Share-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Employee Stock Ownership Plan

As part of the IPO completed on October 14, 2020, the Company established a tax-qualified Employee Stock Ownership Plan to provide eligible employees the opportunity to own Company shares. The ESOP borrowed $149.4 million from the Company to purchase 14,940,652 common shares during the IPO and in the open market. The loan is payable in annual installments over 30 years at an interest rate equal to the Prime rate as published in the The Wall Street Journal. As the loan is repaid to the Company, shares are released and allocated proportionally to eligible participants on the basis of each participant’s proportional share of compensation relative to the compensation of all participants. The unallocated ESOP shares are pledged as collateral on the loan.

The Company accounts for its ESOP in accordance with FASB ASC 718-40, "Compensation – Stock Compensation". Under this guidance, unreleased shares are deducted from shareholders’ equity as unearned ESOP shares in the accompanying Consolidated Balance Sheets. The Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they are committed to be released. To the extent that the fair value of the Company’s ESOP shares differs from the cost of such shares, the difference is credited or debited to equity. As the loan is internally leveraged, the loan receivable from the ESOP to the Company is not reported as an asset nor is the debt of the ESOP shown as a liability in the Company’s Consolidated Balance Sheets. Dividends on unallocated shares are used to pay the ESOP debt.

The following table presents the amount of compensation expense associated with the ESOP and the amount of the loan payments made by the ESOP, including the portions related to principal and interest, for the periods indicated:


	Year Ended December 31,
	2023		2022		2021
	(In thousands)
Compensation expense	$	7,129	$	9,923	$	9,408
Annual loan payment:
Interest	9,374		4,724		4,826
Principal	2,914		3,147		3,045
Total loan payment	$	12,288	$	7,871	$	7,871

The number of shares committed to be released per year is estimated to be 495,339 through 2049 and 392,141 in the year 2050.

The following table presents share information held by the ESOP:


	As of December 31,
	2023		2022
	(Dollars in thousands)
Allocated shares	1,541,971		1,046,850
Shares committed to be released	103,230		104,464
Unallocated shares (suspense shares)	13,270,932		13,769,628
Total shares	14,916,133		14,920,942
Fair value of unallocated shares	$	188,447	$	237,526

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 December 31, 2023 and 2022, there were 4,872,494 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 December 31, 2023 and 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 Years Ended December 31,
	2023			2022
Restricted Stock Awards	Number of Shares	Weighted-Average Grant Price Per Share		Number of Shares	Weighted-Average Grant Price Per Share
Non-vested restricted stock at beginning of year	525,460	$	20.08	683,056	$	20.13
Granted	47,820	11.50		31,559	19.17
Vested	(152,880)	19.95		(136,609)	20.13
Forfeited	—	—		(52,546)	20.08
Non-vested restricted stock at end of year	420,400	$	19.15	525,460	$	20.08

During the year ended December 31, 2021, 683,056 RSA shares were granted which had a total grant date fair value of $13.7 million. During the year ended December 31, 2023, 152,880 RSA awards vested. Such awards had a grant date fair value of $3.0 million. During the year ended December 31, 2022, 136,609 RSA awards had vested. Such awards had a grant date fair value of $2.7 million.

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


	For the Years Ended December 31,
	2023			2022
Restricted Stock Units	Number of Shares	Weighted-Average Grant Price Per Share		Number of Shares	Weighted-Average Grant Price Per Share
Non-vested restricted stock at beginning of year	972,325	$	21.08	—	$	—
Granted	318,577	15.63		978,364	21.08
Vested (1)	(302,908)	21.08		—	—
Forfeited	(35,993)	15.73		(6,039)	21.08
Non-vested restricted stock at end of year	952,001	$	19.46	972,325	$	21.08

(1)Includes 95,808 shares withheld upon settlement for employee taxes.

During the year ended December 31, 2023, 302,908 RSU awards vested. Such awards had a grant date fair value of $6.4 million. As of December 31, 2022, no RSU awards had vested. During the year ended year ended December 31, 2021, no RSU awards were granted.

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


	For the Years Ended December 31,
	2023			2022
Performance Stock Units	Number of Shares	Weighted-Average Grant Price Per Share		Number of Shares	Weighted-Average Grant Price Per Share
Non-vested restricted stock at beginning of year	533,676	$	21.12	—	$	—
Granted	108,984	10.16		533,676	21.12
Forfeited	(9,626)	10.16		—	—
Non-vested restricted stock at end of year	633,034	$	19.40	533,676	$	21.12

As of December 31, 2023, no PSU awards had vested. As of December 31, 2022, no PSU awards had vested. During the year ended year ended December 31, 2021, no PSU awards were granted.

The following table shows share-based compensation expense under the 2021 Plan and the related tax benefit for the periods indicated:


	For the Years Ended December 31,
	2023		2022		2021
	(In millions)
Share-based compensation expense	$	16.5	$	10.5	$	0.2
Related tax benefit (1)	4.7		3.0		0.1

(1)Estimated based upon the Company’s statutory rate for the respective period.

As of December 31, 2023 and 2022, there was $26.8 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 December 31, 2023, this cost is expected to be recognized over a weighted average remaining period of approximately 2.2 years. As of December 31, 2022, this cost was expected to be recognized over a weighted average remaining period of approximately 3.3 years.