Share-Based Compensation

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement [Abstract]

Share–Based Compensation

On June 18, 2013, the Board of Directors adopted the Horizon Bancorp 2013 Omnibus Equity Incentive Plan (“2013 Plan”), which was approved by the Company’s shareholders on May 8, 2014. Under the 2013 Plan, Horizon may issue up to 1,556,325 common shares, plus the number of shares that are tendered to or withheld by Horizon in connection with the exercise of options under the 2013 Plan plus that number of shares that are purchased by Horizon with the cash proceeds received upon option exercises. The 2013 Plan limits the number of shares available to 225,000 for incentive stock options and to 900,000 for the grant of non–option awards. The shares available for issuance under the 2013 Plan may be divided among the various types of awards and among the participants as the Committee determines. The Committee is authorized to grant any type of award to a participant that is consistent with the provisions of the 2013 Plan. Awards may consist of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, performance units, performance shares or any combination of these awards. The Committee determines the provisions, terms and conditions of each award. The 2013 Plan was amended on May 3, 2018, upon shareholder approval, primarily to allow grants of other types of stock–based awards, such as awards valued in whole or in part by reference to the value of shares of Horizon common stock. All share data has been adjusted for the 3:2 stock split on June 15, 2018 and November 14, 2016.

The restricted shares can vest over a period of time established by the Committee at the time of each grant, but the restricted shares already granted under the 2013 Plan generally cliff vest at the end of three years of continuous employment. Holders of restricted shares have the same dividend and voting rights as unrestricted shares. The restricted shares are recorded at fair market value (on the date granted) as a separate component of stockholders’ equity. The cost of these shares is being amortized against earnings using the straight–line method over the vesting period. There were no unvested restricted shares outstanding in the 2013 Plan as of December 31, 2023 and December 31, 2024.

The performance shares that are awarded become earned and vested based on the achievement of certain performance goals during a performance period as established by the Committee at the time of each grant. The performance goals under the outstanding grant agreements are based on a comparison of the Company’s average performance over the performance period for the return on common equity, compounded annual growth rate of total assets, and return on average assets, all as relative to the average performance for publicly traded banks with total assets between $1 billion and $5 billion on the SNL Bank Index. Holders of performance share awards receive pass–through dividends but do not have any voting rights before the performance shares are earned and vested.

There were no unvested performance shares outstanding in the 2013 Plan as of December 31, 2023 and December 31, 2024.

The options shares granted under the 2013 Plan vest at a rate designated per the individual agreements.

The fair value of options granted is estimated on the date of the grant using an option–pricing model. There have been no options granted since 2019.

A summary of option activity under the 2013 Plan as of December 31, 2024, and changes during the year then ended, is presented below:


	Shares	Weighted– Average Exercise Price		Weighted– Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding, beginning of year	120,680	$	14.64		136,560
Granted	—	—
Exercised/Converted	(25,882)	10.69
Forfeited	—	—
Expired	—	—
Outstanding, end of year	94,798	$	16.87	2.84 years	56,985
Exercisable, end of year	94,798	$	16.87	2.84 years	56,985

There have been no options granted under the 2013 Plan during the years 2024, 2023 and 2022. The total intrinsic value of stock options exercised was approximately $418 thousand, $355 thousand, and $726 thousand for the years ended December 31, 2024, 2023, and 2022.

On January 19, 2021, the Board of Directors adopted the Horizon Bancorp 2021 Omnibus Equity Incentive Plan (“2021 Plan”), which was approved by the Company’s shareholders on May 6, 2021. Under the 2021 Plan, Horizon may issue up to 1,787,548 common shares, plus the number of shares that are tendered to or withheld by Horizon in connection with the exercise of options under the 2021 Plan plus that number of shares that are purchased by Horizon with the cash proceeds received upon option exercises. The Committee is authorized to grant any type of award to a participant that is consistent with the provisions of the 2021 Plan. Awards may consist of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, performance units, performance shares or any combination of these awards. The Committee determines the provisions, terms and conditions of each award.

The restricted shares can vest over a period of time established by the Committee at the time of each grant, but the restricted shares already granted under the 2021 Plan generally cliff vest at the end of three years of continuous employment. Holders of restricted shares have the same dividend and voting rights as unrestricted shares. The restricted shares are recorded at fair market value (on the date granted) as a separate component of stockholders’ equity. The cost of these shares is being amortized against earnings using the straight–line method over the vesting period.

The performance shares that are awarded become earned and vested based on the achievement of certain performance goals during a performance period as established by the Committee at the time of each grant. The performance goals under the outstanding grant agreements are based on a comparison of the Company’s average performance over the performance period for the return on common equity, compounded annual growth rate of total assets, and return on average assets, all as relative to the average performance for publicly traded banks with total assets between $5 billion and $10 billion on the SNL Bank Index. Holders of performance awards receive pass–through dividends but do not have any voting rights before the performance shares are earned and vested.

The option shares granted under the 2021 Plan vest at a rate designated per the individual agreements. As of December 31, 2024, there have been no stock options granted under the 2021 Plan.

A summary of the status of Horizon’s non–vested restricted and performance shares under the 2021 Plan as of December 31, 2024 are presented below:


	Shares	Weighted Average Grant Date Fair Value
Non–vested, beginning of year	630,721	$	15.36
Vested	(159,006)	17.10
Granted	270,343	11.96
Forfeited	(23,861)	14.46
Non–vested, end of year	718,197	$	13.73

The total fair value of shares vested during 2024, 2023 and 2022 were $2.0 million, $1.8 million, and $1.9 million, respectively.

The Company did not have option-based compensation expense applicable to the Company’s share-based compensation plans for the year ended December 31, 2024 or 2023. Compensation expense recognized in the income statement for option–based payment arrangements during the year ended December 31, 2022 was $13 thousand and the recognized tax benefit related thereto was approximately $3 thousand. The Company does not have any unrecognized option-based compensation expense related to unvested options as of December 31, 2024.

Compensation expense recognized in the income statement for restricted share and performance share based payment arrangements during 2024, 2023 and 2022 was $4.6 million, $3.6 million, and $2.5 million. The recognized tax benefit related thereto was approximately $963 thousand, $753 thousand, and $517 thousand for the years ended December 31, 2024, 2023 and 2022.

There was no cash received from option exercise under all share–based payment arrangements for the years ended December 31, 2024 and 2023. For the year ended December 31, 2022, cash received from option exercise under all share–based payment arrangements $145 thousand. The actual tax benefit realized for the tax deductions from option exercise of the share–based payment arrangements totaled $72 thousand, $58 thousand, and $126 thousand, for the years ended December 31, 2024, 2023 and 2022.

As of December 31, 2024, there was $2.0 million of total unrecognized compensation cost related to all non–vested share–based compensation arrangements granted under all of the plans. That cost is expected to be recognized over a weighted–average period of 11 months.