FIRST BANCORP /PR/FBP

FIRST BANCORP /PR/ Stock Compensation Disclosure

10-KFiled Feb 27, 20266 min read
NOTE 11 – STOCK-BASED
.
COMPENSATION
The
First
BanCorp.
Omnibus
Plan,
which
is
effective
until
May
24,
2026,
provides
for
equity-based
and
non-equity-based
compensation
incentives
(the
“awards”).
The
Omnibus
Plan
authorizes
the
issuance
of
up
to
14,169,807
shares
of
common
stock,
subject
to
adjustments
for
stock
splits,
reorganizations
and
other
similar
events.
As
of
December
31,
2025,
there
were
1,973,213
authorized
shares of
common stock
available for
issuance under
the Omnibus
Plan. The
Corporation’s
Board of
Directors, based
on
the
recommendation
of
the
Compensation
and
Benefits
Committee
of
the
Board,
has
the
power
and
authority
to
determine
those
eligible to receive awards and to establish the terms and conditions of
any awards, subject to various limits and vesting restrictions that
apply to individual and aggregate awards.
Restricted Stock
Under the
Omnibus Plan,
the Corporation
may grant
restricted stock
to plan
participants, subject
to forfeiture
upon the
occurrence
of certain
events until
the dates
specified in
the participant’s
award agreement.
While the
restricted stock
is subject
to forfeiture
and
does
not
contain
non-forfeitable
dividend
rights,
participants
may
exercise
full
voting
rights
with
respect
to
the
shares
of
restricted
stock
granted
to
them.
The
fair
value
of
the
shares
of
restricted
stock
granted
was
based
on
the
market
price
of
the
Corporation’s
common
stock on
the date
of the
respective grant.
The shares
of restricted
stocks granted
to employees
are subject
to the
following
vesting period:
fifty percent
(
50
%) of
those shares
vest on
the
two-year
anniversary of
the grant
date and
the remaining
50
% vest
on
the
three-year
anniversary of
the grant
date. The
shares of
restricted stock
granted to
directors are
generally subject
to vesting
on the
one-year
anniversary of the grant date.
The following
table summarizes
the restricted
stock activity
under the
Omnibus Plan
during the
years ended December
31, 2025,
2024 and 2023:
Year Ended December 31,
2025
2024
2023
Number of
Weighted-
Number of
Weighted-
Number of
Weighted-
shares of
Average
shares of
Average
shares of
Average
restricted
Grant Date
restricted
Grant Date
restricted
Grant Date
stock
Fair Value
stock
Fair Value
stock
Fair Value
Unvested shares outstanding at beginning of year
1,007,621
$
14.39
889,642
$
12.30
938,491
$
9.14
Granted
(1)
463,289
18.47
415,577
17.50
522,801
12.07
Forfeited
(10,793)
16.42
(14,896)
14.07
(63,133)
11.36
Vested
(426,427)
13.16
(282,702)
12.40
(508,517)
6.36
Unvested shares outstanding at end of year
1,033,690
$
16.71
1,007,621
$
14.39
889,642
$
12.30
(1)
Includes restricted stock
awarded to independent
directors of
17,744
;
18,509
and
28,973
shares during 2025,
2024 and 2023,
respectively,
and restricted stock
awarded to employees
of
445,545
;
397,068
and
494,008
shares for
2025, 2024
and 2023,
respectively,
of which
103,560
;
84,122
and
33,718
shares, respectively,
were granted
to retirement-eligible
employees
and thus charged to earnings as of the grant date.
For the
years ended
December 31,
2025, 2024
and 2023,
the Corporation
recognized
$
7.3
million, $
6.2
million and
$
5.7
million,
respectively,
of
stock-based
compensation
expense
related
to
restricted
stock
awards.
As
of
December
31,
2025,
there
was
$
5.6
million of total unrecognized compensation cost related to
unvested shares of restricted stock that the Corporation expects to recognize
over a weighted-average period of
1.5
years.
Performance Units
Under the Omnibus Plan, the Corporation may award
performance units to participants, with each unit representing
the value of one
share
of
the
Corporation’s
common
stock.
These awards, which are granted to executives, have the right to receive dividend
equivalents. Such dividend equivalents accrue during the performance cycle and are paid in cash on the vesting date based upon
achievement of the performance goals.
Performance units granted vest on the third anniversary of the effective date of the award based on actual achievement of two
performance metrics weighted equally: relative total shareholder return (“Relative TSR”), compared to companies that comprise the
KBW Nasdaq Regional Banking Index, and the achievement of a tangible book value per share (“TBVPS”) goal, which is measured
based upon the growth in the tangible book value during the performance cycle, adjusted for certain allowable non-recurring
transactions. The participant may earn 50% of their target opportunity for threshold level performance and up to 150% of their target
