Share-Based Compensation

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Share-Based Compensation Plan

On November 29, 2021, the shareholders of the Company approved the Eastern Bankshares, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan provides for the issuance of up to 26,146,141 shares of common stock pursuant to grants of restricted stock, restricted stock units (“RSUs”), non-qualified stock options and incentive stock options, any or all of which can be granted with performance-based vesting conditions. Under the 2021 Plan, 7,470,326 shares may be issued as restricted stock or RSUs, including those issued as performance shares and performance share units (“PSUs”), and 18,675,815 shares may be issued upon the exercise of stock options. These shares may be awarded from the Company’s authorized but unissued shares. However, the 2021 Plan permits the grant of additional awards of restricted stock or RSUs above the aforementioned limit, provided that, for each additional share of restricted stock or RSU awarded in excess of such limit, the pool of shares available to be issued upon the exercise of stock options will be reduced by three shares. Pursuant to the terms of the 2021 Plan, each of the Company’s non-employee directors were automatically granted awards of restricted stock on November 30, 2021. Such restricted stock awards vest pro-rata on an annual basis over a five-year period. The maximum term for stock options is ten years.

In May 2023, the Company granted a total of 47,820 shares of restricted stock to the Company’s non-employee directors which vest after approximately one year from the date of grant. In May 2022, the Company granted a total of 31,559 shares of restricted stock to the Company’s non-employee directors which vest after approximately one year from the date of grant. In March 2023, the Company granted to all of the Company’s executive officers and certain other employees a total of 318,577 RSUs, which vest pro-rata on an annual basis over a period of three years from the date of the grant, and a total of 108,984 PSUs for which vesting is contingent upon the Compensation and Human Capital Management Committee of the Board of Director’s certification, after the conclusion of a three-year period from the date of the grant, that the Company has attained a threshold level of certain performance criteria over such period. In March 2022, the Company granted to all of the Company’s executive officers and certain other employees a total of 978,364 RSUs, which vest pro-rata on an annual basis over a period of three or five years from the date of the grant, and a total of 533,676 PSUs for which vesting is contingent upon the Compensation and Human Capital Management Committee of the Board of Director’s certification, after the conclusion of a three-year period from the date of the grant, that the Company has attained a threshold level of certain performance criteria over such period.

As of June 30, 2023 and December 31, 2022, there were 4,827,515 shares and 5,302,256 shares that remained available for issuance as restricted stock or RSU awards (including those that may be issued as performance shares and PSUs), respectively, and 18,675,815 shares that remained available for issuance upon the exercise of stock options at both dates. As of both June 30, 2023 and December 31, 2022, no stock options had been awarded under the 2021 Plan.

The following table summarizes the Company’s restricted stock award activity for the periods indicated:


	For the Six Months Ended June 30,
	2023			2022
	Number of Shares	Weighted-Average Grant Price Per Share		Number of Shares	Weighted-Average Grant Price Per Share
Non-vested restricted stock as of the beginning of the respective period	525,460	$	20.08	683,056	$	20.13
Granted	47,820	11.50		31,559	19.17
Vested	(28,690)	19.17		—	—
Forfeited	—	—		—	—
Non-vested restricted stock as of the end of the respective period	544,590	$	19.37	714,615	$	20.09

The following table summarizes the Company’s restricted stock unit activity for the periods indicated:


	For the Six Months Ended June 30,
	2023			2022
	Number of Shares	Weighted-Average Grant Price Per Share		Number of Shares	Weighted-Average Grant Price Per Share
Non-vested restricted stock units as of the beginning of the respective period	972,325	$	21.08	—	$	—
Granted	318,577	15.63		978,364	21.08
Vested (1)	(231,407)	21.08		—	—
Forfeited	(640)	21.08		(4,041)	21.08
Non-vested restricted stock units as of the end of the respective period	1,058,855	$	19.44	974,323	$	21.08

(1)Includes 74,625 shares withheld upon settlement for employee taxes.

The following table summarizes the Company’s performance stock unit activity for the periods indicated:


	For the Six Months Ended June 30,
	2023			2022
	Number of Shares	Weighted-Average Grant Price Per Share		Number of Shares	Weighted-Average Grant Price Per Share
Non-vested performance stock units as of the beginning of the respective period	533,676	$	21.12	—	$	—
Granted	108,984	10.16		533,676	21.12
Vested	—	—		—	—
Forfeited	—	—		—	—
Non-vested performance stock units as of the end of the respective period	642,660	$	19.26	533,676	$	21.12

As of June 30, 2023, no PSU awards had vested. As of December 31, 2022, no RSU or PSU awards had vested. During the six months ended June 30, 2023, 231,407 RSU awards vested. Such awards had a grant date fair value of $4.9

million. During the six months ended June 30, 2023, 28,690 RSA awards vested. Such awards had a grant date fair value of $0.5 million. During the six months ended June 30, 2022, no awards had vested.

For the three months ended June 30, 2023, share-based compensation expense under the 2021 Plan and the related tax benefit totaled $4.7 million and $1.3 million, respectively. For the three months ended June 30, 2022, share-based compensation expense under the 2021 Plan and the related tax benefit totaled $2.9 million and $0.9 million, respectively.

For the six months ended June 30, 2023, share-based compensation expense under the 2021 Plan and the related tax benefit totaled $7.7 million and $2.2 million, respectively. For the six months ended June 30, 2022, share-based compensation expense under the 2021 Plan and the related tax benefit totaled $4.5 million and $1.3 million, respectively.

As of June 30, 2023 and December 31, 2022, there was $36.3 million and $34.6 million, respectively, of total unrecognized compensation expense related to unvested restricted stock awards, restricted stock units and performance stock units granted and issued under the 2021 Plan, as applicable. As of June 30, 2023, this cost is expected to be recognized over a weighted average remaining period of approximately 2.7 years. As of December 31, 2022, this cost was expected to be recognized over a weighted average remaining period of approximately 3.3 years.