Defined Benefit Pension Plan— The Wesbanco, Inc. Defined Benefit Pension Plan (“the Plan”) established on January 1, 1985, is a non-contributory, defined benefit pension plan. The Plan covers all employees of Wesbanco and its subsidiaries who were hired on or before August 1, 2007 who satisfy minimum age and length of service requirements. Benefits of the Plan are generally based on years of service and the employee’s compensation during the last five years of employment. Contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future. Wesbanco uses a December 31 measurement date for the Plan.

The benefit obligations and funded status of the Plan are as follows:


	December 31,
(dollars in thousands)	2021			2020
Accumulated benefit obligation at end of year	$	152,232		$	157,328
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	168,433		$	153,960
Service cost		2,500			2,283
Interest cost		3,416			4,507
Actuarial (gain) loss		(4,688	)		14,376
Plan amendment		—			(313	)
Benefits paid		(5,742	)		(6,380	)
Projected benefit obligation at end of year	$	163,919		$	168,433
Change in fair value of plan assets:
Fair value of plan assets at beginning of year	$	185,716		$	167,720
Actual return on plan assets		22,809			24,376
Employer contribution		—			—
Benefits paid		(5,742	)		(6,380	)
Fair value of plan assets at end of year	$	202,783		$	185,716
Amounts recognized in the statement of financial position:
Funded status	$	38,864		$	17,284
Net amounts recognized as receivable pension costs in the consolidated balance sheets	$	38,864		$	17,284
Amounts recognized in accumulated other comprehensive income consist of:
Unrecognized prior service credit	$	(193	)	$	(227	)
Unrecognized net loss		2,700			21,726
Net amounts recognized in accumulated other comprehensive income (before tax)	$	2,507		$	21,499
Weighted average assumptions used to determine benefit obligations:
Discount rate		3.03	%		2.74	%
Rate of compensation increase		3.62	%		3.30	%
Expected long-term return on assets		5.74	%		6.11	%

The components of and weighted-average assumptions used to determine net periodic benefit costs are as follows:


	For the Years Ended December 31,
(dollars in thousands)	2021			2020			2019
Components of net periodic benefit cost:
Service cost—benefits earned during year	$	2,500		$	2,283		$	2,248
Interest cost on projected benefit obligation		3,416			4,507			5,266
Expected return on plan assets		(11,207	)		(10,433	)		(8,869	)
Amortization of prior service (credit) cost		(34	)		(34	)		26
Amortization of net loss		2,736			3,192			3,240
Net periodic pension (income) cost	$	(2,589	)	$	(485	)	$	1,911
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net (gain) loss for period	$	(16,290	)	$	432		$	2,946
Prior service credit		—			(313	)		—
Amortization of prior service credit (cost)		34			34			(26	)
Amortization of net loss		(2,736	)		(3,192	)		(3,240	)
Total recognized in other comprehensive (income) loss	$	(18,992	)	$	(3,039	)	$	(320	)
Total recognized in net periodic pension cost and other comprehensive income	$	(21,581	)	$	(3,524	)	$	1,591
Weighted-average assumptions used to determine net periodic pension cost:
Discount rate		2.74	%		3.38	%		4.48	%
Rate of compensation increase		3.30	%		3.53	%		3.62	%
Expected long-term return on assets		6.11	%		6.30	%		6.30	%

As permitted under ASC 715-30-35-13, the amortization of any prior service cost is determined using a straight-line amortization of the cost over the average remaining service period of employees expected to receive benefits under the Plan.

The expected long-term rate of return for the Plan’s total assets is based on the expected return of each of the Plan asset categories, weighted based on the median of the target allocation for each class.

Pension Plan Investment Policy and Strategy— The investment policy as established by the Pension and Post-Retirement Plan Committee, to be followed by the Trustee, which is Wesbanco’s Trust and Investment Services department, is to invest assets based on the target allocations shown in the table below. Assets are reallocated periodically by the Trustee based on the ranges set forth by the Committee to meet the target allocations. The investment policy is also subject to review periodically to determine if the policy should be changed. Plan assets are to be invested with the principal objective of maximizing long-term total return without exposing Plan assets to undue risk, taking into account the Plan’s funding needs and benefit obligations. Assets are to be invested in a balanced portfolio composed primarily of equities, fixed income, alternative asset funds and cash or cash equivalent money market investments.

