STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2022

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

16.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 September 30, 2022, there were 963,107 shares reserved for issuance under the 2021 Equity Incentive Plan.

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 Awards

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, 2022	121,253	$	35.39
Options exercised	—		—
Options forfeited	(29,116)		35.39
Options outstanding at September 30, 2022	92,137	$	35.39	6.5	$	—
Options vested and exercisable at September 30, 2022	92,137	$	35.39	6.5	$	—

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2022		2021		2022		2021
Cash received for option exercise cost	$	—	$	—	$	—	$	396
Income tax (expense) benefit recognized on stock option exercises		—		—		—		—
Intrinsic value of options exercised		—		—		—		77

The range of exercise prices and weighted-average remaining contractual lives of both outstanding and vested options (by option exercise cost) as of September 30, 2022 were as follows:

	Outstanding Options		Vested Options
		Weighted		Weighted
		Average		Average
		Contractual		Contractual
		Years		Years
	Amount	Remaining	Amount	Remaining
Exercise Prices:
$34.87	35,671	7.4	35,671	7.4
$35.35	32,079	6.4	32,079	6.4
$36.19	24,387	5.4	24,387	5.4
Total	92,137	6.5	92,137	6.5

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.

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, 2022	446,923	$	26.45
Shares granted	110,363		33.84
Shares vested	(173,447)		26.67
Shares forfeited	(30,456)		27.52
Unvested allocated shares outstanding at September 30, 2022	353,383	$	28.55

Information related to RSAs during each period is as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2022		2021		2022		2021
Compensation expense recognized	$	1,035	$	1,454	$	2,823	$	3,804
Income tax (expense) benefit recognized on vesting of RSAs		(10)		—		178		86

As of September 30, 2022, there was $7.0 million of total unrecognized compensation cost related to unvested RSAs to be recognized over a weighted-average period of 2.2 years.

Performance-Based Share Awards

The Company maintains a long-term incentive award program (“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.  

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, 2022	38,948	$	31.40
Shares granted	60,755		29.63
Shares forfeited	(3,872)		29.63
Maximum aggregate share payout at September 30, 2022	95,831	$	30.35
Minimum aggregate share payout	—		—
Expected aggregate share payout	77,449	$	29.45

Information related to PSAs during each period is as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2022		2021		2022		2021
Compensation expense recognized	$	193	$	81	$	570	$	81

As of September 30, 2022, there was $1.6 million 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 2.1 years.  None of the Company’s PSAs vested during the three and nine months ended September 30, 2022 and 2021.