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Incentive Plan | 12 Months Ended
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Dec. 31, 2021
Share-based Payment Arrangement [Abstract] |
Incentive Plan | Incentive Plan The OceanFirst Financial Corp. 2011 Stock Incentive Plan, which authorizes the granting of stock options or awards of common stock, was approved by stockholders in 2011. This plan was subsequently amended in 2017 to increase the number of authorized shares available for grant and to update the performance goals under which performance-based awards may be granted. In 2018, the Company implemented a performance-based stock plan for select senior management executives. On May 20, 2020, the OceanFirst Financial Corp. 2020 Stock Incentive Plan, which also authorizes the granting of stock options or awards of common stock, was approved by stockholders. On March 24, 2021, the 2020 Stock Incentive Plan was amended to increase the number of shares authorized for issuance through equity awards. The purpose of these plans is to attract and retain qualified personnel in key positions, provide officers, employees, and non-employee directors with a proprietary interest in the Company as an incentive to contribute to the success of the Company, align the interests of management with those of other stockholders and reward employees for outstanding performance. All officers, other employees, and non-employee directors of the Company and its affiliates are eligible to receive awards under the plans. Under the amended 2020 Stock Incentive Plan, the Company is authorized to issue up to 6,950,000 shares subject to option or, in lieu of options, up to 2,780,000 shares in the form of stock awards. At December 31, 2021, 5,000,294 options or 2,000,118 awards remain available for issuance. Under the amended 2011 Stock Incentive Plan, the Company is authorized to issue up to an additional 4,000,000 shares subject to option or, in lieu of options, up to 1,600,000 shares in the form of stock awards. At December 31, 2021, 149,343 options or 59,737 awards remain available for issuance. Stock awards vest ratably over the vesting period. The Company granted to senior executives performance-based awards in 2021, 2020 and 2019, which vest in equal amounts over a three- to five-year period when a specific performance metric has been attained or exceeded. Tiered performance goals for each metric are aligned with corresponding tiered vesting values and have been set using financial data from the applicable strategic plan as approved by the Board. The Company accrues expenses for the performance-based awards based on the estimated probability of achievement of the defined performance goals. Options expire 10 years from the date of grant and generally vest at the rate of 20% per year. The exercise price of each option equals the closing market price of the Company’s stock on the grant date. The Company typically issues treasury shares or authorized but unissued shares to satisfy stock option exercises. The Company recognizes the grant-date fair value of stock options and other stock-based compensation issued to employees in the income statement. The modified prospective transition method was adopted and, as a result, the income statement includes $1.2 million, $1.5 million, and $973,000, of expenses for stock option grants and $4.2 million, $2.8 million, and $2.9 million, of expense for stock award grants, for the years ended December 31, 2021, 2020 and 2019, respectively. At December 31, 2021, the Company had $14.7 million in compensation costs related to non-vested options and stock awards not yet recognized. This cost will be recognized over the remaining vesting period of 2.79 years. The fair value of stock options granted by the Company was estimated through the use of the Black-Scholes option pricing model applying the following assumptions:
