STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2023

STOCK-BASED COMPENSATION [Abstract]

STOCK-BASED COMPENSATION

NOTE 13 – STOCK-BASED

.

COMPENSATION

The First Bancorp Omnibus Incentive Plan (the “Omnibus Plan”), which is effective until May 24, 2026, provides for equity-based

and non equity-based compensation incentives (the “awards”). The Omnibus Plan authorizes the issuance of up to

14,169,807

 shares

of common stock, subject to adjustments for stock splits, reorganizations and other similar events. As of September 30, 2023, there

were

3,151,949

 authorized shares of common stock available for issuance under the Omnibus Plan. The Board, based on the

recommendation of the Compensation and Benefits Committee of the Board, has the power and authority to determine those eligible

to receive awards and to establish the terms and conditions of any awards, subject to various limits and vesting restrictions that apply

to individual and aggregate awards.

Restricted Stock

Under the Omnibus Plan, the Corporation may grant restricted stock to plan participants, subject to forfeiture upon the occurrence

of certain events until the dates specified in the participant’s award agreement. While the restricted stock is subject to forfeiture and

does not contain non-forfeitable dividend rights, participants may exercise full voting rights with respect to the shares of restricted

stock granted to them. The fair value of the shares of restricted stock granted was based on the market price of the Corporation’s

common stock on the date of the respective grant. The shares of restricted stocks granted to employees are subject to the following

vesting period: fifty percent (

50

%) of those shares vest on the two-year anniversary of the grant date and the remaining

50

% vest on

the three-year anniversary of the grant date. The shares of restricted stock granted to directors are generally subject to vesting on the

one-year anniversary of the grant date. The Corporation issued

519,794

 shares during the nine-month period ended September 30,

2023 in connection with restricted stock awards, which were reissued from treasury shares.

The following table summarizes the restricted stock activity under the Omnibus Plan during the nine-month periods ended

September 30, 2023 and 2022:

Nine-Month Period Ended September 30,

2023

2022

Number of

Weighted-

Number of

Weighted-

shares of

Average

shares of

Average

restricted

Grant Date

restricted

Grant Date

stock

 Fair Value

stock

 Fair Value

Unvested shares outstanding at beginning of year

938,491

$

9.14

1,148,775

$

6.61

Granted

(1)

519,794

12.06

323,364

13.18

Forfeited

(58,454)

11.31

(15,108)

8.79

Vested

(503,460)

6.27

(510,007)

6.05

Unvested shares outstanding at end of period

896,371

$

12.32

947,024

$

9.12

(1)

Includes, for the nine-month period ended September 30,2023,

25,786

 shares of restricted stock awarded to independent directors and

494,008

 shares of restricted stock awarded to

employees, of which

33,718

 shares were granted to retirement-eligible employees and thus charged to earnings as of the grant date. Includes, for the nine-month period ended September

30,2022,

24,972

 shares of restricted stock awarded to independent directors and

298,392

 shares of restricted stock awarded to employees, of which

6,084

 shares were granted to

retirement-eligible employees and thus charged to earnings as of the grant date.

For the quarter and nine month-period ended September 30, 2023, the Corporation recognized $

1.3

 million and $

4.3

 million,

respectively, of stock-based compensation expense related to restricted stock awards, compared to $

0.9

 million and $

2.7

 million for

the same periods in 2022, respectively. As of September 30, 2023, there was $

5.4

 million of total unrecognized compensation cost

related to unvested shares of restricted stock that the Corporation expects to recognize over a weighted average period of

1.7

 years.

Performance Units

Under the Omnibus Plan, the Corporation may award performance units to participants, with each unit representing the value of one

share of the Corporation’s common stock.

These awards, which are granted to executives, do not contain non-forfeitable rights to

dividend equivalent amounts and can only be settled in shares of the Corporation’s common stock.

On March 16, 2023, the Corporation granted 216,876 performance units to executives. Performance units granted on March 16,

2023 will vest on the third anniversary of the effective date of the award based on actual achievement of two performance metrics

weighted equally: relative total shareholder return (“Relative TSR”), compared to companies that comprise the KBW Nasdaq

Regional Banking Index, and the achievement of a tangible book value per share (“TBVPS”) goal, which is measured based upon the

growth in the tangible book value during the performance cycle, adjusted for certain allowable non-recurring transactions. The

participant may earn 50% of their target opportunity for threshold level performance and up to 150% of their target opportunity for

maximum level performance, based on the individual achievement of each performance goal during a three-year performance cycle.

