Stock-based compensation

12 Months Ended

Dec. 31, 2022

Disclosure of compensation related costs sharebased payments [Abstract]

Stock-based Compensation

Note 34 - Stock-based compensation

Incentive Plan

 On May 12, 2020, the stockholders of the Corporation approved the Popular, Inc. 2020 Omnibus Incentive Plan, which permits

the Corporation to issue several types of stock-based compensation to employees and directors of the Corporation and/or any of its

subsidiaries (the “2020 Incentive Plan”). The 2020 Incentive Plan replaced the Popular, Inc. 2004 Omnibus Incentive Plan, which

was in effect prior to the adoption of the 2020 Incentive Plan (the “2004 Incentive Plan” and, together with the 2020 Incentive Plan,

the “Incentive Plan”). Participants under the Incentive Plan are designated by the Talent and Compensation Committee of the Board

of Directors (or its delegate, as determined by the Board). Under the Incentive Plan, the Corporation has issued restricted stock and

performance shares to its employees and restricted stock and restricted stock units (“RSUs”) to its directors.

The restricted stock granted under the Incentive Plan to employees becomes vested based on the employees’ continued service

with Popular. Unless otherwise stated in an agreement,

the compensation cost associated with the shares of restricted stock

granted prior to 2021 was determined based on a two-prong vesting schedule. The first part is vested ratably over five or four years

commencing at the date of grant (the “graduated vesting portion”) and the second part is vested at termination of employment after

attaining 55 years of age and 10 years of service or 60 years of age and 5 years of service (the “retirement vesting portion”). The

graduated vesting portion is accelerated at termination of employment after attaining 55 years of age and 10 years of service or 60

years of age and 5 years of service. Restricted stock granted on or after 2021 will vest ratably in equal annual installments over a

period of 4 years or 3 years, depending in the classification of the employee. The vesting schedule is accelerated at termination of

employment after attaining the earlier of 55 years of age and 10 years of service or 60 years of age and 5 years of service.

The performance share awards granted under the Incentive Plan consist of the opportunity to receive shares of Popular, Inc.’s

common stock provided that the Corporation achieves certain goals during a three-year performance cycle. The goals will be based

on two metrics weighted equally: the Relative Total Shareholder Return (“TSR”) and, depending on the date of the grant, the

Absolute Return on Average Assets (“ROA”) goal or the Absolute Return on Average Tangible Common Equity (“ROATCE”) goal. 

The TSR metric is considered to be a market condition under ASC 718. For equity settled awards based on a market condition, the

fair value is determined as of the grant date and is not subsequently revised based on actual performance. The ROA and ROATCE

metrics are considered to be a performance condition under ASC 718. The fair value is determined based on the probability of

achieving the ROA or ROATCE goal as of each reporting period. The TSR and ROA or ROATCE metrics are equally weighted and

work independently. 

The number of shares that will ultimately vest ranges from 50% to a 150% of target based on both market

(TSR) and performance (ROA and ROATCE) conditions. The performance shares vest at the end of the three-year performance

cycle. If a participant terminates employment after attaining the earlier of 55 years of age and 10 years of service or 60 years of age

and 5 years of service, the performance shares shall continue outstanding and vest at the end of the performance cycle.

The following table summarizes the restricted stock and performance shares activity under the Incentive Plan for members of

management.

(Not in thousands)

Shares

Weighted-average

grant date fair value

Non-vested at January 1, 2020

345,365

$

41.68

Granted

253,943

42.49

Performance Shares Quantity Adjustment

(7)

48.79

Vested 

(234,421)

42.64

Forfeited

(6,368)

44.26

Non-vested at December 31, 2020

358,512

$

41.23

Granted

191,479

69.38

Performance Shares Quantity Adjustment

54,306

54.21

Vested 

(273,974)

55.11

Forfeited

(8,440)

43.48

Non-vested at December 31, 2021

321,883

$

47.98

Granted

194,791

84.29

Performance Shares Quantity Adjustment

6,947

78.02

Vested 

(240,033)

66.11

Forfeited

(1,625)

78.86

Non-vested at December 31, 2022

281,963

$

56.50

During the year ended December 31, 2022,

137,934

 shares of restricted stock (2021 -

120,105

; 2020 -

213,511

) and

56,857

performance shares (2021 -

71,374

; 2020 -

40,432

) were awarded to management under the Incentive Plan.

During the year ended December 31, 2022, the Corporation recognized $

10.3

 million of restricted stock expense related to

management incentive awards, with a tax benefit of $

1.8

 million (2021 - $

8.6

 million, with a tax benefit of $

1.6

 million; 2020 - $

7.6

million, with a tax benefit of $

1.3

 million). During the year ended December 31, 2022, the fair market value of the restricted stock

and performance shares vested was $

12.2

 million at grant date and $

20.7

 million at vesting date. This differential triggers a windfall

of $

3.1

 million that was recorded as a reduction in income tax expense. During the year ended December 31, 2022, the Corporation

recognized $

4.8

 million of performance shares expense, with a tax benefit of $

0.4

 million (2021 - $

5.8

 million, with a tax benefit of

$

0.5

 million; 2020 - $

2.3

 million, with a tax benefit of $

0.2

 million). The total unrecognized compensation cost related to non-vested

restricted stock awards and performance shares to members of management at December 31, 2022 was $

10.1

 million and is

expected to be recognized over a weighted-average period of

1.86

 years.

The following table summarizes the restricted stock activity under the Incentive Plan for members of the Board of Directors:

(Not in thousands)

RSU

Weighted-average grant

date fair value

Non-vested at January 1, 2020

-

-

Granted

43,866

$

35.47

Vested 

(43,866)

35.47

Forfeited

-

-

Non-vested at December 31, 2020

-

-

Granted

20,638

$

78.20

Vested 

(20,638)

78.20

Forfeited

-

-

Non-vested at December 31, 2021

-

-

Granted

25,321

$

77.48

Vested 

(25,321)

77.48

Forfeited

-

-

Non-vested at December 31, 2022

-

-

The equity awards granted to members of the Board of Directors of Popular, Inc. (the “Directors”) will vest and become non-

forfeitable on the grant date of such award. Effective in May 2019, all equity awards granted to the Directors may be paid in either

restricted stock or RSUs at each Directors election. If RSUs are elected, the Directors may defer the delivery of the shares of

common stock underlying the RSU award until their retirement. To the extent that cash dividends are paid on the Corporation’s

outstanding common stock, the Directors will receive an additional number of RSUs that reflect a reinvested dividend equivalent. 

For 2022, 2021 and 2020, all Directors elected RSUs. For the year ended December 31, 2022,

25,321

 RSUs were granted to the

Directors (2021 -

20,638

; 2020 - 

43,866

). For the year ended December 31, 2022, $

2.0

 million of restricted stock expense related

to these RSUs was recognized, with a tax benefit of $

0.4

 million (2021 - $

1.9

 million with a tax benefit of $

0.4

 million; 2020 - $

1.6

million with a tax benefit of $

0.3

 million). The fair value at vesting date of the RSUs vested during the year ended December 31,

2022 for the Directors was $

2.0

 million.