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Employee Benefits
 6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Employee Benefits Employee Benefits
Pension Plans
The Company provides pension benefits for its employees through membership in the Savings Banks Employees’ Retirement Association. The plan through which benefits are provided is a noncontributory, qualified defined benefit plan and is referred to as the Defined Benefit Plan. The Company’s annual contribution to the Defined Benefit Plan is based upon standards established by the Pension Protection Act. The contribution is based on an actuarial method intended to provide not only for benefits attributable to service to date, but also for those expected to be earned in the future. The Defined Benefit Plan has a plan year end of October 31.
The Company has an unfunded Defined Benefit Supplemental Executive Retirement Plan (“DB SERP”) that provides certain Company officers upon their retirement with defined pension benefits in excess of qualified plan limits imposed by U.S. federal tax law. The DB SERP has a plan year end of December 31.
In addition, the Company has an unfunded Benefit Equalization Plan (“BEP”) to provide retirement benefits to certain employees whose retirement benefits under the qualified pension plan are limited per the Internal Revenue Code. The BEP has a plan year end of October 31.
The Company also has an unfunded Outside Directors’ Retainer Continuance Plan (“ODRCP”) that provides pension benefits to outside directors who retire from service. The ODRCP has a plan year end of December 31. Effective December 31, 2020, the Company closed the ODRCP to new participants and froze benefit accruals for active participants.
Components of Net Periodic Benefit Cost
The components of net pension expense for the plans for the periods indicated are as follows:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In thousands)
Components of net periodic benefit cost:
Service cost (1)$5,588 $6,338 $11,177 $12,677 
Interest cost4,630 4,298 9,260 8,596 
Expected return on plan assets(8,451)(7,532)(16,904)(15,064)
Prior service credit(2,489)(2,970)(4,977)(5,940)
Recognized net actuarial loss1,775 2,468 3,550 4,936 
Net periodic benefit cost$1,053 $2,602 $2,106 $5,205 
(1)Includes service costs related to employees of our insurance agency business with regard to the three and six months ended June 30, 2023. Such service costs were included in net income from discontinued operations as such costs are no longer incurred by the Company following the sale of the insurance agency business in October 2023. All other costs included in the determination of the benefit obligation for the Defined Benefit Plan and the BEP were included in net income from continuing operations as the Bank assumed the related liability upon dissolution of its Eastern Insurance Group subsidiary. Service costs included in net income from discontinued operations and included in the above table were $1.5 million and $3.0 million for the three and six months ended June 30, 2023, respectively.
Except as described above, service costs for the Defined Benefit Plan and the BEP are recognized within salaries and employee benefits in the Consolidated Statements of Income. There were no service costs associated with the DB SERP or ODRCP during the three and six months ended June 30, 2024 and 2023. The remaining components of net periodic benefit cost are recognized in other noninterest expense in the Consolidated Statements of Income.
In accordance with the Pension Protection Act, the Company was not required to make any contributions to the Defined Benefit Plan for the plan years beginning November 1, 2023 and 2022. Accordingly, during the three and six months ended June 30, 2024 and 2023, there were no contributions made to the Defined Benefit Plan.
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 (“RSAs”) vest pro-rata on an annual basis over a five-year period. The maximum term for stock options is ten years.
In May 2024, the Company granted a total of 56,352 shares of restricted stock to the Company’s non-employee directors which vest after approximately one year from the date of grant. 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 March 2024, the Company granted to all of the Company’s executive officers and certain other employees a total of 416,276 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 234,091 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 period of approximately 2.8 years from the date of the grant, that the Company has attained a threshold level of certain performance criteria over such period. 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.
As of June 30, 2024 and December 31, 2023, there were 4,170,755 shares and 4,872,494 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, 2024 and December 31, 2023, 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,
20242023
Restricted Stock AwardsNumber of SharesWeighted-Average Grant Price Per ShareNumber of SharesWeighted-Average Grant Price Per Share
Non-vested restricted stock as of the beginning of the respective period420,400$19.15 525,460$20.08 
Granted56,35213.84 47,82011.50 
Vested(47,820)11.50 (28,690)19.17 
Forfeited—— —— 
Non-vested restricted stock as of the end of the respective period (1)428,932$18.47 544,590$19.37 
(1)Includes the effect of modifications to previously awarded and unvested restricted share awards for two plan participants to accelerate vesting. The financial effect of the modifications on total unrecognized compensation expense was not significant.
During the six months ended June 30, 2024 and 2023, 47,820 and 28,690 RSA awards vested, respectively. In the aggregate, the amount of RSAs granted each year had a grant date fair value of $0.5 million.
The following table summarizes the Company’s restricted stock unit activity for the periods indicated:
For the Six Months Ended June 30,
20242023
Restricted Stock UnitsNumber of SharesWeighted-Average Grant Price Per ShareNumber of SharesWeighted-Average Grant Price Per Share
Non-vested restricted stock units as of the beginning of the respective period952,001$19.46 972,325$21.08 
Granted416,27612.81 318,57715.63 
Vested (1)(303,015)19.38 (231,407)21.08 
Forfeited(4,980)14.59 (640)21.08 
Non-vested restricted stock units as of the end of the respective period1,060,282$16.89 1,058,855$19.44 
(1)Includes 98,531 and 74,625 shares withheld upon settlement for employee taxes for the six months ended June 30, 2024 and 2023, respectively.
During the six months ended June 30, 2024 and 2023, 303,015 and 231,407 RSU awards vested, respectively. Such awards had a grant date fair value of $5.9 million and $4.9 million, respectively.
The following table summarizes the Company’s performance stock unit activity for the periods indicated:
For the Six Months Ended June 30,
20242023
Performance Stock UnitsNumber of SharesWeighted-Average Grant Price Per ShareNumber of SharesWeighted-Average Grant Price Per Share
Non-vested performance stock units as of the beginning of the respective period633,034$19.40 533,676$21.12 
Granted234,09110.82 108,98410.16 
Vested—— —— 
Forfeited—— —— 
Non-vested performance stock units as of the end of the respective period867,125$17.08 642,660$19.26 
During both the six months ended June 30, 2024 and 2023, no PSU awards vested.
The following table shows share-based compensation expense under the 2021 Plan and the related tax benefit for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions)
Share-based compensation expense$4.2 $4.7 $7.8 $7.7 
Related tax benefit (1)1.2 1.3 2.2 2.2 
(1)Estimated based upon the Company’s statutory rate for each respective period.
As of June 30, 2024 and December 31, 2023, there was $27.2 million and $26.8 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, 2024, this cost is expected to be recognized over a weighted average remaining period of approximately 1.9 years. As of December 31, 2023, this cost was expected to be recognized over a weighted average remaining period of approximately 2.2 years.