Share-Based Plans

12 Months Ended

Dec. 31, 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 Plans have shareholder approval for up to 13.4 million shares of common stock. At December 31, 2017, there were 2.6 million common shares remaining available for grant, while no stock appreciation rights have been granted.

The following table provides a summary of stock compensation expense and income tax benefits associated with stock compensation recognized in the accompanying Consolidated Statements of Income:



	Years ended December 31,
(In thousands)	2017		2016		2015
Stock options	$	—	$	43	$	379
Restricted stock	12,276		11,395		10,556
Total stock compensation expense	$	12,276	$	11,438	$	10,935

Income tax benefit ⁽¹⁾	$	11,849	$	4,132	$	3,903


(1)	The income tax benefit in 2017 includes $7.1 million of excess tax benefits recognized under ASU No. 2016-09, Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share Based Payment Accounting, which the Company adopted effective January 1, 2017.

At December 31, 2017 there was $13.5 million of unrecognized stock compensation expense for restricted stock, expected to be recognized over a weighted-average period of 1.9 years.

The following table provides a summary of the activity under the stock compensation plans for the year ended December 31, 2017:



	Unvested Restricted Stock Awards									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
Balance at January 1, 2017	253,361	$	32.24	2,158	$	32.89	116,184	$	33.62	1,072,974	$	21.24
Granted	168,369	54.76		8,129	56.07		89,581	56.18		—	—
Exercised options	—	—		—	—		—	—		399,935	25.42
Vested restricted stock awards ⁽¹⁾	194,986	37.16		10,287	51.21		117,695	42.09		—	—
Forfeited	18,944	35.58		—	—		9,154	43.10		—	—
Balance at December 31, 2017	207,800	$	43.16	—	$	—	78,916	$	45.35	673,039	$	18.75


(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 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 zero to 150%. For the performance-based shares granted in 2017, 50% vest based upon Webster's ranking for total shareholder return versus Webster's compensation peer group companies and 50% vest based upon Webster's average of return on equity during the 3 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.

The total fair value of restricted stock awards vested during the years ended December 31, 2017, 2016, and 2015 was $12.7 million, $11.6 million, and $11.6 million, respectively.

Stock options. Stock option awards have an exercise price equal to the market price of Webster's stock on the date of grant. Each option grants the holder the right to acquire a share of Webster common stock over a contractual life of up to 10 years. There have been no stock options granted since 2013. All awarded options have vested. There were 639,151 non-qualified stock options and 33,888 incentive stock options outstanding at December 31, 2017.

Aggregate intrinsic value represents the total pretax intrinsic value (the difference between Webster's closing stock price on the last trading day of the year and the weighted-average exercise price, multiplied by the number of shares) that would have been received by the option holders had they all exercised their options at that time. At December 31, 2017, as all awarded options have vested, all of the outstanding options are exercisable, and the aggregate intrinsic value of these options was $25.2 million. The total intrinsic value of options exercised during the years ended December 31, 2017, 2016, and 2015 was $11.1 million, $6.4 million, and $4.3 million, respectively.

The following table summarizes information for options, all of which are both outstanding and exercisable, at December 31, 2017:



Range of Exercise Prices	Number of Shares	Weighted-Average Remaining Contractual Life (years)	Weighted-Average Exercise Price
$ 5.14 - 12.85	222,947	1.2	$	9.43
$ 22.04 - 25.15	450,092	4.5	23.37
	673,039	3.4	$	18.75