On October 24, 2018, the Company’s shareholders approved the PCSB Financial Corporation 2018 Equity Incentive Plan (the “Plan”), which permits the grant of stock options and restricted stock and/or restricted stock units. The total number of shares that may be granted under the Plan is 2,543,115, of which 1,816,511 shares may be granted as stock options and 726,604 shares may be granted as restricted stock and restricted stock units. Total compensation cost that has been charged against income for the Plan was $820,000 and $2.5 million for the three and nine months ended March 31, 2022 and $809,000 and $2.5 million for the three and nine months ended March 31, 2021, respectively.

RSAs awarded under the Plan provide for the issuance of shares to both employees and non-employee directors. These awards generally vest over a 5-year period, with 20% vesting each year on the anniversary of the award. All awards were made at the fair value of common stock on the grant date. Compensation expense is recognized over the vesting period of the awards based on the fair value of the stock at grant date. The fair value of the stock was determined to be the closing price of the stock on the NASDAQ exchange. Total shares available for grant under the Plan are 726,000, of which 549,467 shares were granted as of March 31, 2022.

The following table presents a summary of RSA activity during the period ended March 31, 2022.


	Number of Shares			Weighted-Average Grant Date Fair Value
Unvested granted shares outstanding at July 1, 2021		322,580		$	18.95
Shares granted		8,000			17.66
Shares vested		(107,130	)		18.97
Shares forfeited		-			-
Unvested granted shares at March 31, 2022		223,450		$	18.89

As of March 31, 2022, there was $3.4 million of total unrecognized compensation cost related to non-vested shares granted under the Plan. The cost is expected to be recognized over a weighted-average period of 2.0 years.

Stock options awarded to employees under the Plan are considered incentive stock options (ISOs), up to applicable limits. Option awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant. Those issued to non-employee directors, as well as those exceeding ISO limitations, are considered non-qualified stock options (NQSOs). Options generally vest over a 5-year period, with 20% vesting each year on the anniversary of the award, however, may not vest more rapidly than over a three-year period, and have a contractual term of 10 years. The Company has a policy of using shares held as a treasury stock to satisfy share option exercises. Currently, the Company has a sufficient number of treasury shares to satisfy the current level of exercisable share options.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the following table. Expected volatilities are based on the historical volatilities of a peer group of publicly traded financial institutions. The expected term of options granted is based on the simplified “mid-point” approach which utilizes the weighted average vesting period and contractual term. 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.

Total options available for grant under the Plan are 1,816,511, of which 1,320,963 options were granted as of March 31, 2022. The following table presents a summary of activity related to stock options granted under the Plan, and changes during the period then ended:


	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Years		Aggregate Intrinsic Value
	(Dollars in thousands, except share and per share data)
Options outstanding at July 1, 2021		1,308,963	$	19.00		7.4	$	35
Options granted		12,000		17.66
Options expired		-		-
Options forfeited		-		-
Options exercised		-		-
Options outstanding at March 31, 2022		1,320,963	$	18.98		6.7	$	420

Exercisable at March 31, 2022		782,978	$	19.02		6.6	$	225

As of March 31, 2022, there was $2.0 million of total unrecognized compensation cost related to non-vested stock options granted under the Plan. The cost is expected to be recognized over a weighted-average period of 2.0 years.

The fair value of options granted during the nine months ended March 31, 2022, was determined using the following weighted-average assumptions as of grant date.


Risk-free interest rate		1.00	%
Expected term (in years)		6.25
Expected stock price volatility		35.91	%
Dividend yield		1.36	%
Weighted average fair value of options granted	$	5.50