Stock-Based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

United has an equity compensation plan that allows for grants of various share-based compensation. Options granted under the plan have an exercise price no less than the fair market value of the underlying stock at the date of grant. The general terms of the plan include a vesting period (usually four years) with an exercisable period not to exceed ten years. Certain options and restricted stock

unit awards provide for accelerated vesting if there is a change in control (as defined in the plan document). As of September 30, 2020, 921,000 additional awards could be granted under the plan.

The following table shows stock option activity for the first nine months of September 30, 2020.


Options	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($000)
Outstanding at December 31, 2019	1,500	$	27.95


Expired	(1,500)	27.95
Outstanding at September 30, 2020	—	—		0.00	$	—

Exercisable at September 30, 2020	—	—		0.00	—

The fair value of each option is estimated on the date of grant using the Black-Scholes model. No stock options were granted during the nine months ended September 30, 2020 and 2019. United recognized no compensation expense related to stock options during the nine months ended September 30, 2020 and 2019.

The table below presents restricted stock unit activity for the first nine months of September 30, 2020.


Restricted Stock Unit Awards	Shares	Weighted- Average Grant- Date Fair Value		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($000)
Outstanding at December 31, 2019	808,424	$	27.94
Granted	426,107	18.99
Vested	(249,936)	26.50			$	5,379
Cancelled	(28,691)	26.08
Outstanding at September 30, 2020	955,904	24.11		3.4	16,183

Compensation expense for restricted stock units and performance stock units without market conditions is based on the market value of United’s common stock on the date of grant. Compensation expense for performance stock units with market conditions is based on the grant date per share fair market value, which was estimated using the Monte Carlo Simulation valuation model. United recognizes the impact of forfeitures as they occur. The value of restricted stock unit and performance stock unit awards is amortized into expense over the service period. For the nine months ended September 30, 2020 and 2019, expense of $5.57 million and $7.40 million, respectively, was recognized related to restricted stock unit and performance stock unit awards granted to United employees. Of the expense related to restricted stock unit awards during the nine months ended September 30, 2019, $1.38 million related to the modification of existing awards resulting from an acceleration of vesting of awards due to retirement and $740,000 related to awards granted in conjunction with an acquisition, both of which were recognized in merger-related and other charges in the consolidated statement of income. The remaining expense of $5.28 million for the nine months ended September 30, 2019 was recognized in salaries and employee benefits expense, as was the entire amount for the nine months ended September 30, 2020. In addition, for the nine months ended September 30, 2020 and 2019, $367,000 and $283,000, respectively, was recognized in other operating expense for restricted stock unit awards granted to members of United’s Board of Directors.

A deferred income tax benefit related to stock-based compensation expense of $1.52 million and $1.96 million was included in the determination of income tax expense for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, there was $16.1 million of unrecognized expense related to non-vested restricted stock unit and performance stock unit awards granted under the plan. That cost is expected to be recognized over a weighted-average period of 2.7 years. As of September 30, 2020, there was no unrecognized expense related to non-vested stock options granted under the plan.