In the first half of 2021, the investment policy provided that a maximum of 5% may be invested in any one stock. Foreign stocks may be included, either through direct investment or by the purchase of mutual funds, which invest in foreign stock. Wesbanco common stock can represent up to 5% of the total market value. Corporate bonds selected for purchase must be rated Baa1 by Moody’s or BBB+ by Standard and Poor’s or higher. No more than 5% shall be invested in bonds or notes issued by the same corporation with a maximum term of twenty years. There is no limit on the holdings of U.S. Treasury or Federal Agency Securities. At December 31, 2021 and 2020, the Plan’s equity securities included 55,300 shares of Wesbanco common stock with a fair market value of $1.9 million and $1.7 million, respectively.

At its meeting on June 3, 2021, the Committee approved the engagement of AON Consulting Services to assist in the implementation of changes to the investment policy for the Defined Benefit Plan. Given the overfunded status of the Plan, it was recommended that the investment policy statement be revised to increase the duration of the fixed income portion of the portfolio to better hedge liability risk but do so in a strategic manner that reflects the current interest rate environment. It was also recommended that the return seeking portion of the portfolio be further diversified. Finally, it was recommended that the Committee consider adopting a glide path that reduces the exposure to return seeking assets as the funded status increases.

Accordingly, the Committee adopted certain changes to the investment policy for the Defined Benefit Pension Plan that recognizes over time the return requirements and risk tolerance of the plan will change. Based on an assessment of the long-term goals and desired risk levels, the Committee approved the development of a glide path that adjusts the target allocations as the Plan’s funded status changes. Given the United

States pension regulations and demographics of the Plan, a more risk averse investment approach is deemed appropriate to reduce the funded status volatility. Thus, modifications were made to the return seeking portfolio and the liability hedging portfolio as detailed in the plan. The revised Plan notes that return seeking assets generally consist of investments that focus on price appreciation with returns that, over the long term, are above the interest costs of the Plan. Thus, the policy set target allocations to return seeking assets and rebalanced the ranges for the same. Additionally, the investment policy statement was changed to note that liability hedging assets will be investment grade fixed income investments and are expected to generally behave like the Plan’s liabilities. Since these assets focus mainly on current income, their expected long-term returns will generally be lower than return seeking assets. The policy provides that based on the hedge path, the mix of short term, intermediate term, and long term fixed income holdings will vary. As a result, there will not be set target allocations and ranges for each maturity category, but rather to the hedge path target. Changes to the Plan’s holdings, as noted in the chart below, reflect the changes implemented pursuant to the change in the investment policy statement.

The following table sets forth the Plan’s weighted-average asset allocations by asset category:


	Target
	Allocation	December 31,
	for 2021	2021			2020
Asset Category:
Equity securities	55-75%		55	%		69	%
Debt securities	25-55%		43	%		28	%
Cash and cash equivalents	0-5%		2	%		3	%
Total			100	%		100	%

The fair values of Wesbanco’s pension plan assets at December 31, 2021 and 2020, by asset category are as follows:


			December 31, 2021
			Fair Value Measurements Using:
(in thousands)	Assets at Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Defined benefit pension plan assets:
Registered investment companies	$	54,737	$	54,737	$	—	$	—
Equity securities		74,445		74,445		—		—
Corporate debt securities		57,404		—		57,404		—
Municipal obligations		2,124		—		2,124		—
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		14,073		—		14,073		—
Total defined benefit pension plan assets (1)	$	202,783	$	129,182	$	73,601	$	—

(1)

The defined benefit pension plan statement of net assets also includes cash, accrued interest and dividends, and due to/from brokers resulting in net assets available for benefits of $204.8 million.


			December 31, 2020
			Fair Value Measurements Using:
(in thousands)	Assets at Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Defined benefit pension plan assets:
Registered investment companies	$	58,101	$	58,101	$	—	$	—
Equity securities		85,222		85,222		—		—
Corporate debt securities		21,170		—		21,170		—
Municipal obligations		2,382		—		2,382		—
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		18,425		—		18,425		—
Total defined benefit pension plan assets (1)	$	185,300	$	143,323	$	41,977	$	—

(1)

The defined benefit pension plan statement of net assets also includes cash, accrued interest and dividends, and due to/from brokers resulting in net assets available for benefits of $186.3 million.

Registered investment companies and equity securities: Valued at the closing price reported on the active market on which the individual securities are traded.

Corporate debt securities, municipal obligations, and U.S. government sponsored entities and agency securities: Valued at fair value based on models that consider criteria such as dealer quotes, available trade data, issuer creditworthiness, market movements, sector news, and bond and swap yield curves.

