XML 32 R19.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Stock Options, Restricted Shares and Restricted Share Units | 12 Months Ended
--- | ---
Dec. 31, 2021
Share-based Payment Arrangement [Abstract] |
Stock Options and Restricted Shares and Restricted Share Units | Note 13. Stock Options and Restricted Shares Pinnacle Financial's Amended and Restated 2018 Omnibus Equity Incentive Plan (the "2018 Plan") permits Pinnacle Financial to reissue outstanding awards that are subsequently forfeited, settled in cash, withheld by Pinnacle Financial to cover withholding taxes or expire unexercised and returned to the 2018 Plan. At December 31, 2021, there were approximately 1.9 million shares available for issuance under the 2018 Plan. Upon the acquisition of CapitalMark, Pinnacle Financial assumed approximately 858,000 stock options under the CapitalMark Option Plan. No further shares remain available for issuance under the CapitalMark Option Plan. At December 31, 2021, all of the remaining options outstanding under any equity incentive plan of Pinnacle Financial were granted under the CapitalMark Option Plan. Common Stock Options As of December 31, 2021, of the 56,147 stock options outstanding, approximately 21,443 options were granted with the intention to be incentive stock options qualifying under Section 422 of the Internal Revenue Code for favorable tax treatment to the option holder while approximately 34,704 options would be deemed non-qualified stock options and thus not subject to favorable tax treatment to the option holder. Favorable treatment generally refers to the recipient of the award not having to report ordinary income at the date of exercise assuming certain conditions are met. All stock options granted under the CapitalMark Plan were fully vested at the date of the CapitalMark merger. A summary of stock option activity within the equity incentive plans during each of the years in the three-year period ended December 31, 2021 and information regarding expected vesting, contractual terms remaining, intrinsic values and other matters was as follows:
| Number |  | Weighted-Average Exercise Price |  | Weighted-Average Contractual Remaining Term (in years) |  | Aggregate Intrinsic Value (1) (000's)
Outstanding at December 31, 2018 | 178,591 |  |  | $ | 22.77 |  |  |  |  |
Granted | — |  |  | — |  |  |  |  |
Stock options exercised | (59,317) |  |  | 21.40 |  |  |  |  |
Forfeited | — |  |  | — |  |  |  |  |
Outstanding at December 31, 2019 | 119,274 |  |  | $ | 23.45 |  |  |  |  |
Granted | — |  |  | — |  |  |  |  |
Stock options exercised | (17,505) |  |  | 23.40 |  |  |  |  |
Forfeited | — |  |  | — |  |  |  |  |
Outstanding at December 31, 2020 | 101,769 |  |  | $ | 23.46 |  |  |  |  |
Granted | — |  |  | — |  |  |  |  |
Stock options exercised | (45,125) |  |  | 22.18 |  |  |  |  |
Forfeited | (497) |  |  | 20.00 |  |  |  |  |
Outstanding at December 31, 2021 | 56,147 |  |  | $ | 24.51 |  |  | 1.19 |  | $ | 3,985 |
Options exercisable at December 31, 2021 | 56,147 |  |  | $ | 24.51 |  |  | 1.19 |  | $ | 3,985 |
(1)The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of Pinnacle Financial Common Stock of $95.50 per common share at December 31, 2021 for the 56,147 options that were in-the-money at December 31, 2021. During 2021, 2020 and 2019, the aggregate intrinsic value of stock options exercised under Pinnacle Financial's equity incentive plans was $3.0 million, $350,000 and $2.3 million, respectively, determined as of the date of option exercise. There have been no options granted by Pinnacle Financial since 2008. All stock option awards granted by Pinnacle Financial were fully vested during 2013. Stock options granted under the CapitalMark Plan were fully vested at the time of acquisition. As such, there was no impact on the results of operations for stock-based compensation related to stock options for any year in the three-year period ended December 31, 2021, except for the tax impact recorded as a component of income tax expense upon exercise. Restricted Shares A summary of activity for unvested restricted share awards for the years ended December 31, 2021, 2020, and 2019 follows:
| Number |  | Grant Date Weighted-Average Cost
Unvested at December 31, 2018 | 692,806 |  |  | $ | 55.19 |
Shares awarded | 245,845 |  |  | 55.25 |
