CENTRAL PACIFIC FINANCIAL CORPCPF

CENTRAL PACIFIC FINANCIAL CORP Stock Compensation Disclosure

10-KFiled Feb 27, 20262 min read
13. SHARE-BASED COMPENSATION

In accordance with ASC 718, compensation expense is recognized only for those shares expected to vest, based on the Company's historical experience and future expectations. The following table summarizes the effects of share-based compensation for options and awards granted under the Company's equity incentive plans for each of the periods presented:

 Year Ended December 31,
(Dollars in thousands)202520242023
Salaries and employee benefits$2,484 $2,165 $2,641 
Directors stock awards588 432 399 
Income tax benefit(1,081)(742)(957)
Net share-based compensation effect$1,991 $1,855 $2,083 

Upon exercise or vesting of a share-based award, if the tax deduction exceeds the compensation cost that was previously recorded for financial statement purposes, this will result in an excess tax benefit. The Company recognizes all excess tax
benefits or tax deficiencies through the income statement as income tax expense/benefit. The Company recorded income tax benefits of $0.3 million, $0.1 million, and $0.2 million in 2025, 2024, and 2023, respectively, as a result of restricted stock units vesting during the respective years.

The Company's share-based compensation arrangements are described below:

Equity Incentive Plans

The Company has adopted equity incentive plans for the purpose of granting options, restricted stock and other equity based awards for the Company's common stock to directors, officers and other key individuals. Option awards are generally granted with an exercise price equal to the market price of the Company's common stock at the date of grant; those option awards generally vest based on three or five years of continuous service and have 10-year contractual terms. Certain option and share awards provide for accelerated vesting if there is a change in control (as defined in the stock option plans below). The Company has historically issued new shares of common stock upon exercises of stock options and purchases of restricted awards.

The Company adopted in January 2023 and shareholders approved in April 2023, the 2023 Stock Compensation Plan ("2023 Plan") making available 1,140,000 shares for grants to employees and directors. Upon adoption of the 2023 Plan, all unissued shares from the previous plan were frozen and no new grants were granted under the previous plan. Shares may continue to be settled under the previous plan pursuant to previously outstanding awards. New shares are issued from the 2023 Plan.

A total of 818,271 and 950,328 shares were available for future grants under our 2023 Plan as of December 31, 2025 and 2024, respectively, and 1,108,639 shares were previously available for future grants under our previous stock compensation plan as of December 31, 2023.
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Historical Timeline

Fiscal YearFiled
2025Feb 27, 2026Showing above
2019Feb 25, 2020
2017Feb 28, 2018
2016Mar 1, 2017
2015Feb 25, 2016

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.

Other Available Disclosures

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