Amounts between threshold, target and maximum performance will vest in a proportional amount. Performance units granted prior to

March 16, 2023 vest subject only to achievement of a TBVPS goal and the participant may earn only up to 100% of their target

opportunity.

The following table summarizes the performance units activity under the Omnibus Plan during the nine-month periods ended

September 30, 2023 and 2022:

Nine-Month Period Ended September 30,

2023

2022

Number 

Weighted -

Number 

Weighted -

of

Average

of

Average

Performance

Grant Date

Performance

Grant Date

Units

Fair Value

Units

Fair Value

Performance units at beginning of year

791,923

7.36

814,899

7.06

Additions

(1)

216,876

12.24

166,669

13.15

Vested

(2)

(474,538)

4.08

(189,645)

11.16

Performance units at end of period

534,261

12.25

791,923

7.36

(1)

Units granted during the nine-month period ended September 30, 2023 are subject to the achievement of the Relative TSR and TBVPS performance goals during a three-year performance

cycle beginning January 1, 2023 and ending on December 31, 2025. Units granted during the nine-month period ended September 30, 2022 are subject to the achievement of the TBVPS

performance goal during a three-year performance cycle beginning January 1, 2022 and ending on December 31, 2024.

(2)

Units vested during the nine-month period ended September 30, 2023 are related to performance units granted in 2020 that met certain pre-established targets and were settled with shares

of common stock reissued from treasury shares. Units vested during the nine-month period ended September 30, 2022 are related to performance units granted in 2019 that met certain pre-

established targets and were settled with shares of common stock reissued from treasury shares.

The fair value of the performance units awarded during the nine-month periods ended September 30, 2023 and 2022, that was based

on the TBVPS goal component, was calculated based on the market price of the Corporation’s common stock on the respective date of

the grant and assuming attainment of 100% of target opportunity. As of September 30, 2023, there have been no changes in

management’s assessment of the probability that the pre-established TBVPS goal will be achieved; as such, no cumulative adjustment

to compensation expense has been recognized. The fair value of the performance units awarded during the nine-month period ended

September 30, 2023, that was based on the Relative TSR component, was calculated using a Monte Carlo simulation. Since the

Relative TSR component is considered a market condition, the fair value of the portion of the award based on Relative TSR is not

revised subsequent to grant date based on actual performance.

The following table summarizes the valuation assumptions used to calculate the fair value of the Relative TSR component of the

performance units granted under the Omnibus Plan during the nine-month period ended September 30, 2023:

Nine-Month Period Ended

September 30, 2023

Risk-free interest rate

(1)

3.98

%

Correlation coefficient

77.16

Expected dividend yield

(2)

-

Expected volatility

(3)

41.37

Expected life (in years)

2.79

(1)

Based on the yield on zero-coupon U.S. Treasury Separate Trading of Registered Interest and Principal of Securities as of the grant date.

(2)

Assumes that dividends are reinvested at each ex-dividend date.

(3)

Calculated based on the historical volatility of the Corporation's stock price with a look-back period equal to the simulation term using daily stock prices.

For the quarter and nine-month periods ended September 30, 2023, the Corporation recognized $

0.6

 million and $

1.6

 million,

respectively, of stock-based compensation expense related to performance units, compared to $

0.5

 million and $

1.3

 million for the

same periods in 2022, respectively. As of September 30, 2023, there was $

3.6

 million of total unrecognized compensation cost related

to unvested performance units that the Corporation expects to recognize over a weighted average period of

2.0

 years. 

Shares withheld

During the first nine months of 2023, the Corporation withheld

288,613

 shares (as compared to

202,649

 shares during the first nine

months of 2022) of the restricted stock that vested during such period to cover the officers’ payroll and income tax withholding

liabilities; these shares are held as treasury shares. The Corporation paid in cash any fractional share of salary stock to which an

officer was entitled. In the consolidated financial statements, the Corporation presents shares withheld for tax purposes as common

stock repurchases.