3. STOCK-BASED COMPENSATION PLANS

In May 2019, the Company’s shareholders approved the Bridge Bancorp, Inc. 2019 Equity Incentive Plan (the “2019 Equity Incentive Plan”), which provides for the grant of stock-based and other incentive awards to officers, employees and directors of the Company. The 2019 Equity Incentive Plan superseded the Bridge Bancorp, Inc. 2012 Stock-Based Incentive Plan (the “2012 Equity Incentive Plan”). The 2012 Equity Incentive Plan superseded the 2006 Stock-Based Incentive Plan. The maximum number of shares of stock, in the aggregate, that may be granted under the 2019 Equity Incentive Plan as stock options, restricted stock, or restricted stock units is 370,000 plus the number of shares of stock which have been reserved but not issued under the 2012 Equity Incentive Plan, and any awards that are forfeited under the 2012 Equity Incentive Plan after the effective date of the 2019 Equity Incentive Plan. No further grants will be made under the 2012 Equity Incentive Plan. Currently outstanding grants under the 2012 Equity Incentive Plan will not be affected.

The number of shares of common stock of Bridge Bancorp, Inc. available for stock-based awards under the 2019 Equity Incentive Plan is 370,000 plus 162,738 shares that were remaining under the 2012 Equity Incentive Plan. At March 31, 2020, 382,166 shares remain available for issuance, including shares that may be granted in the form of stock options, RSAs, or RSUs.

The Compensation Committee of the Board of Directors determines awards under the 2019 Equity Incentive Plan. The Company accounts for the 2019 Equity Incentive Plan under FASB ASC No. 718.

Stock Options

Stock options may be either incentive stock options, which bestow certain tax benefits on the optionee, or non-qualified stock options, not qualifying for such benefits. All options have an exercise price that is not less than the market value of the Company's common stock on the date of the grant.

The fair value of each option granted is estimated on the date of the grant using the Black-Scholes option-pricing model. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of the Company's common stock as of the exercise or reporting date.

During the three months ended March 31, 2020 and 2019, in accordance with the Long Term Incentive Plan (“LTI Plan”) for Named Executive Officers (“NEOs”), the Company granted 69,360 and 63,267 stock options, respectively, with an exercise price set to equal a 10.0% premium over the grant date stock price. All of the stock options granted vest ratably over three years. The estimated weighted-average grant-date fair value of all stock options granted in the three months ended March 31, 2020 and 2019 was $4.10 and $5.05 per stock option, respectively, using the Black-Scholes option-pricing model with assumptions as follows:


	Three Months Ended
	March 31,
	2020			2019
Dividend yield		3.03	%		2.86	%
Expected volatility		23.11			23.80
Risk-free interest rate		1.47			2.52
Expected option life		6.0	years		6.0	years

Compensation expense attributable to stock options was $78 thousand and $39 thousand for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, there was $548 thousand of total unrecognized compensation cost related to unvested stock options. The cost is expected to be recognized over a weighted-average period of 2.2 years.

The following table summarizes the status of the Company's stock options as of and for the three months ended March 31, 2020:

Weighted

Average

Number

Average

Remaining

Aggregate

Exercise

Contractual

Intrinsic

(Dollars in thousands, except per share amounts)

Options

Price

Life

Value

Outstanding, January 1, 2020

110,660

35.71

Granted

69,360

34.87

Outstanding, March 31, 2020

180,020

35.39

9.0

years

—

Vested and Exercisable, March 31, 2020

52,681

35.85

8.3

years

—



	Number of	Exercise
Range of Exercise Prices	Options	Price
$34.87	69,360	$	34.87
35.35	63,267		35.35
36.19	47,393		36.19
	180,020

Restricted Stock Awards

The Company's RSAs are shares of the Company's common stock that are forfeitable and are subject to restrictions on transfer prior to the vesting date. RSAs are forfeited if the award holder departs the Company before vesting. RSAs carry dividend and voting rights from the date of grant. The vesting of time-vested RSAs depends upon the award holder continuing to render services to the Company. The Company's performance-based RSAs vest subject to the achievement of the Company's corporate goals.

