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STOCK-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2017
STOCK-BASED COMPENSATION [Text Block] | NOTE 22 – STOCK-BASED COMPENSATION As of January 21, 2017, the Corporation’s 1997 stock option plan expired and no additional awards could be granted under that plan. All outstanding awards granted under this plan continued in full force and effect thereafter, subject to their original terms. During the first quarter of 2017, all of the remaining outstanding awards granted under the 1997 stock option plan exp ired.
The activity of stock options granted under the 1997 stock option plan for the year ended December 31, 2017 is set forth below:
|  |  |  |  |  | Weighted-Average |  |  | Aggregate
|  |  |  |  |  | Remaining |  |  | Intrinsic
| Number of |  |  | Weighted-Average |  | Contractual Term |  |  | Value
| Options |  |  | Exercise Price |  | (Years) |  |  | (In thousands)
Beginning of year outstanding and exercisable | 34,989 |  | $ | 138.00 |  |  |  |  |
Options expired | (34,989) |  |  | (138.00) |  |  |  |  |
End of year outstanding and exercisable | - |  | $ | - |  | - |  | $ | -
On May 24, 2016, the Corporation’s stockholders approved the amendment and restatement of the First BanCorp. Omnibus Incentive Plan, as amended (the “Omnibus Plan”), to, among other things, increase the number of shares of common stock reserved for issuance under the Omnibus Plan, extend the term of the Omnibus Plan to May 24, 2026 and re-approve the material terms of the performance goals under the Omnibus Plan for purposes of Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended. The Omnibus Plan provides for equity-based compensation incentives (the “awards”) through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, cash-based awards and other stock-based awards. The Omnibus Plan authorizes the issuance of up to 14,169,807 shares of common stock, subject to adjustments for stock splits, reorganizations and other similar events. As of December 31, 201 7, 7,558,450 authorized shares of common stock were available for iss uance under the Omnibus Plan. The Corporation’s Board of Directors, based on the recommendation of the Corporation’s Compensation and Benefits Committee, has the power and authority to determine those eligible to receive awards and to establish the terms a nd conditions of any awards, subject to various limits and vesting restrictions that apply to individual and aggregate awards. Under the Omnibus Plan, during 201 7, the Corporation awarded to its independent directors 148,424 shares of restricted st ock that are subject to a one-year vesting period. In addition, during 201 7, the Corporation awarded 951,332 shares of restricted stock to employees subject to a vesting period of 2 years. Included in those 951,332 shares of restricted stock were 838,332 s hares granted in the first quarter of 2017 to certain senior officers consistent with the requirements of the Troubled Asset Relief Program (“TARP”) Interim Final Rule, which permits TARP recipients to grant “long-term restricted stock” without violating t he prohibition on paying or accruing a bonus payment, subject to limits on value and certain vesting and non-transferability requirements. On May 10, 2017, the United States Department of the Treasury (the “U.S. Treasury”) announced that it had sold all of its remaining 10,291,553 shares of the Corporation’s common stock. As a result of the U.S. Treasury’s sale, the Corporation is no longer subject to the compensation-related restrictions under TARP, which substantially limited the Corporation’s ability to award short-term and long-term incentives to the Corporation’s executives, and the Corporation’s senior officers are no longer subject to the transferability restrictions on their shares of restricted stock. However, since the U.S. Treasury did not recover the full amount of its original investment under TARP, the senior officers forfeited 2,370,571 of their outstanding shares of restricted stock, resulting in a reduction in the number of common shares outstanding. The U.S. Treasury continues to hold a warr ant to purchase 1,285,899 shares of the Corporation’s common stock. In 2017, prior to the U.S Treasury’s sale of its shares, t he Corporation accounted for the restricted stock subject to TARP requirements at a discount from the market price at the date of the grant. For the se 838,332 shares of restricted stock, the market price was discounted assuming that 50% of the shares of restricted stock would become freely transferable and the remaining 50% would be forfeited, resulting in a fair value o f $2.71 for each share of restricted stock granted under TARP requirements. Since the assumption was correct, the forfeiture resulting from the U.S. Treasury’s sale did not have an impact on the Corporation’s operating results. Also, the Corporation used e mpirical data to estimate employee terminations; separate groups of employees that have similar historical exercise behavior were considered separately for valuation purposes.
The following table summarizes the restricted stock activity in 2017 under the Omnibus Plan:
|  | 2017
| Number of |  | Weighted-
| shares of |  | Average
| restricted |  | Grant Date
| stock |  | Fair Value
Non-vested shares at beginning of year |  | 4,178,791 |  | $ | 2.58
Granted |  | 1,099,756 |  |  | 3.31
Forfeited (1) |  | (2,411,223) |  |  | 2.33
Vested (2) |  | (1,050,356) |  |  | 3.57
Non-vested shares at end of year |  | 1,816,968 |  | $ | 2.76
(1) | Includes 2,370,571 of outstanding shares of restricted stock, subject to TARP requirements, that were forfeited as a result of the U.S. Treasury's sale of its remaining shares of the Corporation's common stock.
(2) | Includes 743,021 shares of restricted stock released from TARP restrictions.
