Stock-Based Compensation Plans

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

NOTE 15 – STOCK-BASED COMPENSATION PLANS

The following table presents compensation expense and related tax benefits for all equity awards recognized in the consolidated statements of income:


	2020		2019		2018
	(in thousands)
Compensation expense	$	8,381	$	7,413	$	7,965
Tax benefit	(1,790)		(1,610)		(2,625)
Total stock-based compensation, net of tax	$	6,591	$	5,803	$	5,340

The tax benefits as a percentage of compensation expense, as shown in the preceding table, were 21.4%, 21.7% and 33.0% in 2020, 2019 and 2018, respectively. These percentages differ from the Corporation’s federal statutory tax rate of 21%. Tax benefits are only recognized over the vesting period for awards that ordinarily will generate a tax deduction when exercised, in the case of non-qualified stock options, or upon vesting, in the case of restricted stock, RSUs, and PSUs. Tax benefits in excess of the tax rate resulted from incentive stock option exercises that triggered a tax deduction when they were exercised, and excess tax benefits realized on vesting RSUs and PSUs during the period.

The following table provides information about stock option activity for the year ended December 31, 2020:


	Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in millions)
Outstanding and exercisable as of December 31, 2019	500,260	$	11.12

Exercised	(89,725)	9.99
Forfeited	(1,047)	12.25
Expired	(11,181)	10.27
Outstanding and exercisable as of December 31, 2020	398,307	$	11.39	1.9 years	$	0.5

The following table presents information about stock options exercised:


	2020		2019		2018
	(dollars in thousands)
Number of options exercised	89,725		150,296		214,845
Total intrinsic value of options exercised	$	192	$	1,028	$	1,616
Cash received from options exercised	$	880	$	1,446	$	2,210
Tax benefit from options exercised	$	37	$	188	$	291

Upon exercise, the Corporation issues shares from its authorized, but unissued, common stock to satisfy the options.

The following table provides information about nonvested restricted stock, RSUs and PSUs granted under the Employee Equity Plan and Directors' Plan for the year ended December 31, 2020:


	Restricted Stock/RSUs/PSUs (1)
		Shares	Weighted Average Grant Date Fair Value
Nonvested as of December 31, 2019		1,425,021	$	16.39
Granted		911,367	11.82
Vested		(357,838)	17.88
Forfeited		(81,170)	13.74
Nonvested as of December 31, 2020		1,897,380	$	14.07

(1) There were no nonvested stock options at December 31, 2020 or 2019.

As of December 31, 2020, there was $11.1 million of total unrecognized compensation cost (pre-tax) related to restricted stock, RSUs and PSUs that will be recognized as compensation expense over a weighted average period of 1.9 years. As of

December 31, 2020, the Employee Equity Plan had 9.3 million shares reserved for future grants through 2023, and the Directors’ Plan had 180,000 shares reserved for future grants through 2021.

The fair value of certain PSUs with market-based performance conditions granted under the Employee Equity Plan was estimated on the grant date using the Monte Carlo valuation methodology performed by a third-party valuation expert. This valuation is dependent upon certain assumptions, as summarized in the following table:


	2020		2019		2018
Risk-free interest rate	0.25	%	2.27	%	2.63	%
Volatility of Corporation’s stock	33.10	%	23.00	%	23.50	%
Expected life of PSUs	3 years		3 years		3 years

The expected life of the PSUs with fair values measured using the Monte Carlo valuation methodology was based on the defined performance period of three years. Volatility of the Corporation’s stock was based on historical volatility for the period commensurate with the expected life of the PSUs. The risk-free interest rate is the zero-coupon U.S. Treasury rate commensurate with the expected life of the PSUs on the date of the grant. Based on the assumptions above, the Corporation calculated an estimated fair value per PSU with market-based performance conditions granted in 2020, 2019 and 2018 of $10.16, $16.83 and $12.92, respectively.

Under the ESPP, eligible employees can purchase stock of the Corporation at 85% of the fair market value of the stock on the date of purchase. The ESPP is considered to be a compensatory plan and, as such, compensation expense is recognized for the 15% discount on shares purchased. The following table summarizes activity under the ESPP:


	2020		2019		2018
ESPP shares purchased	194,485		136,576		110,200
Average purchase price per share (85% of market value)	$	10.02	$	14.03	$	14.74
Compensation expense recognized (in thousands)	$	344	$	338	$	287