Stock-Based Compensation

9 Months Ended

Sep. 30, 2022

The fair values of stock options and restricted stock awards are amortized as compensation expense on a straight-line basis over the vesting period of the grants. For colleagues who meet the definition of retirement eligible under the 2017 Incentive Compensation Plan and the 2020 Incentive Compensation Plan, expenses related to stock options and restricted stock awards are fully recognized on the date the colleague meets the definition of normal or early retirement. Compensation expense recognized is included in personnel expense on the consolidated statements of income.

A summary of the Corporation’s stock option activity for the nine months ended September 30, 2022 is presented below:


Stock Options	Shares(a)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value(a)
Outstanding at December 31, 2021	4,814	$	20.72	5.96 years	$	12,532

Exercised	436	17.61
Forfeited or expired	62	19.83
Outstanding at September 30, 2022	4,316	$	21.05	5.14 years	$	4,506
Options Exercisable at September 30, 2022	3,735	$	21.35	4.82 years	$	3,547

(a) In thousands

Intrinsic value represents the amount by which the fair market value of the underlying stock exceeds the exercise price of the stock option. For the nine months ended September 30, 2022, the intrinsic value of stock options exercised was $3 million compared to $6 million for the nine months ended September 30, 2021. For the nine months ended September 30, 2022, the total fair value of stock options vested was $2 million compared to $3 million for the nine months ended September 30, 2021.

The Corporation recognized compensation expense for the vesting of stock options of approximately $587,000 for the nine months ended September 30, 2022, compared to $1 million for the nine months ended September 30, 2021. Compensation expense for the nine months ended September 30, 2022 related to accelerated vesting of stock options for retirement eligible colleagues was immaterial. At September 30, 2022, the Corporation had approximately $563,000 of unrecognized compensation expense related to stock options that is expected to be recognized over the remaining requisite service periods that extend predominately through the first quarter of 2024.

The Corporation also has issued time-based and performance-based restricted stock awards under the 2017 Incentive Compensation Plan and subsequent 2020 Incentive Compensation Plan. Performance awards are based on performance goals determined by the Corporation's Compensation and Benefits Committee, with vesting ranging from a minimum of 0% to a maximum of 150% of the target award. Performance awards are valued utilizing a Monte Carlo simulation model to estimate fair value of the awards at the grant date.

The following table summarizes information about the Corporation’s restricted stock awards activity for the nine months ended September 30, 2022:


Restricted Stock Awards	Shares(a)	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021	2,635	$	19.87
Granted	785	22.91
Vested	948	21.83
Forfeited	109	20.30
Outstanding at September 30, 2022	2,363	$	20.91

(a) In thousands

The Corporation amortizes the expense related to restricted stock awards as compensation expense over the vesting period specified in the grant's award agreement. Performance-based restricted stock awards granted during 2021 and 2022 will cliff-vest after the three year performance period has ended. Service-based restricted stock awards granted during 2021 and 2022 will vest ratably over a period of four years. Expense for restricted stock awards of $13 million was recorded for the nine months ended September 30, 2022 and $11 million was recorded for the nine months ended September 30, 2021. Included in compensation expense for the first nine months of 2022 was $3 million of expense for the accelerated vesting of restricted stock awards granted to retirement eligible colleagues. The Corporation had $24 million of unrecognized compensation costs related to restricted stock awards at September 30, 2022 that are expected to be recognized over the remaining requisite service periods that extend predominately through the first quarter of 2026.

The Corporation has the ability to issue shares from treasury or new shares upon the exercise of stock options or the granting of restricted stock awards. The Board of Directors has authorized management to repurchase shares of the Corporation’s common stock in the market, to be made available for issuance in connection with the Corporation’s employee incentive plans and for other corporate purposes. The repurchase of shares, if any, will be based on market and investment opportunities, capital levels, growth prospects, and regulatory constraints. Such repurchases may occur from time to time in open market purchases, block transactions, private transactions, accelerated share repurchase programs, or similar facilities.