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STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

20. STOCK-BASED COMPENSATION

Before the Merger, Bridge and Legacy Dime granted share-based awards under their respective share-based compensation plans, (collectively, the “Legacy Stock Plans”), which are both subject to the accounting requirements of ASC 718.

In May 2021, the Company’s shareholders approved the Dime Community Bancshares, Inc. 2021 Equity Incentive Plan (the “2021 Equity Incentive Plan”) to provide the Company with sufficient equity compensation to meet the objectives of appropriately incentivizing its officers, other employees, and directors to execute our strategic plan to build shareholder value, while providing appropriate shareholder protections. The Company no longer makes grants under the Legacy Stock Plans. Awards outstanding under the Legacy Stock Plans will continue to remain outstanding and subject to the terms and conditions of the Legacy Stock Plans. At December 31, 2021, there were 1,123,844 shares reserved for issuance under the 2021 Equity Incentive Plan.

In anticipation of the Merger, Legacy Dime accelerated and vested all unvested and outstanding share-based awards such that there were no outstanding awards as of December 31, 2020. In connection with the Merger, all outstanding stock options granted under Legacy Dime’s equity plans, were legally assumed by the combined company and adjusted so that its holder is entitled to receive a number of shares of Dime’s common stock equal to the product of (a) the number of shares of Legacy Dime common stock subject to such award multiplied by (b) the Exchange Ratio and (c) rounded, as applicable, to the nearest whole share, and otherwise subject to the same terms and conditions (including, without limitation, with respect to vesting conditions (taking into account any vesting that occurred at the Merger Date)).

In connection with the Merger, all outstanding stock options and time-vesting restricted stock units of Bridge, which we refer to as the Bridge equity awards, which were outstanding immediately before the Merger Date continue to be awards in respect of Dime common stock following the Merger, subject to the same terms and conditions that were applicable to such awards before the Merger Date.

Stock Option Activity

The following table presents a summary of activity related to stock options granted under the Legacy Stock Plans, and changes during the period then ended:


				Weighted-
				Average	Aggregate
		Weighted-		Remaining	Intrinsic
	Number of	Average Exercise		Contractual	Value
	Options	Price		Years	(In thousands)

Options outstanding at January 1, 2021 as adjusted for conversion	18,685	$	23.23
Options acquired	180,020		35.39
Options exercised	(48,031)		30.66
Options forfeited	(29,421)		35.38
Options outstanding at December 31, 2021	121,253	$	35.39	7.2	$	14
Options vested and exercisable at December 31, 2021	121,253	$	35.39	7.2	$	14

Information related to stock options during each period is as follows:



	Year Ended December 31,
(In thousands)	2021		2020		2019
Cash received for option exercise cost	$	431	$	38	$	367
Income tax (expense) benefit recognized on stock option exercises		(15)		—		39
Intrinsic value of options exercised		171		8		229

The range of exercise prices and weighted-average remaining contractual lives of both outstanding and vested options (by option exercise cost) as of December 31, 2021 were as follows:


	Outstanding Options		Vested Options
		Weighted		Weighted
		Average		Average
		Contractual		Contractual
		Years		Years
	Amount	Remaining	Amount	Remaining
Exercise Prices:
$34.87	46,799	8.1	46,799	8.1
$35.35	42,475	7.1	42,475	7.1
$36.19	31,979	6.1	31,979	6.1
Total	121,253	7.2	121,253	7.2

Restricted Stock Awards

The Company has made RSA grants to outside Directors and certain officers under the Legacy Stock Plans and the 2021 Equity Incentive Plan. Typically, awards to outside Directors fully vest on the first anniversary of the grant date, while awards to officers vest over a pre-determined requisite period. All awards were made at the fair value of the Company’s common stock on the grant date. Compensation expense on all RSAs is based upon the fair value of the shares on the respective dates of the grant.

