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Stock Options and Restricted Shares | 6 Months Ended
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Jun. 30, 2023
Share-Based Payment Arrangement [Abstract] |
Stock Options and Restricted Shares | Note 8. 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 June 30, 2023, there were approximately 941,000 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 awards remain available for issuance under the CapitalMark Option Plan. At June 30, 2023, all of the options remaining outstanding under any equity incentive plan of Pinnacle Financial were granted under the CapitalMark Option Plan. Common Stock Options A summary of the stock option activity within the equity incentive plans during the six months ended June 30, 2023 and information regarding, contractual terms remaining, intrinsic values and other matters is as follows:
| Number | Weighted-Average Exercise Price | Weighted-Average Contractual Remaining Term (in years) | Aggregate Intrinsic Value (000's) |
Outstanding at December 31, 2022 | 40,188 |  | $ | 25.00 |  | 0.33 | $ | 1,945 |  | (1)
Granted | — |  |  |  |  |
Exercised | (40,188) |  |  |  |  |
Forfeited | — |  |  |  |  |
Outstanding at June 30, 2023 | — |  | $ | — |  | — |  | $ | — |  |
Options exercisable at June 30, 2023 | — |  | $ | — |  | — |  | $ | — |  |
(1)The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted closing price of Pinnacle Financial common stock of $73.40 per common share at December 31, 2022 for the 40,188 options that were in-the-money at December 31, 2022. Compensation costs related to stock options granted under Pinnacle Financial's equity incentive plans have been fully recognized and as of June 30, 2023, there were no further options outstanding under any of Pinnacle Financial's equity incentive plans. Restricted Share Awards A summary of activity for unvested restricted share awards for the six months ended June 30, 2023 is as follows:
| Number |  | Grant Date Weighted-Average Cost
Unvested at December 31, 2022 | 675,611 |  |  | $ | 78.53 |
Shares awarded | 213,773 |  |  |
Restrictions lapsed and shares released to associates/directors | (163,044) |  |  |
Shares forfeited | (13,724) |  |  |
Unvested at June 30, 2023 | 712,616 |  |  | $ | 78.05 |
Pinnacle Financial has granted restricted share awards to associates and outside directors with a time-based vesting criteria. Compensation expense associated with 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. The following table outlines restricted stock grants that were made, grouped by similar vesting criteria, during the six months ended June 30, 2023. The table 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 |  |  |  |  |  |  |  |  |
2023 | Associates (2) |  |  | 5 | 202,933 |  | 193 |  | 111 |  | 3,956 |  | 198,673 |
Outside Director Awards (3) |  |  |  |  |  |  |  |  |
2023 | Outside directors |  |  | 1 | 10,840 |  | — |  | — |  | — |  | 10,840 |
(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, 2024 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 June 30, 2023. 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 Stock Unit Awards A summary of activity for unvested restricted stock units for the six months ended June 30, 2023 is as follows:
| Number |  | Grant Date Weighted-Average Cost
Unvested at December 31, 2022 | 73,983 |  |  | $ | 88.21 |
Shares awarded | 70,716 |  |  |
Restrictions lapsed and shares released to associates | (31,392) |  |  |
Shares forfeited | (7,060) |  |  |
Unvested at June 30, 2023 | 106,247 |  |  | $ | 77.90 |
Pinnacle Financial grants 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 six months ended June 30, 2023. 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
2023 | 3 | 70,716 |  |  | 153 |  |  | 100 |  |  | 4,126 |  |  | 66,337 |
(1)These shares represent forfeitures resulting from recipients whose employment was terminated during the year-to-date period ended June 30, 2023. 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 June 30, 2023:
| Units Awarded |  |  |  |
Grant year | NEOs (1) | Leadership Team other than NEOs | 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)
2023 | 103,136 | — | 247,515 |  | 61,673 |  | 2023-2025 | 0 | 0 | 2026
2022 | 56,465 | — | 135,514 |  | 32,320 |  | 2022-2024 | 0 | 0 | 2025
2022 | — | — | 230,000 |  | — |  | 2022-2024 | 0 | 1 | 2026
2021 | 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
(1)The named executive officers are awarded a range of awards that generally may be earned based on attainment of goals between a target level of performance and a maximum level of performance. The 230,000 performance units awarded to the NEOs in 2022 may be earned based on target level performance and do not include maximum level payout. (2)Performance stock unit awards granted in or after 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 are met. During the six months ended June 30, 2023 and 2022, the restrictions associated with 111,108 and 149,893 performance stock unit awards previously granted, respectively, lapsed, based on the terms of the underlying award agreements and approval by Pinnacle Financial's Human Resources and Compensation Committee, and were settled into shares of Pinnacle Financial common stock with 38,782 and 53,125 shares being withheld to pay the taxes associated with the settlement of those shares. Stock compensation expense related to restricted share awards, restricted stock unit awards and performance stock unit awards for the three and six months ended June 30, 2023 was $9.3 million and $19.5 million, respectively, compared to $10.8 million and $20.2 million, respectively, for the three and six months ended June 30, 2022. As of June 30, 2023, the total compensation cost related to unvested restricted share awards, restricted stock unit awards and performance stock unit awards estimated at maximum performance not yet recognized was $82.2 million. This expense, if the underlying units are earned, is expected to be recognized over a weighted-average period of 2.01 years.

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