For the years ended December 31, 201 7, 201 6 and 201 5, the Corporation recognized $4.0 million, $3.9 million and $3.8 million, respectively, of stock-based compensation expense related to restricted stock awards. As of December 31, 201 7, there was $3.0 million of total unrecognized compensation cost related to nonvested shares of restricted stock. The weighted average period over which the Corporation expects to recognize such cost is 1.0 year. In 201 6, the Corporation awarded (i) 130,873 shares of re stricted stock to its independent directors subject to a one-year vesting period and (ii) 1,794,702 shares of restricted stock to employees subject to vesting periods that range d from 2 to 3 years. Included in those 1,794,702 shares of restricted stock wer e 1,546,137 shares granted to certain senior officers consistent with the requirements of TARP. As explained above, the Corporation is no longer subject to the compensation-related restrictions under TARP as a result of the U.S. Treasury’s sale of its rema ining shares of the Corporation’s common stock. The fair value of the shares of restricted stock granted in 2016 was based on the market price of the Corporation’s outstanding common stock on the date of the grant. For the 1,546,137 shares of restricted s tock granted under the TARP requirements, the market price was discounted due to the post-vesting restrictions. For purposes of determining the awards’ fair value, the Corporation assumed that 50% of the shares of restricted stock would become freely trans ferable and the remaining 50% would be forfeited, resulting in a fair value of $1.43 for restricted shares granted under the TARP requirements. Stock-based compensation accounting guidance requires the Corporation to reverse compensation expense for a ny awards that are forfeited due to employee or director turnover. Quarterly changes in the estimated forfeiture rate may have a significant effect on stock-based compensation, as the effect of adjusting the rate for all expense amortization is recognized in the period in which the forfeiture estimate is changed. If the actual forfeiture rate is higher than the estimated forfeiture rate, then an adjustment is made to increase the estimated forfeiture rate, which will result in a decrease in the expense rec ognized in the financial statements. If the actual forfeiture rate is lower than the estimated forfeiture rate, an adjustment is made to decrease the estimated forfeiture rate, which will result in an increase in the expense recognized in the financial st atements. The estimated forfeiture rate did not change as a result of the restricted shares forfeited in connection with the aforementioned U.S. Treasury’s sale of the Corporation’s common stock. Approximately $48 thousand of compensation expense was rever sed during 2017 related to forfeitures upon resignation of two of the Corporation’s independent directors. Also, under the Omnibus Plan, effective April 1, 2013, the Corporation’s Board of Directors determined to increase the salary amounts paid to certain executive officers primarily by paying the increased salary amounts in the form of shares of the Corporation’s common stock, instead of cash. During 201 7, the Corporation issued 582,193 shares of common stock (201 6 – 755,223 shares) with a weighted-average market value of $5.64 (201 6 - $3.96 market value) as salary stock compensation. This resulted in compensation expense of $3.3 million recorded in 201 7 (201 6 – $3.0 million). During 201 7, the Corporation withheld 195,789 shares (201 6 – 226,261 sh ares) from the common stock paid to certain senior officers as additional compensation and 243,102 shares of restricted stock that vested during 201 7 (201 6- 65,498 shares) to cover employees’ payroll and income tax withholding liabilities; these shares are held as treasury shares. The Corporation paid any fractional share of salary stock that the officer was entitled to in cash. In the consolidated financial statements, the Corporation treats shares withheld for tax purposes as common stock repurchases. On June 29, 2017, upon the recommendation of the Corporation’s Compensation and Benefits Committee, the Corporation’s Board of Directors approved a new executive compensation program that, as of July 1, 2017, applies to the Corporation’s executive officers a s a result of the aforementioned sale by the U.S. Treasury of its remaining shares of the Corporation’s common stock. The new compensation program for executive officers maintained the same levels of cash salary through calendar year 2017. The payment of a dditional salary amounts currently paid in the form of stock will continue through the second quarter of 2018 and will be eliminated at such time. In addition, as a long-term incentive, the new compensation program provides a variable pay opportunity fo r long-term performance through a combination of performance shares and restricted stock. The aggregate value of the performance shares and restricted stock will be determined based upon a qualitative assessment of the achievement by executives of their in dividual goals for the prior year and at three different possible aggregate equity valuation levels (minimum threshold, target and maximum). The Corporation’s Board of Directors has determined that 60% of the long-term incentive award value based upon prio r year performance will be in performance shares and 40% will be in restricted stock with the following terms:  Performance Shares— the payout of the performance shares will depend upon the achievement of a pre-established corporate tangible boo k value per share goal at the end of a three-year period. All of the performance shares will vest if performance is at the pre-established performance goal level or above. To the extent that performance is below the target but at or above a pre-defined min imum threshold, a proportionate amount of the performance shares will vest. No performance shares will vest if performance is below the threshold.  Restricted Stock—Restricted stock will vest over a three-year period as follows: fifty percent (50%) of the shares will vest on the second anniversary date of the grant of the award and the remaining fifty percent (50%) will vest on the third anniversary date of the grant of the award. The first awards of performance shares are expected to be made in March 2018.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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