The following table summarizes the unvested RSA activity for the three months ended March 31, 2020:


		Weighted
		Average Grant-Date
	Shares	Fair Value
Unvested, January 1, 2020	293,717	$	30.37
Granted	86,428		31.65
Vested	(100,020)		28.87
Forfeited	(585)		32.12
Unvested, March 31, 2020	279,540		31.30

During the three months ended March 31, 2020, the Company granted a total of 86,428 RSAs. Of the 86,428 RSAs granted, 57,850 time-vested RSAs vest ratably over five years and 28,578 time-vested RSAs vest ratably over three years. During the three months ended March 31, 2019, the Company granted a total of 74,252 RSAs. Of the 74,252 RSAs granted, 49,925 time-vested RSAs vest ratably over five years, 24,327 time-vested RSAs vest ratably over three years. As of March 31, 2020, there were 279,540 unvested RSAs, all of which were time-vested RSAs and there were no unvested performance-based RSAs.

Compensation expense attributable to RSAs was $606 thousand and $602 thousand for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, there was $6.8 million of total unrecognized compensation cost related to non-vested RSAs. The cost is expected to be recognized over a weighted-average period of 3.4 years.

Restricted Stock Units

Long Term Incentive Plan

RSUs represent an obligation to deliver shares to a grantee at a future date if certain vesting conditions are met. RSUs are subject to a time-based vesting schedule, or the satisfaction of performance conditions, and are settled in shares of the Company's common stock. RSUs do not provide voting rights and RSUs may provide dividend equivalent rights from the date of grant.

The following table summarizes the unvested NEO RSU activity for the three months ended March 31, 2020:


		Weighted
		Average Grant-Date
	Shares	Fair Value
Unvested, January 1, 2020	85,342	$	29.59
Granted	26,556		32.13
Reinvested dividends	663		29.59
Forfeited	(6,623)		28.68
Vested	(15,106)		25.24
Unvested, March 31, 2020	90,832		31.12

During the three months ended March 31, 2020, in accordance with the LTI Plan for NEOs, the Company granted 26,556 RSUs. Of the 26,556 RSUs granted, 17,943 time-vested RSUs vest ratably over three years and 8,613 performance-based RSUs vest subject to the achievement of the Company's three-year corporate goal for the three-year period ending December 31, 2022.

Compensation expense attributable to LTI Plan RSUs was $196 thousand and $170 thousand for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, there was $2.0 million of total unrecognized compensation cost related to non-vested RSUs. The cost is expected to be recognized over a weighted-average period of 2.6 years.

Directors Plan

In April 2009, the Company adopted a Directors Deferred Compensation Plan (“Directors Plan”). Under the Directors Plan, independent directors may elect to defer all or a portion of their annual retainer fee in the form of RSUs. In addition, directors receive a non-election retainer in the form of RSUs. These RSUs vest ratably over one year and have dividend rights but no voting rights. In connection with the Directors Plan, the Company recorded expense of $142 thousand and $143 thousand for the three months ended March 31, 2020 and 2019, respectively.

Employee Stock Purchase Plan

In May 2018, the Board of Directors adopted, and stockholders approved the Employee Stock Purchase Plan (“ESPP”). A total of 1,000,000 shares of the Company’s common stock have been initially authorized for issuance under the ESPP. Subject to any plan limitations, the ESPP allows eligible employees to contribute, normally through payroll deductions, up to $25 thousand for the purchase of the Company’s common stock at a discounted price per share for any calendar year. The current offering period is from January 1, 2020 through June 15, 2020.

During the three months ended March 31, 2020, no shares of common stock were purchased, and no expense was recorded related to the ESPP.