Stockholders' Equity

12 Months Ended

Dec. 31, 2021

Stockholders' Equity Note [Abstract]

Stockholder's Equity

13. STOCKHOLDERS' EQUITY

Stock-Based Compensation

Restricted Stock Awards

The Incentive Plan, as amended, gives the BOD the authority to grant up to 11.8 million in stock awards consisting of unrestricted stock, stock units, dividend equivalent rights, stock options (incentive and non-qualified), stock appreciation rights, restricted stock, and performance and annual incentive awards. The Incentive Plan limits the maximum number of shares of common stock that may be awarded to any person eligible for an award to 300,000 per calendar year and also limits the total compensation (cash and stock) that can be awarded to a non-employee director to $600,000 in any calendar year. Stock awards available for grant at December 31, 2021 were 3.0 million.

Restricted stock awards granted to employees generally vest over a 3-year period. Stock grants made to non-employee WAL directors in 2021 were fully vested on July 1, 2021. The Company estimates the compensation cost for stock grants based upon the grant date fair value. Stock compensation expense is recognized on a straight-line basis over the requisite service period for the entire award. Stock compensation expense related to restricted stock awards granted to employees are included in Salaries and employee benefits in the Consolidated Income Statement. For restricted stock awards granted to WAL directors, the related stock compensation expense is included in Legal, professional, and directors' fees. For the year ended December 31, 2021, the Company recognized $22.9 million in stock-based compensation expense related to these stock grants, compared to $20.3 million and $17.4 million during the years ended December 31, 2020 and 2019, respectively.

In addition, the Company previously granted shares of restricted stock to certain members of executive management that had both performance and service conditions that affect vesting. There were no such grants made during the years ended December 31, 2021, 2020, and 2019, however expense was still being recognized through June 30, 2021 for a grant made in 2017 with a four-year vesting period. The Company recognized $0.6 million in stock-based compensation expense related to these performance-based restricted stock grants through June 30, 2021, the end of the vesting period, compared to $1.2 million and $1.9 million during the years ended December 31, 2020 and 2019, respectively.

A summary of the status of the Company’s unvested shares of restricted stock and changes during the years then ended is presented below: 

	December 31,
	2021			2020
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
	(in millions, except per share amounts)
Balance, beginning of period	1.0	$	50.12	1.0	$	49.98
Granted	0.4	83.56		0.4	51.53
Vested	(0.4)	53.50		(0.4)	51.86
Forfeited	(0.1)	59.24		0.0	49.79
Balance, end of period	0.9	$	63.53	1.0	$	50.12

The total weighted average grant date fair value of all stock awards, including the performance-based restricted stock awards, granted during the years ended December 31, 2021, 2020, and 2019 was $35.4 million, $22.7 million, and $23.7 million, respectively. The total fair value of restricted stock that vested during the years ended December 31, 2021, 2020, and 2019 was $34.2 million, $19.6 million, and $21.3 million, respectively.

As of December 31, 2021, there was $28.0 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Incentive Plan. That cost is expected to be recognized over a weighted average period of 2.0 years.

Performance Stock Units

The Company grants performance stock units to members of its executive management that do not vest unless the Company achieves a specified cumulative EPS target and a TSR performance measure over a three-year performance period. The number of shares issued will vary based on the cumulative EPS target and relative TSR performance factor that is achieved. The Company estimates the cost of performance stock units based upon the grant date fair value and expected vesting percentage over the three-year performance period. For the year ended December 31, 2021, the Company recognized $10.4 million in stock-based compensation expense related to these performance stock units, compared to $7.1 million and $6.9 million in stock-based compensation expense for such units during the years ended December 31, 2020 and 2019, respectively.

The three-year performance period for the 2019 grant ended on December 31, 2021, and the Company's cumulative EPS and TSR performance measure for the performance period exceeded the level required for a maximum award under the terms of the grant. As a result, 203,646 shares will become fully vested and distributed to executive management in the first quarter of 2022.

The three-year performance period for the 2018 grant ended on December 31, 2020, and the Company's cumulative EPS and TSR performance measure for the performance period exceeded the level required for a maximum award under the terms of the grant. As a result, 152,418 shares became fully vested and were distributed to executive management in the first quarter of 2021.

Preferred Stock

On September 15, 2021, the Company entered into an underwriting agreement, pursuant to which the Company agreed to issue and sell an aggregate of 12,000,000 depositary shares, each representing a 1/400th ownership interest in a share of the Company’s 4.250% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Shares, Series A, par value $0.0001 per share, with a liquidation preference of $25 per depositary share (equivalent to $10,000 per share of Series A preferred stock).

The Company received net proceeds of $294.5 million from the issuance of preferred stock during the year ended December 31, 2021. On December 14, 2021, the Company declared the first quarterly cash dividend of $0.29 per depositary share, for a total dividend payment to preferred shareholders of $3.5 million, paid on December 30, 2021.

Common Stock Issuances

Pursuant to ATM Distribution Agreement

On June 3, 2021, the Company entered into a distribution agency agreement with J.P. Morgan Securities LLC, under which the Company may sell up to 4,000,000 shares of its common stock on the NYSE. The Company pays the distribution agents a mutually agreed rate, not to exceed 2% of the gross offering proceeds of the shares sold pursuant to the distribution agency agreement. The common stock will be sold at prevailing market prices at the time of the sale or at negotiated prices and, as a result, prices will vary. Sales under the ATM program are being made pursuant to a prospectus dated May 14, 2021 and a prospectus supplement filed with the SEC in an offering of shares from the Company's shelf registration statement on Form S-3 (No. 333-256120). On November 18, 2021, the distribution agency agreement was amended to add Piper Sandler & Co. as an agent with J.P. Morgan Securities LLC.

During the year ended December 31, 2021, the Company sold 3.1 million shares under the ATM program at a weighted-average selling price of $106.41 per share for gross proceeds of $333.4 million. Total related offering costs were $2.3 million, of which $2.0 million relates to compensation costs paid to J.P. Morgan Securities LLC and Piper Sandler & Co.

Registered Direct Offering

The Company sold 2.3 million shares of its common stock in a registered direct offering during the year ended December 31, 2021. The shares were sold for $91.00 per share for aggregate net proceeds of $209.2 million.

Common Stock Repurchase

The Company's common stock repurchase program, which expired on December 31, 2020, authorized the Company to repurchase up to $250.0 million of its outstanding common stock. Effective April 17, 2020, the Company temporarily suspended its stock repurchase program. Prior to this decision and pursuant to the repurchase plan, the Company repurchased 2.1 million shares of its common stock at a weighted average price of $34.65 for a total payment of $71.6 million during the year ended December 31, 2020. There were no share repurchases during the year ended December 31, 2021.

Cash Dividend on Common Shares

During the year ended December 31, 2021, the Company declared and paid quarterly cash dividends of $0.25 per share for the first two quarters of the year and increased the quarterly cash dividend to $0.35 per share for the last two quarters of the year, for a total dividend payment to shareholders of $124.1 million. During the year ended December 31, 2020, the Company declared and paid a quarterly cash dividend of $0.25 per share, for a total dividend payment to shareholders of $101.3 million.

Treasury Shares

Treasury share purchases represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. During the year ended December 31, 2021, the Company purchased treasury shares of 180,607 at a weighted average price of $86.63 per share, compared to 165,489 shares at a weighted average price per share of $50.80 in 2020, and 210,657 shares at a weighted average price per share of $45.80 in 2019.