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Stock Options, Restricted Shares and Restricted Share Units (Tables)

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Summary of Stock Option Activity

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.

Summary of Activity for Unvested Restricted Share Awards

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.

Restricted Share Unit Awards Outstanding

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.

Schedule of Share Based Compensation Expense

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

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Tabular disclosure of the changes in outstanding nonvested restricted stock units.

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Tabular disclosure of activity for award under share-based payment arrangement. Includes, but is not limited to, outstanding award at beginning and end of year, granted, exercised, forfeited, and weighted-average grant date fair value.

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