Stock-based compensation

9 Months Ended

Sep. 30, 2023

Disclosure of compensation related costs sharebased payments [Abstract]

Stock-based Compensation

Note 30 - Stock-based compensation

Incentive Plan

On May 12, 2020, the shareholders 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

attainment of 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 on 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 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 ROATCE metric is considered to be a performance condition under ASC 718. The fair value is

determined based on the probability of achieving the ROATCE goal as of each reporting period. The TSR and 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 (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 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

Granted

251,658

66.79

Performance Shares Quantity Adjustment

16,374

76.07

Vested 

(232,717)

66.38

Forfeited

(16,082)

55.56

Non-vested at September 30, 2023

301,196

$

58.14

During the quarter ended September 30, 2023,

no

 shares of restricted stock (September 30, 2022 –

1,888

) were awarded to

management under the Incentive Plan. During the quarters ended September 30, 2023 and 2022,

no

 performance shares were

awarded to management under the Incentive Plan. For the nine months ended September 30, 2023,

200,303

 shares of restricted

stock (September 30, 2022 –

137,934

) and

51,355

 performance shares (September 30, 2022 -

56,857

) were awarded to

management under the Incentive Plan. 

During the quarter ended September 30, 2023, the Corporation recognized $

2.0

 million of restricted stock expense related to

management incentive awards, with a tax benefit of $

0.4

 million (September 30, 2022 - $

1.5

 million, with a tax benefit of $

0.3

million). For the nine months ended September 30, 2023, the Corporation recognized $

9.7

 million of restricted stock expense related

to management incentive awards, with a tax benefit of $

1.5

 million (September 30, 2022 - $

8.9

 million, with a tax benefit of $

1.5

million). For the nine months ended September 30, 2023, the fair market value of the restricted stock and performance shares

vested was $

11.3

 million at grant date and $

14.1

 million at vesting date. This differential triggers a windfall of $

1.0

 million that was

recorded as a reduction on income tax expense. During the quarter ended September 30, 2023 the Corporation recognized $

0.1

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

8

 thousand due to performance shares target adjustment (September

30, 2022 - $

0.3

 million, with a tax benefit of $

13

 thousand). For the nine months ended September 30, 2023, the Corporation

recognized $

3.6

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

0.1

 million (September 30, 2022 - $

4.3

 million, with a

tax benefit of $

0.3

 million). The total unrecognized compensation cost related to non-vested restricted stock awards and

performance shares to members of management at September 30, 2023 was $

13.6

 million and is expected to be recognized over a

weighted-average period of

1.6

 years.

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

(Not in thousands)

RSUs / Unrestricted

stock

Weighted-Average 

Grant Date Fair

Value per Unit

Non-vested at December 31, 2021

$

-

$

-

Granted

25,321

77.48

Vested 

(25,321)

77.48

Forfeited

-

-

Non-vested at December 31, 2022

$

-

$

-

Granted

37,712

55.05

Vested 

(37,712)

55.05

Forfeited

-

-

Non-vested at September 30, 2023

$

-

$

-

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

unrestricted 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 RSUs 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 2023 and 2022, Directors elected RSUs and unrestricted stock. During the quarter ended September 30, 2023,

1,384

 RSUs

and

no

 unrestricted stocks were granted to the Directors (September 30, 2022 -

857

 RSUs) and the Corporation recognized

expense related to these shares of $

0.1

 million with a tax benefit of $

16

 thousand (September 30, 2022 - $

0.1

 million with a tax

benefit of $

25

 thousand). For the nine months ended September 30, 2023, the Corporation

granted

35,412

 RSUs and

2,300

unrestricted stocks to the Directors (September 30, 2022 -

24,409

 RSUs) and the Corporation recognized $

2.1

 million of expense

related to these shares, with a tax benefit of $

0.4

 million, (September 30, 2022 - $

1.9

 million, with a tax benefit of $

0.4

 million). The

fair value at vesting date of the shares vested during the nine months ended September 30, 2023 for the Directors was $

2.1

 million.