Stock Based Compensation
|12 Months Ended|
Dec. 31, 2017
|Stock Based Compensation|
|Stock Based Compensation||
12. Stock‑Based Compensation
Amended and Restated 2004 Stock Incentive Plan
As of December 31, 2017, no additional shares of common stock were reserved for issuance upon the exercise of stock options under the Company’s Amended and Restated 2004 Stock Incentive Plan (the “A&R 2004 Plan”). No further awards are permitted to be issued under the A&R 2004 Plan.
2010 Stock Incentive Plan
In connection with the IPO, in May 2010, the Company’s Board of Directors and stockholders adopted the 2010 Stock Incentive Plan (the “2010 Plan”). The material terms of the performance goals under the 2010 Plan, as amended and restated, were approved by stockholders at the Company’s 2014 annual meeting of stockholders. The 2010 Plan provides for the issuance of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock awards and restricted stock units, any of which may be performance‑based, and for incentive bonuses, which may be paid in cash or stock or a combination of both, to eligible employees, officers, non‑employee directors and other service providers to the Company and its subsidiaries. A maximum of 2,130,000 shares of common stock may be issued pursuant to all awards under the 2010 Plan. As of December 31, 2017, the Company had 1,147,750 shares of common stock available for future issuance of awards under the 2010 Plan. The shares of common stock to be issued under the 2010 Plan will be made available from authorized and unissued Company common stock.
There were no stock options exercised in the years ended December 31, 2017 and 2016. There were 26,350 stock options exercised with respect to the Company’s stock under the A&R 2004 Plan during the year ended December 31, 2015. The option holder paid the Company the required aggregate exercise price of $111 for options exercised at the time of the exercise. Stock options were previously expensed over the vesting period and therefore no additional expense was recorded at the time of the exercise. There were no outstanding stock options at December 31, 2017, 2016 or 2015. There were 10,890 shares that were cancelled during the year ended December 31, 2015.
As of December 31, 2017, December 31, 2016 and December 31, 2015, there were no unexercised stock options.
Restricted stock carries both voting and dividend rights. There was no restricted stock activity in the year ended December 31, 2017. A summary of restricted stock activity for the years ended December 31, 2016 and 2015 is as follows:
The fair value of the Company’s restricted stock awards is the closing stock price on the date of grant. The Company recognized $0, $0 and $385 of compensation expense related to restricted stock awards for the years ended December 31, 2017, 2016, and 2015, respectively. There was no unrecognized compensation expense for shares expected to vest as of December 31, 2017, 2016 and 2015.
Restricted Stock Units
Restricted stock units (“RSUs”) are granted to both non‑employee directors and management. Prior to 2013, RSUs were only issued to directors. However, in 2013, the Company changed the timing and form of management’s annual stock grants and began to grant RSUs to management. For both non‑employee directors and management, RSUs carry dividend equivalent rights but do not carry voting rights. Each RSU represents the right to receive one share of the Company’s common stock and is subject to time based vesting restrictions. Participants are not required to pay any consideration to the Company at either the time of grant of a RSU or upon vesting.
In 2013, the Company’s compensation committee approved a retirement provision for RSUs issued to management. The retirement provision provides that members of management who either (1) are age 65 or older or (2) have at least ten years of service and are at least age 55 will continue to vest in unvested RSUs upon retirement. As the retirement provision does not qualify as a substantive service condition, the Company incurred $619, $528 and $303 in additional expense in the years ended December 31, 2017, 2016 and 2015, respectively, as a result of accelerated stock based compensation expense for employees who meet the thresholds of the retirement provision. The Company’s nominating and governance committee also approved a retirement provision for the RSUs issued to non‑employee directors that accelerates the vesting of such RSUs upon retirement. Such awards are fully expensed immediately upon grant in accordance with ASC 718, as the retirement provision eliminates substantive service conditions associated with the awards.
A summary of RSU activity for the years ended December 31, 2017, 2016 and 2015 is as follows:
The Company recognized $1,732, $1,516 and $1,643 of compensation expense related to the RSU awards in the years ended December 31, 2017, 2016 and 2015, respectively. The unrecognized compensation expense, net of expected forfeitures, calculated under the fair value method for shares that were, as of December 31, 2017, expected to be earned through the requisite service period was approximately $461 and is expected to be recognized through 2020.
Vested RSUs are “settled” by the delivery to the participant or a designated brokerage firm of one share of common stock per vested RSU as soon as reasonably practicable following a termination of service of the participant that constitutes a separation from service, and in all events no later than the end of the calendar year in which such termination of service occurs or, if later, two and one‑half months after such termination of service.
Performance Share Unit Awards
The Company granted performance share units as performance based awards under the 2010 Plan in the first quarter of 2017, 2016 and 2015 that are subject to performance conditions. Upon meeting the prescribed performance conditions, in the first quarter of the year subsequent to grant, employees will be issued RSUs of which one third will vest immediately upon issuance. The remaining RSUs issued will be subject to vesting over the two years following the end of the performance period. In accordance with ASC 718, such awards are being expensed over the vesting period from the date of grant through the requisite service period, based upon the most probable outcome. As of December 31, 2017, the performance conditions for share units granted in the year ended December 31, 2017 have been met. Thus, in the first quarter of 2018, management estimates that 64,040 performance share units will be converted into RSUs. In the first quarter of 2017 and 2016 there were 87,876 and 71,428 performance share units that converted into RSUs, respectively. Upon conversion, the first third of the RSUs issued will immediately vest and be converted into common shares. The remaining two thirds of the RSUs issued will vest ratably over the remaining two‑year vesting period. The fair value per share of the awards is the closing stock price on the date of grant, which was $33.60, $19.88 and $22.63 for the 2017, 2016 and 2015 grants, respectively. The Company recognized $1,768, $1,382 and $1,247 of compensation expense related to the awards granted in the years ended December 31, 2017, 2016, and 2015, respectively. The unrecognized compensation expense calculated under the fair value method for shares that were, as of December 31, 2017, expected to be recognized through the requisite service period was $424 and is expected to be recognized through 2020.
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.
Reference 1: http://www.xbrl.org/2003/role/presentationRef