(15) Stock Incentive Plans

Under the 2005 Re-designated, Amended and Restated Stock Incentive Plan for Officers and Employees of Astoria Financial Corporation, as amended, or the 2005 Employee Stock Plan, 6,850,000 shares of common stock were reserved for option, restricted stock, restricted stock units and/or stock appreciation right grants, of which 1,300,665 shares remain available for issuance of future grants at December 31, 2013. Employee grants generally occur annually, upon approval by our Board of Directors, on the third business day after we issue a press release announcing annual financial results for the prior year. Discretionary grants may be made to eligible employees from time to time upon approval by our Board of Directors. In the event the grantee terminates his/her employment due to death or disability, or in the event we experience a change in control, as defined and specified in the 2005 Employee Stock Plan, all options and restricted common stock granted pursuant to such plan immediately vests, except for a performance-based restricted common stock award granted in 2011 which, in the event of death or disability prior to vesting, will remain outstanding subject to satisfaction of the performance and vesting conditions, unless otherwise settled.

The following table summarizes restricted common stock grant awards by year under the 2005 Employee Stock Plan for grant years with unvested shares outstanding at December 31, 2013 and the remaining vesting schedule.

	2013	2012	2011		2010
Number of shares of restricted common stock:
Granted during the year	494,420	155,000	663,530		778,740
Unvested at December 31, 2013	315,820	86,000	229,560		99,604
Scheduled to vest during the year ending:
December 31, 2014	156,410	34,500	82,280		99,604
December 31, 2015	157,410	51,500	82,280		-
December 31, 2016	2,000	-	65,000	(1)	-

(1) Shares of restricted common stock granted under a performance-based award which will vest on June 30, 2016 if the performance conditions are met.

During 2013, in addition to the restricted common stock granted under the 2005 Employee Stock Plan detailed in the table above, 432,300 performance-based restricted stock units were granted to select officers under the 2005 Employee Stock Plan, with a grant date fair value of $9.22 per unit, of which 409,100 units remain outstanding at December 31, 2013. Each restricted stock unit granted represents a right, under the 2005 Employee Stock Plan, to receive one share of our common stock in the future, subject to meeting certain criteria. The restricted stock units have specified performance objectives within a specified performance measurement period and no voting or dividend rights prior to vesting and delivery of shares. The performance measurement period for these restricted stock units is the fiscal year ending December 31, 2015 and the vest date is February 1, 2016. Shares will be issued on the vest date at either 100%, 75%, 50% or 0% of units granted based on actual performance during the performance measurement period. However, in the event of a change in control during the performance measurement period, the restricted stock units will vest on the change in control date and shares will be issued at 100% of units granted. Absent a change in control, if a grantee’s employment terminates prior to December 31, 2015 all restricted stock units will be forfeited. In the event the grantee terminates his/her employment during the period between December 31, 2015 and February 1, 2016 due to death, disability, retirement or a change in control, the grantee will remain entitled to the shares otherwise earned.

Under the Astoria Financial Corporation 2007 Non-Employee Directors Stock Plan, as amended, or the 2007 Director Stock Plan, 240,080 shares of common stock were reserved for restricted stock grants, of which 41,690 shares of restricted common stock were granted in 2013 and 99,641 shares remain available at December 31, 2013 for issuance of future grants. Annual awards and discretionary grants, as such terms are defined in the plan, are authorized under the 2007 Director Stock Plan. Annual awards to non-employee directors occur on the third business day after we issue a press release announcing annual financial results for the prior year. Discretionary grants may be made to eligible directors from time to time as consideration for services rendered or promised to be rendered. Such grants are made on such terms and conditions as determined by a committee of independent directors.

Under the 2007 Director Stock Plan, restricted common stock granted vests approximately three years after the grant date, although awards immediately vest upon death, disability, mandatory retirement, involuntary termination or a change in control, as such terms are defined in the plan. Shares awarded will be forfeited in the event a recipient ceases to be a director prior to the vest date for any reason other than death, disability, mandatory retirement, involuntary termination or a change in control, as defined in the plan.

Restricted common stock activity in our stock incentive plans for the year ended December 31, 2013 is summarized as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Unvested at beginning of year	1,146,657		$	14.87
Granted	536,110		9.70
Vested	(787,655	)	(15.31		)
Forfeited	(113,468	)	(10.88		)
Unvested at end of year	781,644		11.46

The aggregate fair value on the vest date of restricted common stock awards which vested during the year ended December 31, 2013 totaled $9.6 million.

Options outstanding at December 31, 2013, granted under plans other than the 2005 Employee Stock Plan and 2007 Director Stock Plan, have a maximum term of ten years and were granted in tandem with limited stock appreciation rights exercisable only in the event we experience a change in control, as defined by the plans. Common shares are issued from treasury stock upon the exercise of stock options. No options were exercised during the years ended December 31, 2013, 2012 and 2011. We have an adequate number of shares available in treasury stock for future stock option exercises.

Option activity in our stock incentive plans for the year ended December 31, 2013 is summarized as follows:

	Number of Options		Weighted Average Exercise Price
Outstanding at beginning of year	2,846,850		$	25.70
Expired	(1,744,200	)	(25.08		)
Outstanding and exercisable at end of year	1,102,650		26.68

At December 31, 2013, options outstanding and exercisable had no intrinsic value and a weighted average remaining contractual term of approximately 11 months.

Stock-based compensation expense totaled $4.5 million, net of taxes of $2.5 million, for the year ended December 31, 2013, $3.3 million, net of taxes of $1.8 million, for the year ended December 31, 2012 and $5.9 million, net of taxes of $3.2 million, for the year ended December 31, 2011. At December 31, 2013, pre-tax compensation cost related to all unvested awards of restricted common stock and restricted stock units not yet recognized totaled $9.3 million and will be recognized over a weighted average period of approximately 1.9 years, which excludes $1.8 million of pre-tax compensation cost related to 65,000 shares of performance-based restricted common stock granted in 2011 and 102,275 performance-based restricted stock units granted in 2013, for which compensation cost will begin to be recognized when the achievement of the performance conditions becomes probable.

As a result of the resignation and retirement of several executive officers during the 2012 first quarter, the level of forfeitures in 2012 significantly exceeded our original estimate of restricted common stock forfeitures based on our prior experience. As a result, we reversed stock-based compensation expense during 2012 totaling $569,000, net of taxes of $310,000, representing stock-based compensation expense previously recognized on unvested shares of restricted common stock which will not vest as a result of forfeitures.