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Stock-Based Compensation Plans | 12 Months Ended
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Dec. 31, 2021
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation Plans |
NOTE 15 – STOCK-BASED COMPENSATION PLANS
The following table presents compensation expense and related tax benefits for all equity awards recognized in the consolidated statements of income:
| 2021 |  | 2020 |  | 2019
| (in thousands)
Compensation expense | $ | 9,264 |  |  | $ | 8,381 |  |  | $ | 7,413 |
Tax benefit | (2,027) |  |  | (1,790) |  |  | (1,610) |
Total stock-based compensation, net of tax | $ | 7,237 |  |  | $ | 6,591 |  |  | $ | 5,803 |
The tax benefits as a percentage of compensation expense, as shown in the preceding table, were 21.9%, 21.4% and 21.7% in 2021, 2020 and 2019, respectively. These percentages differ from the Corporation’s federal statutory tax rate of 21%. Tax benefits are only recognized over the vesting period for awards that ordinarily will generate a tax deduction when exercised, in the case of non-qualified stock options, or upon vesting, in the case of restricted stock, RSUs, and PSUs. Tax benefits in excess of the tax rate resulted from incentive stock option exercises that triggered a tax deduction when they were exercised, and excess tax benefits realized on vesting RSUs and PSUs during the period. The following table provides information about stock option activity for the year ended December 31, 2021:
| Stock Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term |  | Aggregate Intrinsic Value (in millions)
Outstanding and exercisable as of December 31, 2020 | 398,307 |  |  | $ | 11.39 |  |  |  |  |
Exercised | (148,670) |  |  | 11.10 |  |  |  |  |
Forfeited | (1,676) |  |  | 11.33 |  |  |  |  |
Expired | (8,370) |  |  | 11.24 |  |  |  |  |
Outstanding and exercisable as of December 31, 2021 | 239,591 |  |  | $ | 11.57 |  |  | 1.6 years |  | $ | 1.3 |
The following table presents information about stock options exercised:
| 2021 |  | 2020 |  | 2019
| (dollars in thousands)
Number of options exercised | 148,670 |  |  | 89,725 |  |  | 150,296 |
Total intrinsic value of options exercised | $ | 801 |  |  | $ | 192 |  |  | $ | 1,028 |
Cash received from options exercised | $ | 1,651 |  |  | $ | 880 |  |  | $ | 1,446 |
Tax benefit from options exercised | $ | 155 |  |  | $ | 37 |  |  | $ | 188 |
Upon exercise, the Corporation issues shares from its authorized, but unissued, common stock to satisfy the options. The following table provides information about nonvested restricted stock, RSUs and PSUs granted under the Employee Equity Plan and Directors' Plan for the year ended December 31, 2021:
|  |  | Restricted Stock/RSUs/PSUs (1)
|  |  |  |  | Shares |  | Weighted Average Grant Date Fair Value
Nonvested as of December 31, 2020 |  |  |  |  | 1,897,380 |  |  | $ | 14.07 |
Granted |  |  |  |  | 665,749 |  |  | 16.83 |
Vested |  |  |  |  | (379,193) |  |  | 16.37 |
Forfeited |  |  |  |  | (121,197) |  |  | 15.78 |
Nonvested as of December 31, 2021 |  |  |  |  | 2,062,739 |  |  | $ | 14.26 |
(1) There were no nonvested stock options at December 31, 2021 or 2020. As of December 31, 2021, there was $12.7 million of total unrecognized compensation cost (pre-tax) related to restricted stock, RSUs and PSUs that will be recognized as compensation expense over a weighted average period of 1.85 years. As of December 31, 2021, the Employee Equity Plan had 9.6 million shares reserved for future grants through 2023, and the Directors’ Plan had 109,000 shares reserved for future grants through 2029. The fair value of certain PSUs with market-based performance conditions granted under the Employee Equity Plan was estimated on the grant date using the Monte Carlo valuation methodology performed by a third-party valuation expert. This valuation is dependent upon certain assumptions, as summarized in the following table:
| 2021 |  | 2020 |  | 2019
Risk-free interest rate | 0.25 | % |  | 0.25 | % |  | 2.27 | %
Volatility of Corporation’s stock | 42.55 | % |  | 33.10 | % |  | 23.00 | %
Expected life of PSUs | 3 years |  | 3 years |  | 3 years
The expected life of the PSUs with fair values measured using the Monte Carlo valuation methodology was based on the defined performance period of three years. Volatility of the Corporation’s stock was based on historical volatility for the period commensurate with the expected life of the PSUs. The risk-free interest rate is the zero-coupon U.S. Treasury rate commensurate with the expected life of the PSUs on the date of the grant. Based on the assumptions above, the Corporation calculated an estimated fair value per PSU with market-based performance conditions granted in 2021, 2020 and 2019 of $16.94, $10.16 and $16.83, respectively. Under the ESPP, eligible employees can purchase stock of the Corporation at 85% of the fair market value of the stock on the date of purchase. The ESPP is considered to be a compensatory plan and, as such, compensation expense is recognized for the 15% discount on shares purchased. The following table summarizes activity under the ESPP:
| 2021 |  | 2020 |  | 2019
ESPP shares purchased | 134,156 |  |  | 194,485 |  |  | 136,576 |
Average purchase price per share (85% of market value) | $ | 13.92 |  |  | $ | 10.02 |  |  | $ | 14.03 |
Compensation expense recognized (in thousands) | $ | 329 |  |  | $ | 344 |  |  | $ | 338 |

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