Stock-based compensation

6 Months Ended

Jun. 30, 2024

Disclosure of compensation related costs sharebased payments [Abstract]

Stock-based Compensation

Note 29 - 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 the earlier of 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”). 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, 2022

281,963

$

56.50

Granted

257,757

66.01

Performance Shares Quantity Adjustment

19,753

75.32

Vested 

(243,133)

66.31

Forfeited

(16,444)

55.82

Non-vested at December 31, 2023

299,896

$

58.20

Granted

240,816

86.53

Performance Shares Quantity Adjustment

17,551

86.44

Vested 

(284,249)

75.59

Forfeited

(2,553)

63.21

Non-vested at June 30, 2024

271,461

$

67.53

During the quarter ended June 30, 2024,

97,732

 shares of restricted stock (June 30, 2023 –

130,815

) were awarded to

management under the Incentive Plan. During the quarters ended June 30, 2024 and 2023,

no

 performance shares were awarded

to management under the Incentive Plan. For the six months ended June 30, 2024,

175,591

 shares of restricted stock (June 30,

2023 –

200,303

) and

65,225

 performance shares (June 30, 2023 -

57,715

) were awarded to management under the Incentive Plan. 

During the quarter ended June 30, 2024, the Corporation recognized $

4.1

 million of restricted stock expense related to management

incentive awards, with a tax benefit of $

1.0

 million (June 30, 2023 - $

3.3

 million, with a tax benefit of $

0.8

 million). For the six months

ended June 30, 2024, the Corporation recognized $

10.5

 million of restricted stock expense related to management incentive

awards, with a tax benefit of $

1.7

 million (June 30, 2023 - $

7.7

 million, with a tax benefit of $

1.1

 million). For the six months ended

June 30, 2024, the fair market value of the restricted stock and performance shares vested was $

16.2

 million at grant date and

$

22.3

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

2.2

 million that was recorded as a reduction on income tax

expense. During the quarter ended June 30, 2024, the Corporation recognized $

(0.9)

 million of performance shares benefit, with a

tax benefit of $

(55)

 thousand due to performance shares target adjustment (June 30, 2023 - $

(0.1)

 million, with a tax benefit of $

(4)

thousand). For the six months ended June 30, 2024, the Corporation recognized $

4.1

 million of performance shares expense, with

a tax benefit of $

0.3

 million (June 30, 2023 - $

3.5

 million, with a tax benefit of $

0.1

 million). The total unrecognized compensation

cost related to non-vested restricted stock awards and performance shares to members of management at June 30, 2024 was $

15.7

million and is expected to be recognized over a weighted-average period of

1.7

 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, 2022

-

$

-

Granted

39,104

55.30

Vested 

(39,104)

55.30

Forfeited

-

-

Non-vested at December 31, 2023

-

$

-

Granted

22,998

89.28

Vested 

(22,998)

89.28

Forfeited

-

-

Non-vested at June 30, 2024

-

$

-

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 2024 and 2023, Directors elected RSUs and unrestricted stock. During the quarter ended June 30, 2024,

20,411

 RSUs and

1,392

 shares of unrestricted stock were granted to the Directors (June 30, 2023 -

32,999

 RSUs and

2,300

 shares of unrestricted

stock) and the Corporation recognized expense related to these shares of $

1.9

 million with a tax benefit of $

0.4

 million (June 30,

2023 - $

1.9

 million with a tax benefit of $

0.4

 million). For the six months ended June 30, 2024, the Corporation

granted

21,606

RSUs and

1,392

 shares of unrestricted stock to the Directors (June 30, 2023 -

34,028

 RSUs and

2,300

 shares of unrestricted stock)

and the Corporation recognized $

2.1

 million of expense related to these shares, with a tax benefit of $

0.4

 million, (June 30, 2023 -

$

2.0

 million, with a tax benefit of $

0.4

 million). The fair value at vesting date of the shares vested during the six months ended June

30, 2024 for the Directors was $

2.1

 million.