OLD NATIONAL BANCORP /IN/ Stock Compensation Disclosure

NOTE 19 – SHARE-BASED COMPENSATION

Our Amended and Restated 2008 Incentive Compensation Plan (the “ICP”), which was shareholder-approved, permits the grant of share-based awards to its employees.  At December 31, 2019, 3.7 million shares were available for issuance.  The granting of awards to key employees is typically in the form of restricted stock awards or units.  We believe that such awards better align the interests of our employees with those of our shareholders.  Total compensation cost that has been charged against income for the ICP was $8.0 million in 2019, $8.1 million in 2018,

and $6.3 million in 2017.  The total income tax benefit was $2.0 million in 2019, $2.0 million in 2018, and $2.4 million in 2017.

Restricted Stock Awards

Restricted stock awards require certain service requirements and commonly have vesting periods of 3 years.  Compensation expense is recognized on a straight-line basis over the vesting period.  Shares are subject to certain restrictions and risk of forfeiture by the participants.

A summary of changes in our nonvested shares for the year follows:

 

 

As of December 31, 2019, there was $4.2 million of total unrecognized compensation cost related to nonvested shares granted under the ICP.  The cost is expected to be recognized over a weighted-average period of 1.8 years.  The total fair value of the shares vested was $3.4 million in 2019, 2018, and 2017.

Restricted Stock Units

Restricted stock units require certain performance requirements and have vesting periods of 3 years.  Compensation expense is recognized on a straight-line basis over the vesting period.  Shares are subject to certain restrictions and risk of forfeiture by the participants.

A summary of changes in our nonvested shares for the year follows:

 

 

As of December 31, 2019, there was $4.1 million of total unrecognized compensation cost related to nonvested shares granted under the ICP.  The cost is expected to be recognized over a weighted-average period of 1.7 years.

Stock Options

Option awards are generally granted with an exercise price equal to the market price of our Common Stock at the date of grant; these option awards have vesting periods ranging from 3 to 5 years and have 10-year contractual terms.

Old National has not granted stock options since 2009.  However, Old National did acquire stock options and stock appreciation rights through prior year acquisitions. Old National recorded no incremental expense associated with the conversion of these options and stock appreciation rights.

A summary of the activity in the stock option plan in 2019 follows:

 

 

At December 31, 2019, the outstanding shares consisted of stock appreciation rights acquired through prior year acquisitions.

 

Information related to the stock option plan during each year follows:

 

 

As of December 31, 2019, all options were fully vested and all compensation costs had been expensed.

Outside Director Stock Compensation Program

Old National maintains a director stock compensation program covering all outside directors.  Compensation shares are earned semi-annually.  Beginning in 2017, any shares awarded to directors are anticipated to be issued from the ICP.  In 2019, 12 thousand shares were issued to directors, compared to 16 thousand shares in 2018, and 20 thousand shares in 2017.