Cash Flows— Wesbanco has no required minimum contribution to the Plan for 2022 and as of December 31, 2021 does not expect to make a voluntary contribution in 2022. Wesbanco contributed $3.0 million for the year ended December 31, 2019. Wesbanco did not make a contribution to the Plan in 2020 or 2021.

FFKT Postretirement Medical Benefit Plan— Wesbanco assumed FFKT’s postretirement medical benefit plan upon acquisition, which had a liability totaling $15.0 million at the acquisition date. The plan covers FFKT employees who were hired before January 1, 2016 and meet certain age and length of full-time service requirements. The plan was modified in August 2018, which reduced the number of eligible employees. The modification resulted in a $5.5 million unrealized gain, which was recorded in accumulated other comprehensive income, net of tax, and will be recognized over the life of the plan participants estimated to be approximately 17 years. Benefits provided under this plan are unfunded, and payments to the plan participants are made by Wesbanco.

The benefit obligation and funded status of the plan are as follows:


	December 31,
(dollars in thousands)	2021			2020
Change in projected benefit obligation:
Projected benefit obligation	$	12,695		$	12,632
Interest cost		230			360
Actuarial (gain) loss		(1,096	)		302
Participant contributions		342			353
Benefits paid		(926	)		(952	)
Projected benefit obligation at end of year	$	11,245		$	12,695
Amounts recognized in the statement of financial position:
Funded status	$	(11,245	)	$	(12,695	)
Net amounts recognized as receivable pension costs in the consolidated balance sheets	$	(11,245	)	$	(12,695	)
Amounts recognized in accumulated other comprehensive income consist of:
Unrecognized net loss	$	249		$	1,388
Prior service cost		(2,568	)		(2,792	)
Net amounts recognized in accumulated other comprehensive income (before tax)	$	(2,319	)	$	(1,404	)
Weighted average assumptions used to determine benefit obligations:
Discount rate		2.96	%		2.65	%
Rate of compensation increase	NA			NA
Expected long-term return on assets	NA			NA

The components of and weighted-average assumptions used to determine net periodic benefit costs are as follows:


	For the Years Ended December 31,
(dollars in thousands)	2021			2020
Components of net periodic benefit cost:
Interest cost on projected benefit obligation	$	230		$	360
Amortization of prior service credit		(224	)		(224	)
Amortization of net loss		43			67
Net periodic pension cost	$	49		$	203
Other changes in plan benefit obligations recognized in other comprehensive income:
Prior service cost for period	$	-		$	-
Net (gain) loss for the period		(1,097	)		302
Amortization of prior service credit		224			224
Amortization of net loss		(43	)		(67	)
Total recognized in other comprehensive income	$	(916	)	$	459
Total recognized in net periodic pension cost and other comprehensive income	$	(867	)	$	662
Weighted-average assumptions used to determine net periodic pension cost:
Discount rate		2.40	%		1.97	%
Rate of compensation increase	NA			NA
Expected long-term return on assets	NA			NA

Employee Stock Ownership and 401(k) Plan (“KSOP”) — Wesbanco sponsors a KSOP plan consisting of a non-contributory leveraged ESOP and a contributory 401(k) profit sharing plan covering substantially all of its employees. Under the provisions of the 401(k) plan, Wesbanco matches a portion of eligible employee contributions based on rates established and approved by the Board of Directors. For each of the past three years, Wesbanco matched 100% of the first 3% and 50% of the next 2% of eligible employee contributions. No ESOP contribution has been made for any of the past three years. Total expense for the KSOP was $5.3 million, $5.3 million and $4.4 million in 2021, 2020 and 2019, respectively.

As of December 31, 2021, the KSOP held 453,301 shares of Wesbanco common stock of which all shares were allocated to specific employee accounts. Dividends on shares are either distributed to employee accounts or paid in cash to the participant. Wesbanco had 207,199 and 246,769 shares registered on Form S-8 remaining for future issuance under the KSOP plan at December 31, 2021 and 2020, respectively.

Incentive Bonus, Option and Restricted Stock Plan— The Incentive Bonus, Option and Restricted Stock Plan (the “Incentive Plan”), is a non-qualified plan that includes the following components: an Annual Bonus and a Long-Term Incentive, which included a Total Shareholder Return Plan, a Stock Option component, and a Restricted Stock component for certain key officers of the Company. The components allow for payments of cash, a mixture of cash and stock, granting of stock options, or granting of restricted stock, depending upon the component of the Incentive Plan in which the award is earned, through the attainment of certain performance goals or time-based vesting requirements. Performance goals or service vesting requirements are established by Wesbanco’s Compensation Committee. On April 22, 2021, Wesbanco registered an additional 2,000,000 shares of Wesbanco common stock for issuance under the Incentive Plan. Wesbanco had 1,788,174 and 35,711 shares registered on Form S-8 remaining for future issuance under equity compensation plans at December 31, 2021 and 2020, respectively.

