OFG BANCORPOFG

OFG BANCORP Stock Compensation Disclosure

10-KFiled Feb 25, 20263 min read
STOCK-BASED COMPENSATION PLAN
The Omnibus Plan provides for stock-based compensation incentives through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, and dividend equivalents, as well as stock-based performance awards to key employees, officers, and directors.
The activity in outstanding options for 2025, 2024, and 2023 is set forth below:
Year Ended December 31,
202520242023
Number
Of
Options		Weighted
Average
Exercise
Price		Number
Of
Options		Weighted
Average
Exercise
Price		Number
Of
Options		Weighted
Average
Exercise
Price
Beginning of year1,400 $17.44 16,600 $16.92 234,950 $16.38 
Options exercised(1,400)17.44 (15,200)16.88 (218,350)16.34 
End of year— $17.44 1,400 $17.44 16,600 $16.92 
There were no options granted during 2025, 2024 and 2023. The average fair value of each option granted would have been estimated at the date of the grant using the Black-Scholes option pricing model. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no restrictions and are fully transferable and negotiable in a free trading market. Black-Scholes does not consider the employment, transfer or vesting restrictions that are inherent in OFG’s stock options. Use of an option valuation model, as required by GAAP, includes highly subjective assumptions based on long-term predictions, including the expected stock price volatility and average life of each option grant.
OFG grants share unit awards that are based on performance and service. The restricted stock units granted under the Omnibus Plan predominantly vest over three years commencing at the date of grant, some in one third increments on each of the first three anniversaries of the grant date and others under a cliff vesting at the end of the three years, provided that the employee remains continuously employed with the OFG during that time. The performance shares granted under the Omnibus Plan consist of the opportunity to receive shares of OFG’s common stock provided that OFG achieves certain goals during a three-year performance cycle. The goals will be based on two metrics weighted equally: the Tangible Book Value (“TBV”) and the 3-years average Return on Average Tangible Common Equity (“ROATCE”). TBV measures OFG’s net asset value per share and average ROATCE measures how profitable OFG is relative to its total average tangible common equity. The TBV and average ROATCE metrics are equally weighted and work independently. The number of shares that will ultimately vest ranges from 50% to a 150% of target based on both performance (TBV and average ROATCE) conditions. The performance shares vest at the end of the three-year performance cycle.
The following table summarizes the activity in restricted and performance shares under the Omnibus Plan for 2025, 2024 and 2023:
Year Ended December 31,
202520242023
Restricted
Units and Performance Shares
Weighted
Average
Grant Date
Fair Value
Restricted
Units and Performance Shares
Weighted
Average
Grant Date
Fair Value
Restricted
Units and Performance Shares
Weighted
Average
Grant Date
Fair Value
Beginning of year378,290 $32.61 410,997 $25.43 408,832 $22.27 
Restricted units granted132,731 37.06 290,193 35.57 204,048 27.84 
Restricted units lapsed(153,342)28.82 (268,406)25.31 (181,692)20.85 
Restricted units forfeited(6,273)32.01 (54,494)30.17 (20,191)25.18 
End of year351,406 $32.58 378,290 $32.61 410,997 $25.43 
During the year ended December 31, 2025, 58,985 shares of restricted stock (2024 - 162,451; 2023 - 106,350) and 73,746 performance shares (2024 - 127,742; 2023 - 97,698) were awarded under the Omnibus Plan. The total unrecognized compensation cost related to non-vested restricted units and performance shares at December 31, 2025 was $8.3 million and is expected to be recognized over a weighted-average period of 1.5 years. At December 31, 2025, there were 1,441,308 shares of common stock available for future grants under the Omnibus Plan.

Historical Timeline

Fiscal YearFiled
2025Feb 25, 2026Showing above
2024Feb 27, 2025
2023Feb 26, 2024
2022Feb 24, 2023
2021Feb 25, 2022

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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