquisitions, all outstanding stock options issued by the acquired companies were converted into equivalent Corporation stock options. The Corporation issues shares of treasury stock or authorized but unissued shares to satisfy stock options exercised. Shares issued upon the exercise of stock options were 517,192 for 2014, 69,429 for 2013 and 182,188 for 2012.

The following table summarizes certain information concerning stock options:


	2014			Weighted Average Price per Share		2013			Weighted Average Price per Share		2012			Weighted Average Price per Share
Options outstanding at beginning of year		533,524		$	11.50		640,050		$	13.21		586,020		$	14.93
Assumed from acquisitions		805,507			7.39		274,964			11.16		627,808			10.41
Exercised		(690,973	)		7.75		(69,429	)		7.46		(182,188	)		8.87
Forfeited		(79,224	)		21.40		(312,061	)		15.58		(391,590	)		13.32

Options outstanding and exercisable at end of year		568,834			8.86		533,524			11.50		640,050			13.21

The following table summarizes information about stock options outstanding at December 31, 2014:


Range of Exercise Prices	Options Outstanding and Exercisable		Weighted Average Remaining Contractual Years		Weighted Average Exercise Price
$3.45 - $5.18		218,170		5.74	$	4.79
$5.19 - $7.78		105,497		5.63		6.11
$7.79 - $11.68		—		—		—
$11.69 - $17.54		233,780		2.59		12.77
$17.55 - $26.32		—		—		—
$26.33 - $36.42		11,387		1.34		31.92

		568,834

The intrinsic value of outstanding and exercisable stock options at December 31, 2014 was $2,302.

The following table summarizes certain information relating to stock options exercised:


Year Ended December 31	2014		2013		2012
Proceeds from stock options exercised	$	3,292	$	365	$	864
Tax benefit recognized from stock options exercised		808		79		96
Intrinsic value of stock options exercised		3,289		318		435

Warrants

In conjunction with its participation in the CPP, the Corporation issued to the UST a warrant to purchase up to 1,302,083 shares of the Corporation’s common stock. Pursuant to Section 13(H) of the Warrant to Purchase Common Stock, the number of shares of common stock issuable upon exercise of the warrant has been reduced in half to 651,042 shares as of June 16, 2009, the date the Corporation completed a public offering. The warrant, which expires in 2019, has an exercise price of $11.52 per share.

In connection with the Parkvale acquisition, the warrant issued by Parkvale to the UST under the CPP was converted into a warrant to purchase up to 819,640 shares of the Corporation’s common stock. This warrant, which was recorded at its fair value on January 1, 2012, expires in 2018 and has an exercise price of $5.81 per share.

In conjunction with the ANNB acquisition, the warrant issued by ANNB to the UST under the CPP has been converted into a warrant to purchase up to 364,843 shares of the Corporation’s common stock. The warrant, which was recorded at its fair value on April 6, 2013, expires in 2019 and has an exercise price of $3.38 per share.