Premier has established equity based compensation plans for its directors and employees. On February 27, 2018, the Board adopted, and the shareholders approved at the 2018 Annual Shareholders Meeting, the Premier Financial Corp. 2018 Equity Incentive Plan (the “2018 Equity Plan”). The 2018 Equity Plan replaced all existing plans, although the Company’s former equity plans remain in existence to the extent there were outstanding grants thereunder at the time the 2018 Equity Plan was approved. In addition, as a result of the Company's merger (the "Merger") with United Community Federal Corp. ("UCFC"), Premier assumed certain outstanding stock options granted under UCFC’s Amended and Restated 2007 Long-Term Incentive Plan (the “UCFC 2007 Plan”) and UCFC’s 2015 Long Term Incentive Plan, which has since been renamed as the “Premier Financial Corp. 2015 Long Term Incentive Plan” (the “2015 Plan”). Premier also assumed the shares available for future issuance under the 2015 Plan as of the effective date of the Merger, with appropriate adjustments to the number of shares available to reflect the Merger. The stock options assumed from UCFC in the Merger remain subject to the terms of the 2015 Plan, but became exercisable solely to purchase shares of Premier, with appropriate adjustments to the number of shares subject to the assumed stock options and the exercise price of such stock options. Besides certain options issued under the First Defiance Financial Corp. 2010 Equity Incentive Plan, all awards currently outstanding are issued under the 2018 Equity Plan or the 2015 Plan. The 2018 Equity Plan and the 2015 Plan were each amended and restated in February 2022 to align certain administrative components of the plans in addition to enhancing certain governance components. New awards will be made under either the 2018 Equity Plan or the 2015 Plan as the Company determines. The 2018 Equity Plan allows for issuance of up to 900,000 common shares through the award of options, restricted stock, stock, stock appreciation rights, or other stock-based awards. The 2015 Plan allows for the issuance of up to 1.2 million common shares, as adjusted for the Merger, through the award of options, stock, restyricted stock, stock units, stock appreciation rights, or performance stock awards.

The Company maintains Long-Term Equity Incentive Plans (each, an "LTIP") for select members of management (the "Executive LTIP") and a Key Employee and Commercial Lender Plan (the "Key Plan"). Under the Executive LTIP, participants may earn between 20% to 50% of their salary for potential payout in the form of equity awards based on the achievement of certain corporate performance targets over a three-year period. The Company granted 86,190 performance stock units ("PSUs") to the participants under the 2021 Executive LTIP during the first half of 2022, which represents the maximum target award. The value of awards issued in 2021 and 2022 under the Executive LTIP will be determined individually at the end of each respective 36 month performance period ending December 31. The benefits earned under these LTIPs will be paid out in equity in the first quarter following the end of the performance period. The participants will receive all or a portion of the award if their employment is terminated by the Company without cause, by the participant in certain situations, or by death, disability or retirement of the participant.

The maximum amount of compensation expense that may be earned for the PSUs at September 30, 2022, is approximately $6.8 million in the aggregate. However, the estimated expense that is expected to be earned as of September 30, 2022, is $4.5 million of which $1.3 million was unrecognized at September 30, 2022, and will be recognized over the remaining performance periods. Total expense of $432,000 and $842,000 was recorded during each of the three and nine months ended September 30, 2022, respectively, compared to expense of $825,000 and $1.5 million for the three and nine months ended September 30, 2021, respectively.

Beginning in 2022, under the Key Plan, the participants are granted restricted stock awards ("RSAs") based upon the achievement of certain targets in the prior year. Prior to 2022, restricted stock units ("RSUs") were issued to participants under the same plan. The participants can earn from 5% to 10% of their salary in RSAs or RSUs, that vest three years from the date of grant. The Company granted 19,612 in RSAs and 17,542 RSUs in the first quarter of2022 and 2021, respectively, as a payout under the Key Plan.

In the nine months ended September 30, 2022, the Company also granted 33,101 discretionary RSAs that vest over a period of time ranging from one to three years. Of these grants, 14,712 were issued to directors and have a one year vesting period. The fair value of all granted restricted shares was determined by the stock price at the date of the grant.

At September 30, 2022, a total of 347,343 RSAs were outstanding. Compensation expense is recognized over the performance or vesting period. Total expense of $280,000 and $786,000 was recorded during each of the three and nine months ended September 30, 2022, respectively, compared to expense of $351,000 and $908,000 for the three and nine months ended September 30, 2021, respectively. Approximately $2.3 million and $2.7 million is included within other liabilities at September 30, 2022 and December 31, 2021, respectively, related to the cash portion of the Company's Short-Term Incentive Plans.

The following table sets forth Premier's performance and restricted stock activity during the nine months ended September 30, 2022:


	Performance Stock Units					Restricted Stock Units					Restricted Stock Awards
Unvested Shares	Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value
Unvested at January 1, 2022		161,674		$	28.36		51,773		$	28.44		58,260		$	29.71
Granted		86,190			30.67		—			—		52,713			29.24
Vested		—			—		(13,637	)		29.00		(35,159	)		27.97
Forfeited		(3,030	)		31.12		(6,340	)		27.25		(5,101	)		30.50
Unvested at September 30, 2022		244,834		$	29.14		31,796		$	28.44		70,713		$	30.17

As of September 30, 2022, 29,661 options to acquire Premier shares were outstanding at option prices based on the market value of the underlying shares on the date the options were granted. All options expire ten years from the date of grant. Vested options of retirees expire on the earlier of the scheduled expiration date or one year after the retirement date.

The fair value of each option award is estimated on the date of grant using the Black-Scholes model. Expected volatilities are based on historical volatilities of the Company’s common shares. The Company uses historical data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

There were no options granted during the nine months ended September 30, 2022 and 2021.

Following is stock option activity under the plans during the nine months ended September 30, 2022:


	Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in 000’s)
Options outstanding, January 1, 2022		35,661		$	21.72
Forfeited or cancelled		(3,000	)		17.68
Exercised		(3,000	)		17.68
Granted		—			—
Options outstanding, September 30, 2022		29,661		$	22.54
Exercisable at September 30, 2022		29,661		$	22.54		4.34	$	100

Proceeds, related tax benefits realized from options exercised and intrinsic value of options exercised were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Proceeds of options exercised	$	53	$	—	$	53	$	8
Related tax benefit recognized		6		—		6		—
Intrinsic value of options exercised		29		—		29		11

As of September 30, 2022, there was a de minimus amount of total unrecognized compensation costs related to unvested stock options granted under the Company’s equity plans. The cost is expected to be recognized over a weighted-average period of one month.