Note 9: Share-based Compensation

The Company grants share-based compensation awards to its employees and members of its board of directors as provided for under the Company’s 2010 Equity Incentive Plan. The Company currently grants share-based compensation in the form of restricted stock units (“RSUs”) and deferred stock units (“DSUs”). The Company grants RSUs to members of management periodically throughout the year. Each RSU is equivalent to one share of the Company’s common stock. These units have a requisite service period ranging from one to five years. The Company annually grants share-based awards in the form of DSUs, which are RSUs with a deferred settlement date, to its board of directors. Each DSU is equivalent to one share of the Company’s common stock. The DSUs vest over a twelve-month period following the grant date or on the date of the next Annual Meeting of Stockholders, whichever is earlier. These units generally are subject to the same terms as RSUs under the Company’s 2010 Equity Incentive Plan, except that, following vesting, settlement occurs within 30 days following the earlier of separation from the board or a change in control of the Company. Subsequent to vesting and prior to delivery, these units will continue to earn dividend equivalents. The Company also has outstanding stock options granted prior to 2011.

Under the terms of the Company’s 2010 Equity Incentive Plan, the Company is allowed, but not required, to source stock option exercises and grants of RSUs and DSUs from its inventory of treasury stock. As of September 30, 2015, the Company held 735,025 shares in treasury. On February 3, 2015, First Busey announced that its board of directors approved a repurchase plan under which the Company is authorized to repurchase up to an aggregate of 666,667 shares of its common stock. The repurchase plan has no expiration date and replaced the prior repurchase plan that was originally approved in 2008. During the third quarter of 2015, the Company purchased 333,333 shares under this repurchase plan. Repurchases were executed in contemplation of maintaining levels of treasury stock appropriate to satisfy compensation awards, in addition to favorable pricing opportunities that were broadly manifest in the market for bank stocks during the third quarter of 2015. At September 30, 2015 the Company had 333,334 shares that may yet be purchased under the plan.

A description of the 2010 Equity Incentive Plan can be found in the Company’s Proxy Statement for the 2015 Annual Meeting of Stockholders. The Company’s 2010 Equity Incentive Plan is designed to encourage ownership of its common stock by its employees and directors, to provide additional incentive for them to promote the success of its business, and to attract and retain talented personnel. All of the Company’s employees and directors, and those of its subsidiaries, are eligible to receive awards under the plan.

A summary of the status of and changes in the Company’s stock option awards for the nine months ended September 30, 2015 follows:

		Weighted- Average Exercise		Weighted- Average Remaining Contractual
	Shares	Price		Term
Outstanding at beginning of year	170,026	$	48.99
Granted	—	—
Exercised	—	—
Forfeited	517	58.23
Expired	47,941	57.27

Outstanding at end of period	121,568	$	45.68	1.59

Exercisable at end of period	121,568	$	45.68	1.59

The Company did not record any stock option compensation expense for the three and nine months ended September 30, 2015 or 2014.

A summary of the changes in the Company’s stock unit awards for the nine months ended September 30, 2015, is as follows:

			Director				Weighted-
	Restricted		Deferred				Average
	Stock		Stock				Grant Date
	Units		Units		Total		Fair Value
Non-vested at beginning of year	394,624		18,581		413,205		$	15.75
Granted	108,945		17,899		126,844		20.07
Dividend Equivalents Earned	9,656		1,319		10,975		18.76
Vested	(73,777	)	(13,236	)	(87,013	)	14.96
Forfeited	(17,951	)	—		(17,951	)	16.21

Non-vested at end of period	421,497		24,563		446,060		$	17.19

Outstanding at end of period	421,497		67,903		489,400		$	17.08

All recipients earn quarterly dividend equivalents on their respective units. These dividend equivalents are not paid out during the vesting period, but instead entitle the recipients to additional units. Therefore, dividends earned each quarter compound based upon the updated unit balances. Upon vesting/delivery, shares are expected (though not required) to be issued from treasury.

On June 25, 2015, under the terms of the 2010 Equity Incentive Plan, the Company granted 108,945 RSUs to members of management. As the stock price on the grant date of June 25, 2015 was $20.07, total compensation cost to be recognized is $2.2 million. This cost will be recognized over a period of five years. Subsequent to the requisite service period, the awards will vest 100%.

In addition, on June 25, 2015, under the terms of the 2010 Equity Incentive Plan, the Company granted 12,667 DSUs to directors. As the stock price on the grant date of June 25, 2015 was $20.07, total compensation cost to be recognized is $0.3 million. This cost will be recognized over the requisite service period of one year from the date of grant or the next Annual Meeting of Stockholders; whichever is earlier. The Company also granted 5,232 DSUs to the Chairman of the Board. As the stock price on the grant date of June 25, 2015 was $20.07, total compensation cost to be recognized is $0.1 million. This cost will be recognized over a period of five years. Subsequent to the requisite service period, the awards will vest 100%.

The Company recognized $0.4 million and $0.3 million of compensation expense related to non-vested stock units for the three months ended September 30, 2015 and 2014, respectively. The Company recognized $1.0 million and $0.8 million of compensation expense related to non-vested stock units for the nine months ended September 30, 2015 and 2014, respectively. As of September 30, 2015, there was $4.8 million of total unrecognized compensation cost related to these non-vested stock units. This cost is expected to be recognized over a period of 3.7 years.