Share-Based Plans

6 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock compensation plans

Webster maintains stock compensation plans under which non-qualified stock options, incentive stock options, restricted stock, restricted stock units, or stock appreciation rights may be granted to employees and directors. The Company believes these share awards better align the interests of its employees with those of its shareholders. Stock compensation cost is recognized over the required service vesting period for the awards, based on the grant-date fair value, net of estimated forfeitures, and is included as a component of compensation and benefits reflected in non-interest expense.

The following table provides a summary of stock compensation expense recognized in the accompanying Condensed Consolidated Statements of Income:



	Three months ended June 30,				Six months ended June 30,
(In thousands)	2017		2016		2017		2016
Stock options	$	—	$	—	$	—	$	43
Restricted stock	2,725		2,831		6,043		5,571
Total stock compensation expense	$	2,725	$	2,831	$	6,043	$	5,614

At June 30, 2017 there was $19.0 million of unrecognized stock compensation expense for restricted stock expected to be recognized over a weighted-average period of 2.1 years.

The following table provides a summary of the stock compensation plans activity for the six months ended June 30, 2017:



	Restricted Stock Awards Outstanding									Stock Options Outstanding
	Time-Based						Performance-Based			Stock Options Outstanding
	Number of Shares	Weighted-Average Grant Date Fair Value		Number of Units	Weighted-Average Grant Date Fair Value		Number of Shares	Weighted-Average Grant Date Fair Value		Number of Shares	Weighted-Average Exercise Price
Outstanding, at January 1, 2017	253,361	$	32.24	2,158	$	32.89	116,184	$	33.62	1,072,974	$	21.24
Granted	148,479	55.53		8,129	56.07		89,581	56.18		—	—
Exercised options	—	—		—	—		—	—		232,416	27.97
Vested restricted stock awards ⁽¹⁾	106,532	35.26		4,867	45.79		61,563	39.23		—	—
Forfeited	12,344	37.16		—	—		6,276	42.72		—	—
Outstanding and exercisable, at June 30, 2017	282,964	$	41.53	5,420	$	56.07	137,926	$	45.42	840,558	$	19.38


(1)	Vested for purposes of recording compensation expense.

Time-based restricted stock. Time-based restricted stock awards vest over the applicable service period ranging from 1 to 5 years. The number of time-based awards that may be granted to an eligible individual in a calendar year is limited to 100,000 shares. Compensation expense is recorded over the vesting period based on a fair value, which is measured using the Company's common stock closing price at the date of grant.

Performance-based restricted stock. Performance-based restricted stock awards vest after a 3 year performance period. The awards vest with a share quantity dependent on that performance, in a range from 0 to 150%. The performance criteria for 50% of the shares granted in 2017 is based upon Webster's ranking for total shareholder return versus Webster's compensation peer group companies and the remaining 50% is based upon Webster's average of return on equity during the three year vesting period. The compensation peer group companies are utilized because they represent the financial institutions that best compare with Webster. The Company records compensation expense over the vesting period, based on a fair value calculated using the Monte-Carlo simulation model, which allows for the incorporation of the performance condition for the 50% of the performance-based shares tied to total shareholder return versus the compensation peer group, and based on a fair value of the market price on the date of grant for the remaining 50% of the performance-based shares tied to Webster's return on equity. Compensation expense is subject to adjustment based on management's assessment of Webster's return on equity performance relative to the target number of shares condition.

Stock options. Stock option awards have an exercise price equal to the market price of Webster Financial Corporation's stock on the date of grant. Each option grants the holder the right to acquire a share of Webster Financial Corporation common stock over a contractual life of up to 10 years. All awarded options have vested. There were 765,769 non-qualified stock options and 74,789 incentive stock options outstanding at June 30, 2017.