Compensation expense for key officers for the Annual Bonus was $3.5 million, $1.7 million and $2.1 million for 2021, 2020, and 2019, respectively.

On May 19, 2021, Wesbanco granted 147,200 stock options to selected participants, including certain named executive officers at an exercise price of $38.78 per share. The options granted in 2021 are service-based and vest in two equal installments on May 19, 2022 and December 31, 2022, and expire seven years from the date of grant.

Compensation expense for the stock option component of the Incentive Plan was $0.8 million, $0.6 million and $0.9 million for 2021, 2020 and 2019, respectively. At December 31, 2021, the total unrecognized compensation expense related to non-vested stock option grants totaled $0.5 million, with an expense recognition period of one year remaining. The maximum term of options granted under Wesbanco’s stock option plan is ten years from the original grant date; however, options granted in 2021 had a term of seven years.

The total intrinsic value of options exercised was $1.0 million and $45 thousand for the years ended December 31, 2021 and 2020, respectively. The cash received and related tax benefit realized from stock options exercised was $2.4 million and $0.2 million in 2021 and was $153 thousand and $11 thousand in 2020. Shares issued in connection with options exercised are issued from treasury shares acquired under Wesbanco’s share repurchase plans or from issuance of authorized but unissued shares, subject to prior SEC registration.

The fair value of stock options granted is estimated at the date of grant using the Black-Scholes option-pricing model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. Additionally, there may be other factors that might otherwise have a significant effect on the value of stock options granted that are not considered by the model.

The following table sets forth the significant assumptions used in calculating the fair value of the grants:


	For the Years Ended December 31,
	2021			2020			2019
Weighted-average life	5.2 years			5.7 years			5.6 years
Risk-free interest rate		0.87	%		0.41	%		2.18	%
Dividend yield		3.32	%		5.94	%		2.80	%
Volatility factor		31.81	%		28.38	%		21.97	%
Fair value of the grants	$	7.75		$	2.54		$	6.36

The weighted-average life assumption is an estimate of the length of time that an employee might hold an option before option exercise, option expiration or employment termination. The weighted-average life assumption was developed using historical experience. Wesbanco used a weighted historical volatility of its common stock price over the weighted average life prior to each issuance as the volatility factor assumption, adjusted for abnormal volatility during certain periods, and current and future dividend payment expectations for the dividend assumption.

The following table shows the activity for the Stock Option component of the Incentive Plan:


	For the Year Ended December 31, 2021
	Number of Options			Weighted Average Exercise Price Per Share
Outstanding at beginning of the year		774,749		$	32.87
Granted during the year		147,200			38.78
Exercised during the year		(130,273	)		35.51
Forfeited or expired during the year		(19,025	)		34.53
Outstanding at end of the year		772,651		$	34.70
Exercisable at year end		626,451		$	35.47

The aggregate intrinsic value of the outstanding shares and the shares exercisable at year-end was $2.4 million and $2.4 million, respectively.

The following table shows the average remaining life of the stock options at December 31, 2021:


Year Issued	Exercisable at Year End		Exercise Price Range Per Share		Options Outstanding		Weighted Average Exercise Price		Weighted Avg. Remaining Contractual Life in Years
2012		5,490	10.20 to 13.96			5,490	$	12.89		0.55
2013		3,765		15.35		3,765		15.35		1.16
2014		4,705		21.37		4,705		21.37		2.16
2015		45,675	18.33 to 31.58			45,675		29.08		1.10
2016		56,005	22.63 to 32.37			56,005		31.55		1.63
2017		101,325		38.88		101,325		38.88		2.35
2018		162,436	36.97 to 45.65			162,436		43.25		4.22
2019		122,250		38.93		122,250		38.93		4.37
2020		124,800		21.55		124,800		21.55		5.40
2021		—		—		146,200		38.78		6.39
Total		626,451	$10.20 to $45.65			772,651	$	34.70		4.17

During 2021, Wesbanco granted 128,821 shares of service-based restricted stock to certain officers and directors, which cliff vest 36 months from the date of grant. The weighted average fair value of the restricted stock granted was $38.67 per share. The restricted stock grant provides the recipient with voting rights from the date of issuance. Dividends paid on these restricted shares during the restriction period are converted into additional shares of restricted stock on the date the cash dividend would have otherwise been paid, but do not vest until the related grant of the restricted shares complete their vesting. The Compensation Committee has discretion to elect to pay such dividends in cash to participants. Voting rights accrue from date of issuance of these shares.

