Share-Based Compensation Arrangements

3 Months Ended

Mar. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation Arrangements

Share-Based Compensation Arrangements

Washington Trust has two share-based compensation plans, Bancorp’s 2003 Stock Incentive Plan, as amended, and Bancorp’s 1997 Equity Incentive Plan, as amended, (collectively “the Plans”).

Amounts recognized in the consolidated financial statements for share options, nonvested share units and nonvested performance shares are as follows:

(Dollars in thousands)
Three months ended March 31,	2012		2011
Share-based compensation expense		$412		$327
Related tax benefit		$147		$117

Compensation expense for share options and nonvested share units is recognized over the service period based on the fair value at the date of grant.  Nonvested performance share compensation expense is based on the most recent performance assumption available and is adjusted as assumptions change.  If the goals are not met, no compensation cost will be recognized and any recognized compensation costs will be reversed.

Share Options

There were no share options granted during the three months endedMarch 31, 2012 and 2011.

A summary of the status of Washington Trust's share option activity as of March 31, 2012, and changes during the three months endedMarch 31, 2012, is presented below:

	Number of Share Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (000's)
Outstanding at January 1, 2012	712,061			$22.96
Granted	—		—
Exercised	(95,780	)	20.04
Forfeited or expired	(6,600	)	27.49
Outstanding at March 31, 2012	609,681			$23.37	4.5 years		$1,301
As of March 31, 2012:
Options exercisable	456,931			$24.79	3.1 years		$539
Options expected to vest in future periods	152,750			$19.15	8.5 years		$762

The total intrinsic value (which is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date) of share options exercised during the three months endedMarch 31, 2012 and 2011 was $514 thousand and $352 thousand, respectively.

Nonvested Share Units

During the three months endedMarch 31, 2012, the Corporation granted certain key employees 5,500 nonvested share units with three year cliff vesting terms. There were no nonvested share units granted during the three months ended March 31, 2011.

A summary of the status of Washington Trust’s nonvested shares as of March 31, 2012, and changes during the three months endedMarch 31, 2012, is presented below:

	Number of Shares	Weighted Average Grant Date Fair Value
Nonvested at January 1, 2012	91,250		$19.84
Granted	5,500	23.78
Vested	—	—
Forfeited	—	—
Nonvested at March 31, 2012	96,750		$20.06

Nonvested Performance Shares

Performance share awards are granted providing the opportunity to earn shares of common stock of the Corporation, the number of which will be determined pursuant to, and subject to the attainment of, performance goals during a specified measurement period.  The number of shares earned will range from zero to 200% of the target number of shares dependent upon the Corporation’s core return on equity and core earnings per share growth ranking compared to an industry peer group.

During the three months endedMarch 31, 2012, performance share awards were granted to certain executive officers for the opportunity to earn shares of common stock of the Corporation ranging from zero to 61,600 shares.  The performance shares awarded were valued at $23.65, the fair market value at the date of grant, and will be earned over a three-year performance period.  The current assumption based on the most recent peer group information results in the shares vesting at 150% of the target, or 46,200 shares.

During the three months endedMarch 31, 2011, performance share awards were granted to certain executive officers for the opportunity to earn shares of common stock of the Corporation ranging from zero to 73,502 shares.  The performance shares awarded were valued at $21.62, the fair market value at the date of grant, and will be earned over a three-year performance period.  The current assumption based on the most recent peer group information results in the shares vesting at 150% of the target, or 55,128 shares.

A summary of the status of Washington Trust’s performance share awards as of March 31, 2012, and changes during the three months endedMarch 31, 2012, is presented below:

	Number of Shares		Weighted Average Grant Date Fair Value
Performance shares at January 1, 2012	76,341			$19.97
Granted	46,200		23.65
Vested	—		—
Forfeited	(2,463	)	19.97
Performance shares at March 31, 2012	120,078			$21.38

As of March 31, 2012, there was $3.5 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements (including share options, nonvested share awards and performance share awards) granted under the Plans.  That cost is expected to be recognized over a weighted average period of 2.2 years.