Stock-Based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock–Based Compensation

On April 25, 2023, Valley's shareholders approved the Valley National Bancorp 2023 Incentive Compensation Plan (the 2023 Plan). The purpose of the 2023 Plan is to provide additional long-term incentives to employees, directors and officers whose contributions are essential to the continued growth and success of Valley. Upon shareholder approval of the 2023 Plan, Valley ceased granting awards under the Valley National Bancorp 2021 Incentive Compensation Plan (the 2021 Plan).

Under the 2023 Plan, Valley may issue awards to its officers, employees and non-employee directors in amounts up to 14.5 million shares of common stock, less one share for every share granted after December 31, 2022 under the 2021 Plan. These awards may be in the form of stock appreciation rights, incentive and non-qualified stock options, restricted stock, and restricted stock units (RSUs). If after December 31, 2022, share awards granted under the 2021 Plan are forfeited, expire, settled for cash, withheld for tax obligations, or otherwise not issued, the shares will be added to the 2023 Plan's share reserve. The grant, exercise, vesting, settlement, or payment of an award may be based upon the fair value of Valley's common stock on the last sale price reported for Valley's common stock on such date; or the last sale price reported preceding such date. Performance-based awards may also be based on a market condition. The grant date fair values of performance-based awards that vest based on a market condition are determined by a third-party specialist using a Monte Carlo valuation model.

Valley granted 1.5 million and 1.2 million time-based RSUs during the three months ended March 31, 2023 and 2022, respectively. Generally, time-based RSUs vest ratably over a three-year period. The average grant date fair value of the RSUs granted during the three months ended March 31, 2023 and 2022 was $11.91 per share and $14.05 per share, respectively.

Valley granted 723 thousand and 567 thousand performance-based RSUs to certain officers for the three months ended March 31, 2023 and 2022, respectively. The performance-based RSU awards include RSUs with vesting conditions based upon certain levels of growth in Valley's tangible book value per share, plus dividends; and RSUs, with vesting conditions based upon Valley's total shareholder return as compared to its peer group. The RSUs “cliff” vest after three years based on the cumulative performance of Valley during that time period. The RSUs earn

dividend equivalents (equal to cash dividends paid on Valley's common stock) over the applicable performance period. Dividend equivalents accumulate and are paid to the grantee at the vesting date, or forfeited if the performance conditions are not met. The grant date fair value of the performance-based RSUs granted during the three months ended March 31, 2023 and 2022 was $12.80 per share and $14.82 per share, respectively.Valley recorded total stock-based compensation expense of $8.1 million and $7.3 million for the three months ended March 31, 2023 and 2022, respectively. Stock award fair values are expensed over the shorter of the vesting or required service period. As of March 31, 2023, the unrecognized amortization expense for all stock-based employee compensation totaled approximately $56.6 million. This expense will be recognized over an average remaining vesting period of approximately 2.2 years.