Wesbanco also granted 17,571 shares of performance-based restricted stock to select officers. These shares have a three-year performance period, beginning January 1, 2022, based on Wesbanco’s return on average assets and return on average tangible common equity measured for each year, compared to a national peer group of financial institutions with total assets between approximately $11.8 billion and $28.1 billion. Earned performance-based restricted shares are subject to additional service-based vesting with 50% vesting on May 19, 2025 after the completion of the three-year performance period and the final 50% vesting on May 19, 2026. For the 2017 performance-based restricted stock, the second year reporting period of 2019 achieved 85% of the performance goal. The Compensation Committee approved the goal achievement in 2020, thus Wesbanco issued 2,550 time-based restricted shares to the select officers, of which 1,225 shares vested on May 16, 2021 and the remaining 1,225 shares will vest on May 16, 2022. For the 2018 performance based restricted stock, the first year reporting period of 2019 achieved 85% of the performance goal. The Compensation Committee approved the goal achievement in 2020, thus Wesbanco issued 2,289 shares to the select officers which will vest 50% on May 16, 2022 and the remainder on May 16, 2023. The third year reporting for the 2017 performance-based stock awards, the second year reporting for the 2018 performance-based stock awards and the first year reporting for the 2019 performance-based stock awards did not achieve their targets and thus were forfeited during 2021. Also in 2021, the Compensation Committee adjusted the performance goal to 75% and approved a pro-rata award based on the achievement between 75% through 99%, and the award will be prorated to the percentage achieved.

Dividends accrue on the restricted shares once the performance objective is achieved and then are converted into additional shares of restricted stock on the date the cash dividend would have otherwise been paid, but do not vest until the related grant of the restricted shares complete their vesting. Voting rights accrue upon achievement of the performance objective.

Compensation expense relating to all restricted stock was $5.6 million, $4.6 million and $4.2 million in 2021, 2020 and 2019, respectively. As of December 31, 2021, the total unrecognized compensation expense related to non-vested restricted stock grants totaled $7.0 million, with a weighted average expense recognition period of 1.2 years remaining.

The following table shows the activity for the Restricted Stock component of the Incentive Plan:


For the Year Ended December 31, 2021	Restricted Stock			Weighted Average Grant Date Fair Value Per Share
Non-vested at January 1, 2021		480,044		$	32.90
Granted during the year		146,392			38.68
Vested during the year		(121,211	)		41.77
Forfeited or expired during the year		(16,481	)		38.94
Dividend reinvestment		16,124			33.45
Non-vested at end of the year		504,868		$	29.42

On November 18, 2015, Wesbanco’s Compensation Committee adopted Administrative Rules for a Total Shareholder Return Plan (“TSRP”). The TSRP measures the TSR on Wesbanco common stock over a three-year measurement period relative to the return of an established peer group of publicly traded companies over the same performance period. The award is determined at the end of the three-year period if the TSR of Wesbanco common stock is equal to or greater than the 50th percentile of the TSR of the peer group. The number of shares to be earned by the participant shall be 200% of the grant-date award if the TSR of Wesbanco common stock is equal to or greater than the 75th percentile of the TSR of the peer group. Upon achieving the market-based metric, shares determined to be earned by the participant become service-based and vest in three equal annual installments. Voting rights accrue at such time as well. Wesbanco granted 12,000 TSRP shares in 2021 for the performance period beginning January 1, 2021 and ending December 31, 2023 to certain executive officers. The fair value of the market-based awards is based on a Monte-Carlo Simulation valuation of our common stock and our peers’ common stock as of the grant date.

Based on the calculation of shareholder return over the measurement period beginning January 1, 2019 and ending December 31, 2021, Wesbanco stock performance did not equal or exceed the 50th percentile when compared to peer calculations of shareholder return. Therefore, none of the 12,000 shares granted in 2019 will vest.

Compensation expense relating to the TSR plans was $0.4 million in 2021, 2020 and 2019. The grant date fair value of the 2021 TSR award was $22.60 per share. At December 31, 2021, the total unrecognized compensation expense related to non-vested TSR awards totaled $0.3 million with a weighted average expense recognition period of 2.5 years remaining.