Stock Plans and Stock Based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock Plans and Stock Based Compensation

In 2019, the 2009 Tompkins Financial Corporation Equity Plan (“2009 Equity Plan”) expired and was replaced by the new Tompkins Financial Corporation 2019 Equity Plan (“2019 Equity Plan”). Under the 2019 Equity Plan, the Company may grant stock appreciation rights ("SARs"), shares of restricted stock and restricted units and performance share awards covering up to 1,275,000 shares of the Company's common stock to certain officers, employees, and nonemployee directors. Additionally, restricted stock awards and restricted units and performance share awards will reduce the shares available for grant under the 2019 Equity Plan by 4.25 shares for each share subject to an award, resulting in a total number of full-value share awards that may be issued under the 2019 Plan to 300,000. Stock options and SARs are granted at an exercise price equal to the stock’s fair value at the date of grant, may not have a term in excess of ten years, and have vesting periods that range between five and seven years from the grant date. Options and Stock Appreciation Rights with an expiration date in 2026 have a five-year vesting schedule with zero percent vesting in year one and 25% vesting in years two through five. All other Options and Stock Appreciation Rights have a seven-year vesting schedule with zero percent vesting in year one, 17% vesting in years two through six and 15% vesting in year seven. Restricted stock awards that were granted in 2016, 2017, 2018, 2019, 2020 and 2021 have a five-year vesting schedule with zero percent vesting in year one and 25% vesting in years two through five. All other restricted stock awards have a seven-year vesting schedule with zero percent vesting in year one, 17% vesting in years two through six and 15% vesting in year seven. For Performance Awards, there is a 3-year performance period in the fiscal years immediately following the grant date, at which time the performance goal is measured. If the goal is achieved, the value of the award vests is either immediately payable, or is subject to additional time-based vesting, depending on the terms of the particular executive’s award agreement.

The Company granted 67,846 equity awards to its employees in 2021, consisting of 54,151 shares of restricted stock, 5,340 performance share awards and 8,355 restricted stock units. The Company granted 86,411 equity awards to its employees in 2020, consisting of 69,451 shares of restricted stock, 6,545 performance share awards and 10,415 restricted stock units. The Company granted 62,360 equity awards to its employees in 2019, consisting of 49,365 shares of restricted stock, 4,650 performance share awards and 8,345 restricted stock units.

The following table presents the activity related to stock options and SARs under all plans for the year ended December 31, 2021.


	Number of Shares/Rights	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2021	144,387	$	50.61
Granted	0	0.00
Exercised	(51,771)	44.42
Forfeited	(1,136)	46.28
Outstanding at December 31, 2021	91,480	$	54.17	3.10	$	2,690,855
Exercisable at December 31, 2021	85,821	$	54.03	3.05	$	2,536,421

Total stock-based compensation expense for stock options and SARs was $151,000 in 2021, $194,000 in 2020, and $235,000 in 2019. As of December 31, 2021, unrecognized compensation cost related to unvested stock options and SARs totaled $40,000. The cost is expected to be recognized over a weighted average period of 0.8 years. Net cash proceeds, tax benefits and intrinsic value related to total stock options, SARs, and restricted stock exercised is as follows:


(In thousands)	2021		2020		2019
Proceeds from stock option exercises	$	(803)	$	(253)	$	(992)
Tax benefits related to stock option exercises	355		156		944
Intrinsic value of stock option exercises	1,900		570		2,460

The Company uses the Black-Scholes option-valuation model to determine the fair value of incentive stock options and SARs at the date of grant. The valuation model estimates fair value based on the assumptions for the risk-free rate, expected dividend yield, volatility and expected life. The risk-free rate is the interest rate available on zero-coupon U.S. Treasury instruments with a remaining term equal to the expected term of the share option at the time of grant. The expected dividend yield is based on the dividend trends and the market price of the Company’s stock price at grant. Volatility is largely based on historical volatility of the Company’s stock price. The expected term is based upon historical experience of employee exercises and terminations as the vesting term of the grants. The fair values of the grants are expensed over the vesting periods. There were no incentive stock options or SARs granted in 2021, 2020 and 2019.


December 31, 2021
Options and SARs Outstanding			Options and SARs Exercisable
Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price



$37.51-41.00	17,034	1.27	$	40.60	17,034	$	40.60
$41.01-50.00	33,763	2.79	$	49.22	33,763	$	49.22
$50.01-76.90	40,461	4.11	$	63.84	34,802	$	65.07
$76.91-86.18	222	4.89	$	86.18	222	$	86.18
	91,480	3.10	$	54.17	85,821	$	54.03

The following table presents activity related to restricted stock awards and restricted stock units for the year ended December 31, 2021.


	Number of Shares	Weighted Average Grant Date Fair Value
Unvested at January 1, 2021	254,989	$	70.55
Granted	67,846	83.97
Vested	(71,907)	72.67
Forfeited	(9,018)	70.10
Unvested at December 31, 2021	241,910	$	71.60

The Company granted 54,151 restricted stock awards, 8,355 restricted stock units and 5,340 performance share awards in 2021, each at an average grant date fair value of $83.97. The Company granted 69,451 restricted stock awards,10,415 restricted stock units and 6,545 performance share awards in 2020, each at an average grant date fair value of $63.44. The Company granted 49,365 restricted stock awards, 8,345 restricted stock units and 4,650 performance share awards in 2019 at an average grant date fair value of $89.21. The grant date fair values were the closing prices of the Company’s common stock on the grant dates. The Company recognized stock-based compensation related to restricted stock awards, restricted stock units, and performance share awards of $5.4 million in 2021, $4.7 million in 2020, and $4.0 million in 2019. Unrecognized compensation costs related to restricted stock and performance awards totaled $11.5 million, and restricted stock units totaled $1.4 million at December 31, 2021 and will be recognized over 3.5 years and 4.1 years, respectively on a weighted average basis.