opportunity for maximum level performance, based on the individual achievement of each performance goal during a three-year
performance cycle. Amounts between threshold, target and maximum performance will vest in a proportional amount.
The following table summarizes the
performance units activity under
the Omnibus Plan during the
years ended December 31, 2025,
2024 and 2023:
Year Ended
December 31,
2025
2024
2023
Number
Weighted-
Number
Weighted-
Number
Weighted-
of
Average
of
Average
of
Average
Performance
Grant Date
Performance
Grant Date
Performance
Grant Date
Units
Fair Value
Units
Fair Value
Units
Fair Value
Performance units at beginning of year
549,032
$
14.37
534,261
$
12.25
791,923
$
7.36
Additions
(1)
161,744
18.66
165,487
18.39
216,876
12.24
Vested
(2)
(166,669)
13.15
(150,716)
11.26
(474,538)
4.08
Performance units at end of year
544,107
$
16.02
549,032
$
14.37
534,261
$
12.25
(1)
Units
granted
during
the
years
ended
December
31,
2025,
2024
and
2023
are
based
on
the
achievement
of
the
Relative
TSR
and
TBVPS
performance
goals
during
a
three-year
performance
cycle
beginning
January
1,
2025,
January
1,
2024
and
January
1,
2023,
respectively,
and
ending
on
December
31,
2027,
December
31,
2026
and
December
31,
2025,
respectively.
(2)
Units vested during the years
ended December 31, 2025,
2024 and 2023 are related to
performance units granted in 2022,
2021 and 2020, respectively,
that met the pre-established targets
and were settled with shares of common stock reissued from treasury shares.
The
fair
value
of
the
performance
units
awarded,
that
was
based
on
the
TBVPS
goal
component,
was
calculated
based
on
the
market
price
of
the
Corporation’s
common
stock
on
the
respective
date
of
the
grant
and
assuming
attainment
of
100%
of
target
opportunity.
As
of
December
31,
2025,
there
have
been
no
changes
in
management’s
assessment
of
the
probability
that
the
pre-
established TBVPS
goal will
be achieved;
as such,
no cumulative
adjustment to
compensation expense
has been
recognized. The
fair
value
of
the
performance
units
awarded,
that
was
based
on
the
Relative
TSR
component,
was
calculated
using
a
Monte
Carlo
simulation. Since
the Relative
TSR component
is considered
a market
condition, the
fair value
of the
portion of
the award
based on
Relative TSR is not revised subsequent to grant date based on actual performance.
The following table
summarizes the valuation
assumptions used to
calculate the fair
value as of
the grant date
of the Relative
TSR
component of the performance units granted under the Omnibus Plan during the
years ended December 31, 2025, 2024 and 2023:
Year
Ended December 31,
2025
2024
2023
Risk-free interest rate
(1)
3.92
%
4.41
%
3.98
%
Correlation coefficient
74.96
73.80
77.16
Expected dividend yield
(2)
-
-
-
Expected volatility
(3)
31.94
34.65
41.37
Expected life (in years)
2.79
2.78
2.79
(1)
Based on the yield on zero-coupon U.S. Treasury
Separate Trading of Registered Interest and
Principal of Securities as of the grant date for a period equal to the
simulation term.
(2)
Assumes that dividends are reinvested at each ex-dividend date.
(3)
Calculated based on the historical volatility of the Corporation's
stock price with a look-back period equal to the simulation
term using daily stock prices.
For the
years ended
December 31,
2025, 2024
and 2023,
the Corporation
recognized
$
2.8
million, $
2.5
million and
$
2.1
million,
respectively,
of stock-based
compensation expense
related to performance
units. As
of December
31, 2025,
there was $
3.7
million of
total
unrecognized
compensation
cost
related
to
unvested
performance
units
that
the
Corporation
expects
to
recognize
over
a
weighted-average period of
1.7
years.
Shares withheld
During 2025,
the Corporation
withheld
194,647
shares (2024
–
138,460
shares; 2023
–
289,623
shares) of
the restricted
stock and
performance units that
vested during such period
to cover the participants’
payroll and income
tax withholding liabilities; these
shares
are held
as treasury
shares. The
Corporation paid
in cash
any fractional
share of
salary stock
to which
an officer
was entitled.
In the
consolidated financial statements, the Corporation presents shares
withheld for tax purposes as common stock repurchases.

Historical Timeline

Fiscal YearFiled
2025Feb 27, 2026Showing above
2024Feb 28, 2025
2023Feb 28, 2024
2022Feb 28, 2023

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

Income TaxesRevenueEarnings Per ShareFair ValuePP&EGoodwill & IntangiblesLeasesSegmentsDebtCommitmentsNew Standards