Restrictions lapsed and shares released to associates/directors | (348,145) |  |  | 40.47 |
Shares forfeited | (35,210) |  |  | 58.22 |
Unvested at December 31, 2019 | 555,296 |  |  | $ | 57.04 |
Shares awarded | 284,904 |  |  | 55.91 |
Restrictions lapsed and shares released to associates/directors | (215,846) |  |  | 55.39 |
Shares forfeited | (29,685) |  |  | 59.64 |
Unvested at December 31, 2020 | 594,669 |  |  | $ | 56.97 |
Shares awarded | 249,641 |  |  | 77.00 |
Restrictions lapsed and shares released to associates/directors | (193,846) |  |  | 56.47 |
Shares forfeited | (37,129) |  |  | 62.79 |
Unvested at December 31, 2021 | 613,335 |  |  | $ | 64.93 |
Pinnacle Financial grants restricted share awards to associates (including certain members of executive management) and outside directors with time-based vesting criteria. The following tables outline restricted stock grants that were made by grant year, grouped by similar vesting criteria, during the three-year period ended December 31, 2021. The table below reflects the life-to-date activity for these awards:
Grant year |  | Group (1) |  | Vesting period in years |  | Shares awarded |  | Restrictions lapsed and shares released to participants |  | Shares withheld for taxes by participants |  | Shares forfeited by participants (4) |  | Shares unvested
Time Based Awards
2019 |  | Associates (2) |  | 3 | — |  | 5 |  | 229,296 |  |  | 58,734 |  |  | 23,995 |  |  | 30,030 |  |  | 116,537 |
2020 |  | Associates (2) |  | 3 | — |  | 5 |  | 266,379 |  |  | 40,692 |  |  | 16,847 |  |  | 18,660 |  |  | 190,180 |
2021 |  | Associates (2) |  | 3 | — |  | 5 |  | 237,811 |  |  | 139 |  |  | 92 |  |  | 13,514 |  |  | 224,066 |
Outside Director Awards (3)
2019 |  | Outside directors |  | 1 |  | 16,549 |  |  | 14,582 |  |  | 1,967 |  |  | — |  |  | — |
2020 |  | Outside directors |  | 1 |  | 18,525 |  |  | 16,327 |  |  | 2,198 |  |  | — |  |  | — |
2021 |  | Outside directors |  | 1 |  | 11,830 |  |  | — |  |  | — |  |  | — |  |  | 11,830 |
(1)Groups include employees (referred to as associates above) and outside directors. When the restricted shares are awarded, a participant receives voting rights and forfeitable dividend rights with respect to the shares, but is not able to transfer the shares until the restrictions have lapsed. Once the restrictions lapse, the participant is taxed on the value of the award and may elect to sell some shares (or have Pinnacle Financial withhold some shares) to pay the applicable income taxes associated with the award. Alternatively, the recipient can pay the withholding taxes in cash. For time-based vesting restricted share awards, dividends paid on shares for which the forfeiture restrictions do not lapse will be recouped by Pinnacle Financial at the time of termination. For awards to Pinnacle Financial's directors, dividends are placed into escrow until the forfeiture restrictions on such shares lapse. (2)The forfeiture restrictions on these restricted share awards lapse in equal annual installments on the anniversary date of the grant. (3)Restricted share awards are issued to the outside members of the board of directors in accordance with their board compensation plan. Restrictions lapse on March 1, 2022 based on each individual board member meeting attendance goals for the various board and board committee meetings to which each member was scheduled to attend. (4)These shares represent forfeitures resulting from recipients whose employment or board membership was terminated during the year-to-date period ended December 31, 2021. Any dividends paid on shares for which the forfeiture restrictions do not lapse will be recouped by Pinnacle Financial at the time of termination or will not be distributed from escrow, as applicable. Compensation expense associated with the time-based vesting restricted share awards is recognized over the time period that the restrictions associated with the awards lapse on a straight-line basis based on the total cost of the award. Restricted Stock Unit Awards In 2021, Pinnacle Financial granted restricted stock units to its Named Executive Officers (NEOs) and leadership team members with time-based vesting criteria. Compensation expense associated with time-based vesting restricted stock unit awards is recognized over the time period that the restrictions associated with the awards lapse on a straight-line basis based on the total cost of the award. The following table outlines restricted stock unit grants that were made, grouped by similar vesting criteria, during the year ended December 31, 2021. The table reflects the life-to-date activity for these awards:
