COLUMBIA BANKING SYSTEM, INC.COLB

COLUMBIA BANKING SYSTEM, INC. Stock Compensation Disclosure

10-KFiled Feb 24, 20233 min read
Share-Based Payments
At December 31, 2022, the Company had one equity compensation plan (the “Plan”), which is shareholder approved, that provides for the granting of share options, share units and shares to eligible employees and directors up to 3,050,000 shares.
Share Units: Restricted share units provide for an interest in Company common stock to the recipient, with such units held in escrow until certain conditions are met. Share units provide for vesting requirements that include time-based, performance-based, or market-based conditions. Recipients of restricted units do not pay any cash consideration to the Company for the units and the holders of the restricted units do not have voting rights. For share units issued under the equity incentive plan approved in 2018, the holder accrues dividends, which are paid out when the units vest and the shares are issued. The fair value of time-based and performance-based units is equal to the fair market value of the Company’s common stock on the grant date. The fair value of market-based units is estimated on the grant date using the Monte Carlo simulation model.
A summary of changes in the Company’s nonvested RSUs and related information for the year ended December 31, 2022 is presented below:
UnitsWeighted
Average
Grant-Date
Fair Value
Nonvested at December 31, 2020111,901 $32.85 
Granted86,713 $47.11 
Vested(12,994)$33.48 
Forfeited(3,050)$33.71 
Nonvested at December 31, 2021182,570 $40.05 
Granted136,928 $35.80 
Vested(22,566)$39.04 
Nonvested at December 31, 2022296,932 $38.16 
Share Awards: Restricted share awards provide for the immediate issuance of shares of Company common stock to the recipient, with such shares held in escrow until certain conditions are met. Share awards provide for vesting requirements that include time-based, performance-based, or market-based conditions. Recipients of restricted shares do not pay any cash consideration to the Company for the shares and the holders of the restricted shares have voting rights. For share awards issued under the equity incentive plan approved in 2018, the holder accrues dividends, which are paid out when the shares vest. The fair value of time-based and performance-based share awards is equal to the fair market value of the Company’s common stock on the grant date. The fair value of market-based share awards is estimated on the grant date using the Monte Carlo simulation model.
A summary of changes in the Company’s nonvested RSAs and related information for the years ended December 31, 2022, 2021 and 2020 is presented below:
SharesWeighted
Average
Grant-Date
Fair Value
Nonvested at January 1, 2020889,017 $36.96 
Granted299,007 $33.64 
Vested(231,805)$35.01 
Forfeited(90,588)$36.50 
Nonvested at December 31, 2020865,631 $36.38 
Granted257,298 $44.83 
Vested(324,222)$37.57 
Forfeited(75,696)$36.76 
Nonvested at December 31, 2021723,011 $38.57 
Granted262,571 $35.32 
Vested(335,115)$38.58 
Forfeited(109,104)$33.39 
Nonvested at December 31, 2022541,363 $37.89 
As of December 31, 2022, there was $14.5 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average period of 1.7 years. The total fair value, as measured on the date of vesting, of shares vested during the years ended December 31, 2022, 2021, and 2020 was $13.8 million, $12.6 million, and $8.1 million, respectively.
The Company expenses awards of shares on a straight-line basis over the related vesting term of the award. For the years ended December 31, 2022, 2021 and 2020, the Company recognized pre-tax share-based compensation expense of $16.2 million, $14.9 million and $10.7 million, respectively.

Historical Timeline

Fiscal YearFiled
2022Feb 24, 2023Showing above
2021Feb 25, 2022
2020Feb 26, 2021
2019Feb 27, 2020
2018Feb 28, 2019
2017Mar 1, 2018

About Stock Compensation Disclosures

Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.

Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.

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