During the year ended December 31, 2020, Legacy Dime modified certain RSAs to accelerate the vesting of all outstanding awards in connection with the Merger. Total expense recognized as part of the acceleration was approximately $2.5 million.

The following table presents a summary of activity related to the RSAs granted, and changes during the period then ended:


		Weighted-
		Average
	Number of	Grant-Date
	Shares	Fair Value

Unvested allocated shares outstanding at January 1, 2021	—	$	—
Shares acquired in the Merger	101,778		25.98
Shares granted	390,027		26.48
Shares vested	(9,838)		25.41
Shares forfeited	(35,044)		25.89
Unvested allocated shares at December 31, 2021	446,923	$	26.45

Information related to RSAs during each period is as follows:



	Year Ended December 31,
(Dollars in thousands)		2021		2020		2019
Compensation expense recognized	$	5,253	$	4,217	$	1,540
Income tax benefit (expense) recognized on vesting of RSAs		27		(211)		11

As of December 31, 2021, there was $6.8 million of total unrecognized compensation cost related to unvested RSAs to be recognized over a weighted-average period of 2.8 years.

Performance-Based Share Awards

The Company maintains a LTIP for certain officers, which meets the criteria for equity-based accounting. For each award, threshold (50% of target), target (100% of target) and stretch (150% of target) opportunities are eligible to be earned over a three-year performance period based on the Company’s relative performance on certain goals that were established at the onset of the performance period and cannot be altered subsequently. Shares of common stock are issued on the grant date and held as unvested stock awards until the end of the performance period. Shares are issued at the stretch opportunity in order to ensure that an adequate number of shares are allocated for shares expected to vest at the end of the performance period. Compensation expense on PSAs is based upon the fair value of the shares on the date of the grant for the expected aggregate share payout as of the period end.

During the year ended December 31, 2020, Legacy Dime modified certain PSAs to accelerate the vesting of all outstanding awards in connection with the Merger. Total expense recognized as part of the acceleration was approximately $1.7 million. There were no outstanding PSAs at December 31, 2020. This plan continued into 2021, and as of December 31, 2021, 38,948 shares have been granted.

The following table presents a summary of activity related to the PSAs granted, and changes during the period then ended:


		Weighted-
		Average
	Number of	Grant-Date
	Shares	Fair Value
Maximum aggregate share payout at January 1, 2021	—	$	—
Shares granted	38,948		31.40
Maximum aggregate share payout at December 31, 2021	38,948	$	31.40
Minimum aggregate share payout	—		—
Expected aggregate share payout	29,951	$	30.72

Information related to PSAs during each period is as follows:



	Year Ended December 31,
(In thousands)	2021		2020		2019
Compensation expense recognized	$	154	$	2,279	$	132
Income tax benefit recognized on vesting of PSAs		—		60		—

As of December 31, 2021, there was $765 thousand of total unrecognized compensation cost related to unvested PSAs based on the expected aggregate share payout to be recognized over a weighted-average period of 2.5 years.

Sales Incentive Awards

Legacy Dime maintained a sales incentive award program for certain officers, which meets the criteria for equity-based accounting. For each quarter an individual earned their shares based on their sales performance in that quarter. The shares then vested one year from the quarter in which they are earned. Shares of common stock were issued on the grant date and held as unvested stock awards until the end of the performance period. They were issued at the maximum opportunity in order to ensure that an adequate number of shares were allocated for shares expected to vest at the end of the performance period.

During the year ended December 31, 2020, Legacy Dime modified certain performance-based share awards to accelerate the vesting of all outstanding awards in connection with the Merger. Total compensation expense recognized as part of the acceleration was approximately $341 thousand. There were no outstanding sales incentive share awards at December 31, 2020. Total compensation expenses of $727 thousand and $171 thousand were recognized during the years ended December 31, 2020 and 2019. There was no sales incentive awards compensation expense recognized during the year ended December 31, 2021.

There was no activity related to sales incentive awards during the year ended December 31, 2021.