Grant year | Vesting period in years | Shares awarded | Restrictions lapsed and shares released to participants | Shares withheld for taxes by participants | Shares forfeited by participants (1) | Shares unvested
2021 | 3 | 56,864 |  | 89 |  | 39 |  | 368 |  | 56,368 |
(1)These shares represent forfeitures resulting from recipients whose employment was terminated during the year-to-date period ended December 31, 2021. Dividend equivalents are held in escrow for award recipients for dividends paid prior to the forfeiture restrictions lapsing. Such dividend equivalents are not released from escrow if an award is forfeited. Performance Stock Unit Awards The following table details the performance stock unit awards outstanding at December 31, 2021:
|  | Units Awarded | Applicable performance periods associated with each tranche (fiscal year) | Service period per tranche (in years) | Subsequent holding period per tranche (in years) | Period in which units to be settled into shares of common stock (2)
Grant year | Named Executive Officers (NEOs) (1) | Leadership Team other than NEOs
2021(3) |  | 89,234 |  | — |  | 214,155 |  | 45,240 |  | 2021-2023 | 0 | 0 | 2024
2020 |  | 136,137 |  | — |  | 204,220 |  | 59,648 |  | 2020 | 2 | 3 | 2025
|  |  |  |  |  | 2021 | 2 | 2 | 2025
|  |  |  |  |  | 2022 | 2 | 1 | 2025
2019 |  | 166,211 |  | — |  | 249,343 |  | 52,244 |  | 2019 | 2 | 3 | 2024
|  |  |  |  |  | 2020 | 2 | 2 | 2024
|  |  |  |  |  | 2021 | 2 | 1 | 2024
2018 |  | 96,878 |  | — |  | 145,339 |  | 25,990 |  | 2018 | 2 | 3 | 2023
|  |  |  |  |  | 2019 | 2 | 2 | 2023
|  |  |  |  |  | 2020 | 2 | 1 | 2023
2017 |  | 72,537 |  | — |  | 109,339 |  | 24,916 |  | 2017 | 2 | 3 | 2022
|  |  |  |  |  | 2018 | 2 | 2 | 2022
|  |  |  |  |  | 2019 | 2 | 1 | 2022
(1)The named executive officers are awarded a range of awards that may be earned based on attainment of goals between a target level of performance and a maximum level of performance. (2)Performance stock unit awards granted prior to 2021, if earned, will be settled in shares of Pinnacle Financial Common Stock in the periods noted in the table, if Pinnacle Bank's ratio of non-performing assets to its loans plus ORE ("NPA Ratio") is less than amounts established in the applicable award agreement. (3)Performance stock unit awards granted in 2021, if earned, will be settled in shares of Pinnacle Financial Common Stock in the period noted in the table, if the performance criterion included in the applicable performance unit award agreement, including the NPA Ratio, are met. During the years ended December 31, 2021 and 2020, the restrictions associated with 134,146 performance stock unit awards and 129,723 performance stock unit awards, respectively, granted in prior years lapsed, based on the terms of the applicable award agreement and approval by Pinnacle Financial's Human Resources and Compensation Committee, and were settled into shares of Pinnacle Financial common stock with 46,616 shares and 43,996 shares, respectively, being withheld to pay the taxes associated with the settlement of those shares. A summary of stock compensation expense, net of the impact of income taxes, related to restricted share awards, restricted stock unit awards and performance stock unit awards for the three-year period ended December 31, 2021, follows (in thousands):
| 2021 |  | 2020 |  | 2019
Restricted stock expense | $ | 24,952 |  |  | $ | 18,737 |  |  | $ | 21,226 |
Income tax benefit | 6,522 |  |  | 4,898 |  |  | 5,548 |
Restricted stock expense, net of income tax benefit | $ | 18,430 |  |  | $ | 13,839 |  |  | $ | 15,678 |
As of December 31, 2021, compensation cost related to unvested restricted share awards, restricted stock unit awards and performance stock unit awards not yet recognized was $51.7 million. This expense, if the underlying awards are earned, is expected to be recognized over a weighted-average period of 1.96 years.

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration