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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION
17. STOCK-BASED COMPENSATION
Our Stock Incentive Plans provide for the granting of stock options, stock appreciation rights, performance awards, restricted stock and restricted stock unit awards (RSUs), deferred stock units, and other awards that are payable in or valued by reference to our common shares. Upon stockholder approval in 2018, the 2013 Incentive Plan (2013 Plan) was replaced by the 2018 Incentive Plan (2018 Plan). We still have awards outstanding under the 2013 Plan for officers, directors and Associates. The 2018 Plan will terminate on the tenth anniversary of its effective date, after which no awards may be granted. Collectively, the 2013 Plan and the 2018 Plan are referred to as the Stock Incentive Plans. The number of shares reserved for issuance under the 2018 Plan is 1,500,000, of which 1,129,687 shares were available for future grants at December 31, 2019. Generally, all awards become exercisable immediately in the event of a change in control, as defined in the Stock Incentive Plans.
Total stock-based compensation expense recognized was $4.5 million ($3.4 million after tax) for 2019, $2.6 million ($2.0 million after tax) for 2018, and $3.7 million ($2.5 million after tax) for 2017. Stock-based compensation expense related to awards granted to Associates is recorded in Salaries, benefits and other compensation; expense related to awards granted to directors is recorded in Other operating expense in our Consolidated Statements of Income.
Stock Options
Stock options are granted with an exercise price not less than the fair market value of our common stock on the date of the grant. All stock options granted during 2019, 2018, and 2017 vest in 25% per annum increments, start to become exercisable in April of the year following the year of grant, and expire between five and seven years from the grant date. We issue new shares upon the exercise of options.
We determine the grant date fair value of stock options using the Black-Scholes option-pricing model. The model requires the use of numerous assumptions, many of which are subjective. Significant assumptions used to determine 2019, 2018, and 2017 grant date fair value included expected term, which was derived from historical exercise patterns and represents the amount of time that stock options granted are expected to be outstanding; volatility, measured using the fluctuation in month end closing stock prices over a period which corresponds with the average expected option life; a weighted-average risk-free rate of return (zero coupon treasury yield); and a dividend yield indicative of our current dividend rate. The assumptions used to determine the grant date fair value for options issued during 2019, 2018, and 2017 are presented below:
 
201920182017
Expected term (in years)5.55.35.3
Volatility23.6 %23.0 %24.9 %
Weighted-average risk-free interest rate2.50 %2.69 %1.95 %
Dividend yield1.02 %0.74 %0.60 %

A summary of the status of our options as of December 31, 2019, and changes during the year, is presented below:
 
 2019
 Shares
Weighted-
Average
Exercise
Price
Weighted-Average Remaining Contractual Term (Years)
Aggregate
Intrinsic
Value (In
Thousands)
Stock Options:
Outstanding at beginning of year790,744  $22.48  2.18$13,235  
Plus: Granted120,019  43.28  
Less: Exercised(475,090) 16.74  
Forfeited(4,937) 46.87  
Outstanding at end of year430,736  34.33  3.164,550  
Nonvested at end of year140,076  43.91  5.61166  
Exercisable at end of year290,660  29.70  1.984,099  
The weighted-average fair value of options granted was $10.26 in 2019, $11.62 in 2018 and $11.50 in 2017. The aggregate intrinsic value of options exercised was $12.3 million in 2019, $20.6 million in 2018, and $7.5 million in 2017.
The following table provides information about our nonvested stock options outstanding at December 31, 2019:
 
 2019
Shares
Weighted-
Average
Exercise
Price
Weighted-
Average
Grant Date
Fair Value
Stock Options:
Nonvested at beginning of period124,348  $42.76  $10.38  
Plus: Granted120,019  43.28  10.26  
Less: Vested(104,291) 41.80  10.04  
Forfeited—  —  —  
Nonvested at end of period140,076  43.91  10.53  
The total amount of unrecognized compensation cost related to nonvested stock options as of December 31, 2019 was $1.0 million. The weighted-average period over which the expense is expected to be recognized is 2.7 years. During 2019, we recognized $1.1 million of compensation expense related to these awards.
Restricted Stock Units
RSUs are granted at no cost to the recipient and generally vest over a four year period. All outstanding awards granted to senior executives vest over no less than a four year period. The 2013 and 2018 Plans allow for awards with vesting periods less than four years, subject to Board approval. The fair value of RSUs is equal to the fair value of the common stock on the date of grant.
We recognize the expense related to RSUs granted to Associates in Salaries, benefits and other compensation and granted to directors in Other operating expense on an accrual basis over the requisite service period for the entire award. When we award restricted stock to individuals from whom we may not receive services in the future, we recognize the expense of restricted stock grants when we make the award, instead of amortizing the expense over the vesting period of the award.
The weighted-average fair value of RSUs granted was $43.28 in 2019, $48.38 in 2018, and $47.05 in 2017. The total amount of compensation cost to be recognized relating to nonvested restricted stock units as of December 31, 2019 was $3.1 million. The weighted-average period over which the cost is expected to be recognized is 2.5 years. During 2019, we recognized $3.0 million of compensation cost related to these awards, which includes $0.5 million of expense related to the Integration Performance RSU Plan, described below.
The following table summarizes the Company’s RSUs and changes during the year:
Units
(in whole)
Weighted Average
Grant-Date Fair
Value per Unit
Balance at December 31, 201895,707  $43.08  
Plus: Granted72,151  43.28  
Less: Vested(38,737) 40.38  
Forfeited(6,461) 44.20  
Balance at December 31, 2019122,660  44.24  
The total fair value of RSUs that vested was $1.5 million in 2019, $1.6 million in 2018, and $1.2 million in 2017.
Integration Performance RSU Plan: In February 2019, the Board of Directors approved the Integration Performance RSU Plan (“the Integration Plan”). Under the Integration Plan, certain senior executives were granted awards based on the achievement of three defined goals measuring the success of the integration of Beneficial and execution of our strategic goals over the five-year period ending 2023. Awards earned under the Plan will be issued under the Company’s 2018 Incentive Plan. The Plan provides for a three-year performance achievement period beginning in 2021 and ending in 2023. If any or all of a portion of RSU’s vest prior to 2023, there will be an additional time-based vesting requirement though the end of 2023. The Performance RSUs were granted on February 28, 2019. We accrue expense for this Plan based on the estimated probability of achievement of the three defined performance goals.