EMPLOYEE STOCK COMPENSATION

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

On May 31, 2018 (the Effective Date), our stockholders approved our 2018 Omnibus Stock Incentive Plan (2018 Omnibus Plan). As of the Effective Date, we discontinued granting awards under our 2013 Omnibus Incentive Plan (2013 Omnibus Plan) or any prior equity incentive plans and future stock-based compensation awards to our directors and employees will be made pursuant to the 2018 Omnibus Plan. The 2018 Omnibus Plan provides that the maximum number of shares that will be available for awards is 4,417,882, which represents the number of shares that were available for new awards under the 2013 Omnibus Plan immediately prior to the Effective Date. As of December 31, 2019, 3,674,033 shares were available for future awards under the 2018 Omnibus Plan.

The Banc of California Capital and Liquidity Enhancement Employee Compensation Trust, a Maryland statutory trust (the SECT) was terminated in 2018. See Note 19 for additional information.

Stock-based Compensation Expense

The following table presents stock-based compensation expense and the related tax benefits for the periods indicated:



	Year Ended December 31,
($ in thousands)	2019			2018		2017
Stock options	$	(8	)	$	174	$	360
Restricted stock awards and units	5,047			6,391		11,732
Stock appreciation rights	—			—		42
Total stock-based compensation expense	$	5,039		$	6,565	$	12,134
Related tax benefits	$	1,481		$	1,929	$	5,078

The following table presents unrecognized stock-based compensation expense as of December 31, 2019:



($ in thousands)	Unrecognized Expense		Weighted-Average Remaining Expected Recognition Period
Stock option awards	$	4	0.5 years
Restricted stock awards and restricted stock units	9,087		2.2 years
Total	$	9,091	2.2 years

Stock Options

We have issued stock options to certain employees, officers and directors. Stock options are issued at the closing market price immediately before the grant date, and generally have a three to five year vesting period and contractual terms of seven to ten years. We recognize an income tax deduction upon exercise of a stock option to the extent taxable income is recognized by the option holder. In the case of a non-qualified stock option, the option holder recognizes taxable income based on the fair market value of the shares acquired at the time of exercise less the exercise price.

The weighted-average estimated fair value per share options granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions.



	Year Ended December 31,
($ in thousands, except per share data)	2019		2018		2017
Grant date fair value of options granted	$	—	$	—	$	—
Fair value of options vested	$	67	$	160	$	611
Total intrinsic value of options exercised	$	87	$	96	$	3,747
Cash received from options exercised	$	—	$	—	$	2,043
Weighted-average estimated fair value per share of options granted	$	—	$	—	$	—

The following table represents stock option activity and weighted-average exercise price per share at and for the periods indicated:



	Year Ended December 31,
	2019				2018				2017
	Number of Shares		Weighted-Average Exercise Price per Share		Number of Shares		Weighted-Average Exercise Price per Share		Number of Shares		Weighted-Average Exercise Price per Share
Outstanding at beginning of year	186,973		$	13.54	210,973		$	13.99	968,591		$	13.95
Exercised	(74,836	)	$	13.41	(24,000	)	$	17.50	(488,281	)	$	12.53
Forfeited	(49,616	)	$	13.34	—		$	—	(269,337	)	$	16.49
Expired	—		$	—	—		$	—	—		$	—
Outstanding at end of year	62,521		$	13.85	186,973		$	13.54	210,973		$	13.99
Exercisable at end of year	60,273		$	13.86	123,125		$	13.67	105,541		$	14.68

The following table represents changes in unvested stock options and related information at and for the periods indicated:



	Year Ended December 31,
	2019				2018				2017
	Number of Shares		Weighted-Average Exercise Price per Share		Number of Shares		Weighted-Average Exercise Price per Share		Number of Shares		Weighted-Average Exercise Price per Share
Outstanding at beginning of year	63,848		$	13.30	105,432		$	13.31	518,936		$	15.04
Granted	—		$	—	—		$	—	—		$	—
Vested	(17,600	)	$	13.26	(41,584	)	$	13.32	(174,833	)	$	14.10
Forfeited	(44,000	)	$	13.29	—		$	—	(238,671	)	$	16.50
Outstanding at end of year	2,248		$	13.75	63,848		$	13.30	105,432		$	13.31

The following table presents a summary of stock options outstanding as of December 31, 2019:



	Options Outstanding						Options Exercisable
($ in thousands)	Number of Shares	Intrinsic Value		Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Life	Number of Shares	Intrinsic Value		Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Life
$10.90 to $11.87	5,508	$	22	$	10.90	4.5 years	5,508	$	22	$	10.90	4.5 years
$11.88 to $12.85	—	—		$	—	0.0 years	—	—		$	—	0.0 years
$12.86 to $13.83	40,848	58		$	13.48	5.4 years	38,600	55		$	13.46	5.4 years
$13.84 to $14.81	—	—		$	—	0.0 years	—	—		$	—	0.0 years
$14.82 to $15.82	16,165	—		$	15.81	1.5 years	16,165	—		$	15.81	1.5 years
Total	62,521	$	80	$	13.85	4.3 years	60,273	$	77	$	13.86	4.3 years

Restricted Stock Awards and Restricted Stock Units

We also have granted restricted stock awards and restricted stock units to certain employees, officers and directors. The restricted stock awards and units are valued at the closing price of our stock on the measurement date. The restricted stock awards and units fully vest after a specified period (generally ranging from one to five years) of continued service from the date of grant plus, in some cases, the satisfaction of performance conditions. These performance targets include conditions relating to our profitability and regulatory standing. The actual amounts of stock released upon vesting will be determined by the Compensation Committee of our Board of Directors upon the Committee's certification of the satisfaction of the target level of performance. We recognize an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted stock, generally upon vesting or, in the case of restricted stock units, when settled. The following table presents unvested restricted stock awards and restricted stock units activity for the periods indicated:



