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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2020
Share-based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION
17. STOCK-BASED COMPENSATION
The Company's stock incentive plans provide for the granting of stock options, stock appreciation rights, performance awards, restricted stock, restricted stock units (RSUs), and other stock based awards or cash incentives that are consistent with the purpose of the incentive plans and interests of the Company. Upon stockholder approval in 2018, the 2013 Incentive Plan (2013 Plan) was replaced by the 2018 Incentive Plan (2018 Plan). However, outstanding awards under the 2013 Plan remain in effect in accordance with their original terms. The 2018 Plan will terminate on the tenth anniversary of its effective date, after which no awards may be granted. The number of shares reserved for issuance under the 2018 Plan is 1,500,000, of which 504,931 shares were available for future grants at December 31, 2020. Generally, all time-based awards become fully vested and outstanding stock options and stock appreciation rights become exercisable immediately in the event of a change in control, as defined in the plans.
Total stock-based compensation expense recognized was $3.1 million ($2.5 million after tax) for 2020, $4.5 million ($3.4 million after tax) for 2019, and $2.6 million ($2.0 million after tax) for 2018. As part of the expense calculation, the Company has elected to recognize forfeitures as they occur. 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 the Company's Consolidated Statements of Income.
Stock Options
Stock options are granted with an exercise price not less than the fair market value of the Company's common stock on the date of the grant. All stock options granted during 2020, 2019, and 2018 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. New shares are issued upon the exercise of options.
The Company determines 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 2020, 2019, and 2018 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 the Company's current dividend rate. The assumptions used to determine the grant date fair value for options issued during 2020, 2019, and 2018 are presented below:
 
202020192018
Expected term (in years)5.55.55.3
Volatility25.0 %23.6 %23.0 %
Weighted-average risk-free interest rate1.06 %2.50 %2.69 %
Dividend yield1.39 %1.02 %0.74 %

A summary of option activity as of December 31, 2020, and changes during the year the ended December 31, 2020, is presented below: 
 2020
 Shares
Weighted-
Average
Exercise
Price
Weighted-Average Remaining Contractual Term (Years)
Aggregate
Intrinsic
Value (In
Thousands)
Stock Options:
Outstanding at beginning of year430,736 $34.33 3.16$4,550 
Plus: Granted150,326 34.93 
Less: Exercised(115,819)24.79 
Forfeited(15,482)39.84 
Outstanding at end of year449,761 36.80 4.163,910 
Nonvested at end of year242,158 38.66 2.701,507 
Exercisable at end of year207,603 34.62 2.302,313 
The weighted-average fair value of options granted was $7.19 in 2020, $10.26 in 2019 and $11.62 in 2018. The aggregate intrinsic value of options exercised was $1.8 million in 2020, $12.3 million in 2019, and $20.6 million in 2018.
The following table summarizes the non-vested stock option activity during the year the ended December 31, 2020: 
 2020
Shares
Weighted-
Average
Exercise
Price
Weighted-
Average
Grant Date
Fair Value
Stock Options:
Nonvested at beginning of period140,076 $43.91 $10.53 
Plus: Granted150,326 34.93 7.19 
Less: Vested(48,244)42.32 10.27 
Forfeited— — — 
Nonvested at end of period242,158 38.66 8.51 
The total amount of unrecognized compensation cost related to non-vested stock options as of December 31, 2020 was $1.4 million. The weighted-average period over which the expense is expected to be recognized is 2.70 years. During 2020, the Company recognized $0.6 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. The expense related to RSUs granted to Associates is recognized 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 restricted stock is awarded to individuals from whom the Company may not receive services in the future, the expense is recognized when the award is granted, instead of amortizing the expense over the vesting period of the award.
The weighted-average fair value of RSUs granted was $37.52 in 2020, $43.28 in 2019, and $48.38 in 2018. The total amount of compensation cost to be recognized relating to nonvested restricted stock units as of December 31, 2020 was $6.7 million. The weighted-average period over which the cost is expected to be recognized is 2.8 years. During 2020, the Company recognized $2.5 million of compensation cost related to these awards. 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, 2019122,660 $44.24 
Plus: Granted154,689 37.52 
Less: Vested(64,173)43.53 
Forfeited(3,569)38.67 
Balance at December 31, 2020209,607 39.66 
The total fair value of RSUs that vested was $1.9 million in 2020, $1.5 million in 2019, and $1.6 million in 2018.
Integration Performance RSU Plan: In February 2019, the Board of Directors approved the Integration Performance RSU Plan (“the Integration Plan”), in which 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 the Company's strategic goals over the five-year period ending 2023. 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, and the Company accrues expense for this Plan based on the estimated probability of achievement of the three defined performance goals.
Beneficial Acquisition Success Plan: On December 10, 2020, the Board of Directors approved the Beneficial Acquisition Success Plan (the “Success Plan”), which is designed to recognize and reward the Company’s achievement of certain key measures of near-term success related to Beneficial and the efforts of the Company’s senior leaders and the value of such success to the Company’s longer term performance. The key measures of success related to Beneficial include acquisition economics, one-time acquisition costs, banking location integration and optimization, customer deposit retention, and cost synergies. Awards under the Success Plan have been awarded as RSUs vesting in equal annual installments over three years. The Company granted 66,703 RSUs under the Success Plan on December 10, 2020.
Awards from both the Integration Plan and the Success Plan will be issued under the Company’s 2018 Incentive Plan.