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Stock-based compensation | 9 Months Ended
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Sep. 30, 2024
Disclosure of compensation related costs sharebased payments [Abstract] |
Stock-based Compensation | Note 29 - Stock-based compensation Incentive Plan On May 12, 2020, the shareholders of the Corporation approved the Popular, Inc. 2020 Omnibus Incentive Plan, which permits the Corporation to issue several types of stock-based compensation to employees and directors of the Corporation and/or any of its subsidiaries (the “2020 Incentive Plan”). The 2020 Incentive Plan replaced the Popular, Inc. 2004 Omnibus Incentive Plan, which was in effect prior to the adoption of the 2020 Incentive Plan (the “2004 Incentive Plan” and, together with the 2020 Incentive Plan, the “Incentive Plan”). Participants under the Incentive Plan are designated by the Talent and Compensation Committee of the Board of Directors (or its delegate, as determined by the Board). Under the Incentive Plan, the Corporation has issued restricted stock and performance shares to its employees and restricted stock and restricted stock units (“RSUs”) to its directors. The restricted stock granted under the Incentive Plan to employees becomes vested based on the employees’ continued service with Popular. Unless otherwise stated in an agreement, the compensation cost associated with the shares of restricted stock granted prior to 2021 was determined based on a two-prong vesting schedule. These grants include ratable vesting over five or four years commencing at the date of grant (“the graduated vesting portion”) with a portion vested at termination of employment after attainment of 55 years of age and 10 years of service or 60 years of age and 5 years of service (“the retirement vesting portion”). The graduated vesting portion is accelerated at termination of employment after attaining the earlier of 55 years of age and 10 years of service or 60 years of age and 5 years of service. Restricted stock granted on or after 2021 have ratable vesting in equal annual installments over a period of 4 years or 3 years, depending on the classification of the employee. The vesting schedule is accelerated at termination of employment after attaining the earlier of 55 years of age and 10 years of service or 60 years of age and 5 years of service. The performance share awards granted under the Incentive Plan consist of the opportunity to receive shares of Popular, Inc.’s common stock provided that the Corporation achieves certain goals during a three-year performance cycle. The goals will be based on two metrics weighted equally: the Relative Total Shareholder Return (“TSR”) and the Absolute Return on Average Tangible Common Equity (“ROATCE”). The TSR metric is considered to be a market condition under ASC 718. For equity settled awards based on a market condition, the fair value is determined as of the grant date and is not subsequently revised based on actual performance. The ROATCE metric is considered to be a performance condition under ASC 718. The fair value is determined based on the probability of achieving the ROATCE goal as of each reporting period. The TSR and ROATCE metrics are equally weighted and work independently. The number of shares that will ultimately vest ranges from 50% to a 150% of target based on both market (TSR) and performance (ROATCE) conditions. The performance shares vest at the end of the three-year performance cycle. If a participant terminates employment after attaining the earlier of 55 years of age and 10 years of service or 60 years of age and 5 years of service, the performance shares shall continue outstanding and vest at the end of the performance cycle. The following table summarizes the restricted stock and performance shares activity under the Incentive Plan for members of management. (Not in thousands) Shares Weighted-Average Grant Date Fair Value Non-vested at December 31, 2022 281,963 $ 56.50 Granted 257,757 66.01 Performance Shares Quantity Adjustment 19,753 75.32 Vested (243,133) 66.31 Forfeited (16,444) 55.82 Non-vested at December 31, 2023 299,896 $ 58.20 Granted 241,744 86.60 Performance Shares Quantity Adjustment 6,739 85.37 Vested (285,048) 75.54 Forfeited (2,952) 64.83 Non-vested at September 30, 2024 260,379 $ 67.13 During the quarter ended September 30, 2024, 928 shares of restricted stock (September 30, 2023 – 0 ) were awarded to management under the Incentive Plan. During the quarters ended September 30, 2024 and 2023, no performance shares were awarded to management under the Incentive Plan. For the nine months ended September 30, 2024, 176,519 shares of restricted stock (September 30, 2023 – 200,303 ) and 65,225 performance shares (September 30, 2023 - 51,355 ) were awarded to management under the Incentive Plan. During the quarter ended September 30, 2024, the Corporation recognized $ 1.8 million of restricted stock expense related to management incentive awards, with a tax benefit of $ 0.4 million (September 30, 2023 - $ 2.0 million, with a tax benefit of $ 0.4 million). For the nine months ended September 30, 2024, the Corporation recognized $ 12.3 million of restricted stock expense related to management incentive awards, with a tax benefit of $ 2.0 million (September 30, 2023 - $ 9.7 million, with a tax benefit of $ 1.5 million). For the nine months ended September 30, 2024, the fair market value of the restricted stock and performance shares vested was $ 16.9 million at grant date and $ 23.2 million at vesting date. This differential triggers a windfall of $ 2.3 million that was recorded as a reduction on income tax expense. During the quarter ended September 30, 2024, the Corporation recognized $ (0.5) million of performance shares benefit, with a tax benefit of $ (32) thousand due to performance shares target adjustment (September 30, 2023 - $ 0.1 million, with a tax benefit of $ 8 thousand). For the nine months ended September 30, 2024, the Corporation recognized $ 3.5 million of performance shares expense, with a tax benefit of $ 0.2 million (September 30, 2023 - $ 3.6 million, with a tax benefit of $ 0.1 million). The total unrecognized compensation cost related to non-vested restricted stock awards and performance shares to members of management at September 30, 2024 was $ 13.9 million and is expected to be recognized over a weighted-average period of 1.65 years. The following table summarizes the restricted stock activity under the Incentive Plan for members of the Board of Directors: (Not in thousands) RSUs / Unrestricted stock Weighted-Average Grant Date Fair Value per Unit Non-vested at December 31, 2022 - $ - Granted 39,104 55.30 Vested (39,104) 55.30 Forfeited - - Non-vested at December 31, 2023 - $ - Granted 24,279 89.22 Vested (24,279) 89.22 Forfeited - - Non-vested at September 30, 2024 - $ - The equity awards granted to members of the Board of Directors of Popular, Inc. (the “Directors”) will vest and become non- forfeitable on the grant date of such award. Effective in May 2019, all equity awards granted to the Directors may be paid in either unrestricted stock or RSUs at each Directors election. If RSUs are elected, the Directors may defer the delivery of the shares of common stock underlying the RSUs award until their retirement. To the extent that cash dividends are paid on the Corporation’s outstanding common stock, the Directors will receive an additional number of RSUs that reflect a reinvested dividend equivalent. For 2024 and 2023, Directors elected RSUs and unrestricted stock. During the quarter ended September 30, 2024, 1,281 RSUs and no shares of unrestricted stock were granted to the Directors (September 30, 2023 - 1,384 RSUs and no shares of unrestricted stock) and the Corporation recognized expense related to these shares of $ 0.1 million with a tax benefit of $ 21 thousand (September 30, 2023 - $ 0.1 million with a tax benefit of $ 16 thousand). For the nine months ended September 30, 2024, the Corporation granted 22,887 RSUs and 1,392 shares of unrestricted stock to the Directors (September 30, 2023 - 35,412 RSUs and 2,300 shares of unrestricted stock) and the Corporation recognized $ 2.2 million of expense related to these shares, with a tax benefit of $ 0.4 million, (September 30, 2023 - $ 2.1 million, with a tax benefit of $ 0.4 million). The fair value at vesting date of the shares vested during the nine months ended September 30, 2024 for the Directors was $ 2.2 million.

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