|  |  |  | 2020 |  | 2019
Risk-free interest rate |  |  |  | 1.03 | % |  | 2.63 | %
Expected option life |  |  |  | 7 years |  | 7 years
Expected volatility |  |  |  | 23 | % |  | 21 | %
Expected dividend yield |  |  |  | 3.33 | % |  | 2.70 | %
Weighted average fair value of an option share granted during the year |  |  |  | $ | 2.93 |  |  | $ | 4.47 |
Intrinsic value of options exercised during the year (in thousands) |  |  |  | 2,499 |  |  | 2,994 |
For the year ended December 31, 2021, there were no stock options granted by the Company. The risk-free interest rate is based on the U.S. Treasury rate with a term equal to the expected option life. The expected option life conforms to the Company’s actual experience. Expected volatility is based on actual historical results. Compensation cost is recognized on a straight line basis over the vesting period. A summary of option activity for the years ended December 31, 2021, 2020 and 2019 is as follows:
|  | 2021 |  | 2020 |  | 2019
|  | Number of Shares |  | Weighted Average Exercise Price |  | Number of Shares |  | Weighted Average Exercise Price |  | Number of Shares |  | Weighted Average Exercise Price
Outstanding at beginning of year |  | 2,838,867 |  |  | $ | 20.67 |  |  | 2,424,032 |  |  | $ | 19.80 |  |  | 2,340,842 |  |  | $ | 18.25 |
Granted |  | — |  |  | — |  |  | 699,651 |  |  | 20.44 |  |  | 461,407 |  |  | 25.20 |
Exercised |  | (264,717) |  |  | 14.80 |  |  | (213,506) |  |  | 9.50 |  |  | (227,189) |  |  | 11.24 |
Forfeited |  | (1,828) |  |  | 23.78 |  |  | (6,357) |  |  | 21.26 |  |  | (149,158) |  |  | 24.71 |
Expired |  | (114,067) |  |  | 26.62 |  |  | (64,953) |  |  | 22.51 |  |  | (1,870) |  |  | 29.59 |
Outstanding at end of year |  | 2,458,255 |  |  | $ | 21.02 |  |  | 2,838,867 |  |  | $ | 20.67 |  |  | 2,424,032 |  |  | $ | 19.80 |
Options exercisable |  | 1,583,521 |  |  |  |  | 1,596,927 |  |  |  |  | 1,612,946 |  |  |
The following table summarizes information about stock options outstanding at December 31, 2021:
|  | Options Outstanding |  | Options Exercisable
Exercise Prices |  | Number of Options |  | Weighted Average Remaining Contractual Life |  | Weighted Average Exercise Price |  | Number of Options |  | Weighted Average Remaining Contractual Life |  | Weighted Average Exercise Price
$10.84 to $15.38 |  | 395,089 |  |  | 0.8 years |  | $ | 13.92 |  |  | 395,089 |  |  | 0.8 years |  | $ | 13.92 |
15.39 to 19.92 |  | 490,055 |  |  | 3.3 |  | 17.45 |  |  | 490,055 |  |  | 3.3 |  | 17.45 |
19.93 to 24.46 |  | 733,895 |  |  | 7.9 |  | 20.55 |  |  | 184,413 |  |  | 7.2 |  | 20.87 |
24.47 to 29.01 |  | 839,216 |  |  | 6.2 |  | 26.87 |  |  | 513,964 |  |  | 5.9 |  | 27.38 |
|  | 2,458,255 |  |  | 5.3 years |  | $ | 21.02 |  |  | 1,583,521 |  |  | 4.0 years |  | $ | 20.19 |
The aggregate intrinsic value for stock options outstanding and stock options exercisable at December 31, 2021 was $6.8 million and $5.9 million, respectively. A summary of the granted but unvested stock award activity for the years ended December 31, 2021, 2020 and 2019 is as follows:
|  | 2021 |  | 2020 |  | 2019
|  | Number of Shares |  | Weighted Average Grant Date Fair Value |  | Number of Shares |  | Weighted Average Grant Date Fair Value |  | Number of Shares |  | Weighted Average Grant Date Fair Value
Outstanding at beginning of year: |  | 575,996 |  |  | $ | 23.42 |  |  | 451,443 |  |  | $ | 25.61 |  |  | 330,598 |  |  | $ | 25.92 |
Granted |  | 388,392 |  |  | 21.53 |  |  | 256,649 |  |  | 20.38 |  |  | 249,651 |  |  | 24.80 |
Vested |  | (126,292) |  |  | 24.04 |  |  | (96,564) |  |  | 24.41 |  |  | (105,307) |  |  | 24.49 |
Forfeited |  | (59,125) |  |  | 24.39 |  |  | (35,532) |  |  | 26.56 |  |  | (23,499) |  |  | 26.38 |
Outstanding at end of year |  | 778,971 |  |  | $ | 22.30 |  |  | 575,996 |  |  | $ | 23.42 |  |  | 451,443 |  |  | $ | 25.61 |

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