Stock-Based Compensation

9 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

On September 26, 2014, the Board of Directors adopted, and on October 10, 2014, NAB, at that time the Company's controlling shareholder, approved the Great Western Bancorp, Inc. 2014 Omnibus Incentive Compensation Plan ("2014 Plan"), the Great Western Bancorp, Inc. 2014 Non-Employee Director Plan ("2014 Director Plan"), and the Great Western Bancorp, Inc. Executive Incentive Compensation Plan ("Bonus Plan"), collectively ("the Plans"), which provide for the issuance of restricted share units and performance based share units to certain officers, employees and directors of the Company. On February 22, 2018, the Company's stockholders approved amendments to the 2014 Plan and the 2014 Director Plan to increase the number of shares available for future grants under the Plans. The Plans were primarily established to enhance the Company’s ability to attract, retain and motivate employees. The Company’s Board of Directors, the Compensation Committee of the Board of Directors ("Compensation Committee"), or executive management upon delegation of the Compensation Committee has exclusive authority to select the employees and others, including directors, to receive the awards and to establish the terms and conditions of each award made pursuant to the Company’s stock-based compensation plans.

Stock units issued under the Company’s restricted and performance based stock plans may not be sold or otherwise transferred until the vesting period has been met and, if applicable, performance objectives have been obtained. During the vesting periods, participants do not have voting rights and dividends are accumulated until the time upon which the award vests. Upon specified events, as defined in the Plans, stock unit awards that have not vested and/or performance hurdles that have not been met will be forfeited.

Based on the substantive terms of each award, restricted and performance-based awards are classified as equity awards and accounted for under the treasury stock method. The fair value of equity-classified awards is based on the market price of the stock on the measurement date and is amortized as compensation expense on a straight-line basis over the vesting or performance period.

Stock compensation is recognized based on the number of awards to vest using actual forfeiture amounts. For performance-based stock awards, an estimate is made of the number of shares expected to vest as a result of actual performance against the performance targets to determine the amount of compensation expense to be recognized. The estimate is reevaluated quarterly and total compensation expense is adjusted for any change in the current period. Stock-based compensation expense is included in salaries and employee benefits expense in the consolidated statements of income. Stock compensation expense was $1.1 million and $4.0 million for the three and nine months ended June 30, 2020, respectively, and $1.4 million and $4.5 million for the three and nine months ended June 30, 2019, respectively. Related income tax benefits recognized were $0.3 million and $1.0 million for the three and nine months ended June 30, 2020, respectively and $0.4 million and $1.1 million for the three and nine months ended June 30, 2019, respectively.

The following is a summary of the Plans’ restricted share and performance-based stock award activity as of June 30, 2020 and September 30, 2019. The number of performance shares granted in the following table are reflected at the amount of achievement of the pre-established targets.


	June 30, 2020				September 30, 2019
	Common Shares	Weighted-Average Grant Date Fair Value		Common Shares	Weighted-Average Grant Date Fair Value
Restricted Shares
Restricted shares, beginning of fiscal year	190,805	$	37.20	163,287	$	37.86
Granted	146,466	30.78		106,753	37.27
Vested	(84,096)	38.61		(76,210)	38.64
Forfeited	(3,742)	36.48		(3,025)	38.67
Canceled	—	—		—	—
Restricted shares, end of period	249,433	$	32.96	190,805	$	37.20

Vested, but not issuable at end of period	62,992	$	33.98	50,770	$	33.88

Performance Shares
Performance shares, beginning of fiscal year	173,332	$	38.50	175,196	$	36.29
Granted	(44,629)	(57.47)		60,583	32.77
Vested	(54,861)	39.43		(59,937)	30.79
Forfeited	(4,407)	37.97		(2,510)	39.25
Canceled	—	—		—	—
Performance shares, end of period	69,435	$	35.12	173,332	$	38.50

Vested, but not issuable at end of period	5,612	$	18.00	5,612	$	18.00

As of June 30, 2020, there was $6.5 million of unrecognized compensation cost related to non-vested restricted stock awards expected to be recognized over a period of 2.4 years. The fair value of the vested, but not issued stock awards was $0.9 million and $1.9 million at June 30, 2020 and September 30, 2019, respectively.