Stock-Based Compensation

3 Months Ended

Mar. 31, 2015

Stock-Based Compensation

Stock-Based Compensation

14. Stock-Based Compensation

Pursuant to the Hilltop Holdings Inc. 2012 Equity Incentive Plan (the “2012 Plan”), the Company may grant nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights and other awards to employees of the Company, its subsidiaries and outside directors of the Company. In the aggregate, 4,000,000 shares of common stock may be delivered pursuant to awards granted under the 2012 Plan. At March 31, 2015, 2,840,783 shares of common stock remained available for issuance pursuant to the 2012 Plan.

During the three months ended March 31, 2015, the Compensation Committee of the Board of Directors of the Company awarded certain executives and key employees an aggregate of 193,770 restricted stock units (“RSUs”) pursuant to the 2012 Plan. At March 31, 2015, 97,932 of these RSUs are subject to time-based vesting conditions and generally cliff vest on the third anniversary of the grant date, and 95,838 of these RSUs vest based upon the achievement of certain performance goals over a three-year period. These RSUs are subject to service conditions set forth in the award agreements, with associated costs recognized on a straight-line basis over the respective vesting periods. The weighted average grant date fair value related to these RSUs was $18.68 per share. At March 31, 2015, unrecognized compensation expense related to these RSUs was $3.5 million, which will be amortized through February 2018. The RSUs are not transferable, and the shares of common stock issuable upon conversion of vested RSUs are generally subject to transfer restrictions for a period of one year following conversion, subject to certain exceptions. In addition, the applicable RSU award agreements provide for accelerated vesting under certain conditions.

Prior to the completion of the SWS Merger and in accordance with the SWS merger agreement, on August 20, 2014, SWS granted restricted shares of common stock (“Restricted Stock Awards”) to certain of its executive officers and key employees. On January 1, 2015, the effective time of the SWS Merger, the Restricted Stock Awards converted into the right to receive an aggregate of 62,994 restricted shares of Company common stock based on the value of the merger consideration, and their vesting schedule did not accelerate. These Restricted Stock Awards generally vest in three equal installments beginning on August 20, 2015, and are subject to service conditions set forth in the award agreements, with associated costs recognized on a straight-line basis over the respective vesting periods. The fair value of these Restricted Stock Awards at the time of conversion was $19.95 per share. At March 31, 2015, unrecognized compensation expense related to these Restricted Stock Awards was $0.7 million, which will be amortized through August 2017. The award agreements governing these Restricted Stock Awards provide for accelerated vesting under certain conditions.

During 2014 and 2013, the Compensation Committee of the Board of Directors of the Company awarded certain executives and key employees an aggregate of 444,175 and 471,000 RSUs, respectively, pursuant to the 2012 Plan, of which 428,258 and 451,000, respectively, remained outstanding at March 31, 2015. At March 31, 2015, unrecognized compensation expense related to these awards was $9.1 million, which will be amortized through December 2017. The award agreements governing these awards provide for accelerated vesting under certain conditions.

Compensation expense related to the plans was $1.8 million and $0.7 million during the three months ended March 31, 2015 and 2014, respectively.

During the three months ended March 31, 2015 and 2014, Hilltop granted 2,545 and 2,303 shares of common stock to independent members of the Company’s Board of Directors for services rendered to the Company pursuant to the 2012 Plan.