Share-Based Plans

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

The Company maintains a stock compensation plan that provides for the grant of stock options, stock appreciation rights, restricted stock, performance-based stock, and stock units to better align the interests of its employees and directors with those of its stockholders. The number of shares of Webster common stock approved by stockholders that could be issued under the plan is 17.4 million shares. At December 31, 2022, there were 2.6 million shares remaining to be granted. Stock compensation expense is recognized over the required service vesting period for each award based on the grant-date fair value, and is included in Compensation and benefits on the accompanying Consolidated Statements of Income.

The following table summarizes stock-based compensation plan activity for the year ended December 31, 2022:


	Non-Vested Restricted Stock Awards Outstanding			Stock Options Outstanding
	Time-Based						Performance-Based
	Number of Shares	Weighted-Average Grant Date Fair Value		Number of Shares	Weighted-Average Grant Date Fair Value			Number of Shares	Weighted-Average Exercise Price
Balance, beginning of period	529,284	$	48.77	266,417	$	50.03		107,612	$	23.05
Granted (1)	711,503	54.95		307,852	57.66			—	—
Sterling replacement awards (2)	1,185,499	56.81		—	—			10,972	29.14
Adjustment (3)	187,915	56.81		(187,915)	47.43			—	—
Vested	(993,512)	48.69		(59,400)	56.14			—	—
Forfeited	(140,947)	51.43		(16,580)	55.63			—	—
Exercised	—	—		—	—			(30,355)	23.18
Balance, end of period	1,479,742	50.47		310,374	57.65			88,229	23.76

(1)Includes 127,524 shares for performance-based awards that were granted to certain executives on February 1, 2022, in order to incentivize their efforts to promote the integration of Webster and Sterling. One-third of these awards will be eligible to vest each year, in an amount ranging from 50% to 100% of target, based on the achievement of performance metrics in each of the three performance periods, and generally subject to the executive's continued employment.

(2)The Company issued 1,126,495 shares of common stock and reissued 59,004 shares from Treasury stock in order to satisfy its consideration to replace Sterling equity awards under the merger agreement. During the year ended December 31, 2022, the Company recognized an increase of $18.8 million in stock compensation expense related to the replacement equity awards.

(3)Due to the impact of the merger with Sterling on the level of achievement of target performance conditions for the open performance periods applicable to outstanding awards, certain non-vested performance-based restricted stock awards were converted into time-based restricted stock awards on January 31, 2022.

Restricted Stock Awards

Time-based restricted stock awards vest over the applicable service period ranging from one to three years. Under the plan, the number of time-based restricted stock awards that may be granted to an eligible individual per calendar year is limited to 100,000 shares. The fair value of time-based restricted stock awards used to determine compensation expense is measured using the closing price of Webster common stock at the grant date.

Performance-based restricted stock awards generally vest after a three year performance period, with the total share quantity dependent on the Company meeting certain target performance conditions throughout the vesting period, ranging from 0% to 150%. Under the plan, 50% of the share quantity is determined based on total stockholder return as compared to the Company's compensation peer group, while the other 50% is based on the Company's average return on equity. The fair value of performance-based restricted stock awards used to determine compensation expense is calculated using the Monte-Carlo simulation model for total stockholder return awards and the closing price of Webster common stock at the grant date for
average return on equity awards. Compensation expense may be subject to adjustment based on management's assessment of the Company's average return on equity performance relative to the target number of shares condition.

For the years ended December 31, 2022, 2021, and 2020, the Company recognized restricted stock compensation expense totaling $55.1 million, $13.7 million, and $12.2 million, respectively. The corresponding income tax benefit recognized was $12.0 million, $5.4 million, and $2.6 million, respectively. The fair value of restricted stock awards that had vested during the years ended December 31, 2022, 2021, and 2020, was $51.7 million, $12.5 million, and $13.5 million, respectively. At December 31, 2022, there was $36.3 million of unrecognized restricted stock expense related to non-vested restricted stock awards, which is expected to be recognized over a weighted-average period of 1.8 years.

Stock Options

Stock options are granted at an exercise price equal to the market value of Webster common stock on the grant date. Each stock option grants the holder the right to acquire one share of Webster common stock over a contractual life of ten years. The Company has not granted stock options since 2013. At December 31, 2022, there were 10,278 and 77,951 incentive and
non-qualified stock options outstanding, respectively, which have a weighted-average remaining contractual life of 0.4 years, and all of which have vested and are exercisable.

Total pre-tax intrinsic value, or the difference between the Webster common stock closing price on the last trading day of the year and the weighted-average exercise price multiplied by the number of shares, represents the aggregate intrinsic value that would have been received by the option holders had all of their outstanding options been exercised on December 31, 2022. At December 31, 2022, the total pre-tax intrinsic value was $2.1 million. For the years ended December 31, 2022, 2021, and 2020, the total intrinsic value of the options exercised was $1.0 million, $9.0 million, and $0.1 million, respectively. The amount of cash received from the exercise of stock options during the years ended December 31, 2022, 2021, and 2020, was $0.7 million, $7.1 million, and $0.2 million, respectively.