	Year Ended December 31,
	2019				2018				2017
	Number of Shares		Weighted-Average Price per Share		Number of Shares		Weighted-Average Price per Share		Number of Shares		Weighted-Average Price per Share
Outstanding at beginning of year	833,601		$	18.96	911,633		$	18.73	1,417,144		$	16.16
Granted ⁽¹⁾	796,547		$	14.40	650,676		$	18.89	859,722		$	20.81
Vested ⁽²⁾	(273,904	)	$	18.37	(415,994	)	$	18.65	(854,031	)	$	15.95
Forfeited ⁽³⁾	(432,762	)	$	17.93	(312,714	)	$	18.54	(511,202	)	$	17.80
Outstanding at end of year	923,482		$	15.74	833,601		$	18.96	911,633		$	18.73


(1)	The number of granted shares includes aggregate performance-based shares/units of 174,935, 306,801 and 152,709 for the years ended December 31, 2019, 2018 and 2017.


(2)	The number of vested shares includes aggregate performance-based shares/units of 37,572, 44,817 and 10,000 for the years ended December 31, 2019, 2018 and 2017


(3)	The number of forfeited shares includes aggregate performance-based shares/units of 233,999, 86,936 and 107,545 for the years ended December 31, 2019, 2018 and 2017.

Stock Appreciation Rights

On August 21, 2012, we granted to Steven A. Sugarman, our then- (now former) chief executive officer a ten-year stock appreciation right (SAR) for 500,000 shares (Initial SAR) of our common stock with a base price of $12.12 per share with one-third of the Initial SAR vesting on the grant date and the remaining amount vesting over a period of 2 years. The Initial SAR entitles Mr. Sugarman to dividend equivalent rights and originally contained an anti-dilution provision pursuant to which additional SARs (Additional SARs) were issued to Mr. Sugarman upon certain stock issuances by us, as described below. On March 24, 2016, concurrent with entering into a new employment agreement with us, Mr. Sugarman entered into a letter agreement that eliminated this anti-dilution provision of the Initial SAR. Under the terms of the March 24, 2016 letter agreement, in consideration of the removal of the anti-dilution provision of the Initial SAR, we granted Mr. Sugarman a onetime performance based restricted stock award with an aggregate grant date fair market value of $5.0 million, which would vest in full on March 24, 2017, but was also subject to restrictions on sale or transfer through March 24, 2021. In connection with Mr. Sugarman’s resignation as our chief executive officer on January 23, 2017, all unvested equity awards (including any unvested SARs) immediately vested and became free of all restrictions. In addition, the SARs continued (and continue) to remain exercisable for their full terms, with dividend equivalent rights of the SARs also continuing in effect during their full terms.

As described more fully in the SAR agreement, the original anti-dilution provision of the Initial SAR did not apply to certain issuances of our common stock for compensatory purposes, but did apply to certain other issuances of our common stock, including the issuances of common stock to raise capital. Pursuant to this anti-dilution provision, we issued Additional SARs to the former chief executive officer with a base price determined as of each date of issuance, but otherwise with the same terms and conditions as the Initial SAR, except for an Additional SAR granted relating to a public offering of our tangible equity units (TEUs) on May 21, 2014 that has different terms (Additional TEU SAR).

Regarding the Additional TEU SAR, each TEU contained a Purchase Contract that could be settled in shares of our voting common stock based on a maximum settlement rate (subject to adjustment) and a minimum settlement rate (subject to adjustment). The Additional TEU SAR was calculated using the initial maximum settlement rate and, therefore, the number of shares underlying the Additional TEU SAR was subject to adjustment and forfeiture if the aggregate number of shares of stock issued in settlement of any single Purchase Contract was less than the initial maximum settlement rate.

By its original terms, the Additional TEU SAR was to vest in full on May 15, 2017 or accelerate in vesting upon early settlement of a Purchase Contract at the holders' option, and until it vested, the Additional TEU SAR was to have no dividend equivalent rights and the shares underlying the Additional TEU SAR were subject to forfeiture.

The following table represents SARs activity and the weighted-average exercise price per share for the periods indicated:



	Year Ended December 31,
	2019			2018			2017
	Number of Shares	Weighted-Average Exercise Price per Share		Number of Shares	Weighted-Average Exercise Price per Share		Number of Shares		Weighted-Average Exercise Price per Share
Outstanding at beginning of year	1,559,012	$	11.60	1,559,012	$	11.60	1,559,047		$	11.60
Granted	—	$	—	—	$	—	—		$	—
Exercised	—	$	—	—	$	—	—		$	—
Forfeited	—	$	—	—	$	—	(35	)	$	10.09
Outstanding at end of year	1,559,012	$	11.60	1,559,012	$	11.60	1,559,012		$	11.60
Exercisable at end of year	1,559,012	$	11.60	1,559,012	$	11.60	1,559,012		$	11.60

The following table represents changes in unvested SARs and related information as of and for the periods indicated:



	Year Ended December 31,
	2019			2018			2017
	Number of Shares	Weighted-Average Exercise Price per Share		Number of Shares	Weighted-Average Exercise Price per Share		Number of Shares		Weighted-Average Exercise Price per Share
Outstanding at beginning of year	—	$	—	—	$	—	8,069		$	10.09
Granted	—	$	—	—	$	—	—		$	—
Vested	—	$	—	—	$	—	(8,034	)	$	10.09
Forfeited	—	$	—	—	$	—	(35	)	$	10.09
Outstanding at end of year	—	$	—	—	$	—	—		$	—