Stock Based Compensation

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

At the Company's annual meeting of stockholders held on June 6, 2019, stockholders approved the Columbia Financial, Inc. 2019 Equity Incentive Plan ("2019 Plan") which provides for the issuance of up to 7,949,996 shares (2,271,427 restricted stock awards and 5,678,569 stock options) of common stock.

At March 31, 2022, there were 830,632 shares remaining available for future restricted stock awards and 1,944,927 shares for future stock option grants under the 2019 plan

On March 22, 2021, 50,203 shares of restricted stock were awarded, with a grant date fair value of $17.86 per share. To fund the grant of restricted common stock, the Company reissued shares from treasury stock.

On March 2, 2022, 51,746 shares of restricted stock were awarded, with a grant date fair value of $21.79 per share. To fund the grant of restricted common stock, the Company issued shares from authorized but unissued shares.

Restricted shares granted under the 2019 Plan generally vest in equal installments, over performance or service periods ranging from 1 year to 5 years, beginning 1 year from the date of grant. A portion of restricted shares awarded are performance vesting awards, which may or may not vest depending upon the attainment of certain corporate financial targets. Management recognizes compensation expense for the fair value of restricted shares on a straight line basis over the requisite performance or service period. During the three months ended March 31, 2022 and 2021, approximately $1.2 million and $1.4 million in expense was recognized in regard to these awards. The expected future compensation expense related to the 1,046,736 non-vested restricted shares outstanding at March 31, 2022 is approximately $8.2 million over a weighted average period of 1.6 years.

The following is a summary of the Company's restricted stock activity during the three months ended March 31, 2022 and 2021:


	Number of Restricted Shares	Weighted Average Grant Date Fair Value

Non-vested at January 1, 2022	1,054,335	$	15.78
Grants	51,746	21.79
Vested	(27,775)	17.86
Forfeited	(31,570)	16.91
Non-vested at March 31, 2022	1,046,736	$	15.98

12. Stock Based Compensation (continued)


	Number of Restricted Shares	Weighted Average Grant Date Fair Value

Non-vested at January 1, 2021	1,263,169	$	15.66
Grants	50,203	$	17.86

Forfeited	(13,846)	15.60
Non-vested at March 31, 2021	1,299,526	$	15.74

On March 22, 2021, options to purchase 109,654 shares of Company common stock were awarded with a grant date fair value of $4.91 per option. Stock options granted under the 2019 Plan vest in equal installments over the service period of three years beginning one year from the date of grant. Stock options were granted at an exercise price of $17.86, which represents the fair value of the Company's common stock price on the grant date based on the closing market price, and have an expiration period of approximately 10 years. The fair value of stock options granted was estimated utilizing the Black-Scholes option pricing model using the following assumptions: expected life of 6.0 years, risk-free rate of return of 1.11%, volatility of 25.98%, and a dividend yield of 0.00%.

On March 21, 2022, options to purchase 130,951 shares of Company common stock were awarded with a grant date fair value of $6.51 per option. Stock options granted under the 2019 Plan vest in equal installments over the service period of three years beginning one year from the date of grant. Stock options were granted at an exercise price of $21.79, which represents the fair value of the Company's common stock price on the grant date based on the closing market price, and have an expiration period of approximately 10 years. The fair value of stock options granted was estimated utilizing the Black-Scholes option pricing model using the following assumptions: expected life of 6.0 years, risk-free rate of return of 2.34%, volatility of 25.31%, and a dividend yield of 0.00%.

The expected life of the options represents the period of time that stock options are expected to be outstanding and is estimated using the simplified approach, which assumes that all outstanding options will be exercised at the midpoint of the vesting date and full contractual term. The risk-free rate of return is based on the rates on the grant date of a U.S. Treasury Note with a term equal to the expected option life. Since the Company recently became a public company and does not have sufficient historical price data, the expected volatility is based on the historical daily stock prices of Company stock plus a peer group of similar entities based on factors such as industry, stage of life cycle, size and financial leverage. The Company has not paid any cash dividends on its common stock.

Management recognizes expense for the fair value of these awards on a straight line basis over the requisite service period. During the three months ended March 31, 2022 and 2021, approximately $756,300 and $761,000 in expense was recognized in regard to these awards. The expected future compensation expense related to the 2,243,815 non-vested options outstanding at March 31, 2022 is $7.9 million over a weighted average period of 2.2 years.

The following is a summary of the Company's option activity during the three months ended March 31, 2022 and 2021:


	Number of Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value

Outstanding, January 1, 2022	3,637,542	$	15.78	7.6	$	18,654,905
Granted	130,951	21.79		0	—
Exercised	(62,859)	16.42
Expired	(1,412)	15.60		0	—
Forfeited	(61,961)	16.84		0	—
Outstanding, March 31, 2022	3,642,261	$	15.92	7.5	$	20,401,381









Options exercisable at March 31, 2022	1,398,446	$	15.69	7.3	$	8,140,661

12. Stock Based Compensation (continued)


	Number of Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value

Outstanding, January 1, 2021	3,708,628	$	15.66	8.6	$	—
Granted	109,654	17.86		—	—
Expired	(2,029)	15.60		—	—
Forfeited	(30,118)	15.60		—	—
Outstanding, March 31, 2021	3,786,135	$	15.73	8.4	$	6,673,328





Options exercisable at March 31, 2021	741,269	$	15.66	8.2	$	1,345,897

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value, the difference between the Company's closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options.

During the three months ended March 31, 2022 the aggregate intrinsic value of options exercised was $360,469. There were no option exercises during the three months ended March 31, 2021.