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Stock-based Compensation

9 Months Ended

Sep. 30, 2020

9. Stock-Based Compensation

On January 31, 2019, the Board of Directors approved a 2019 long-term incentive compensation program for certain Company executive officers that includes grants of performance-based restricted stock units (“PRSUs”) in addition to time-based restricted stock units (“RSU”). Under the terms of the PRSU Agreement, the number of PRSUs that may be earned depends on the extent to which performance goals for the award are achieved over a three-year performance period, as determined by the Compensation Committee of the Board. The number of PRSUs that may be earned ranges from 0% to 150% of the target award, with no PRSUs earned for below threshold-level performance, 50% of PRSUs earned for threshold-level performance, 100% of PRSUs earned for target-level performance, and 150% of PRSUs earned for maximum-level performance. As of September 30, 2020, PRSU’s granted in 2020 are being accrued at target and PRSU’s granted in 2019 are being accrued above target. The different levels of accrual are commensurate with the projected performance of the respective grant.

For the three months ended September 30, 2020 and 2019, the Company’s net income, as reported, included $0.9 million and $1.2 million, respectively, of stock-based compensation costs, including the benefit or expense of phantom stock awards, and $0.2 million and $0.2 million of income tax benefits, respectively, related to the stock-based compensation plans. For the nine months ended September 30, 2020 and 2019, the Company’s net income, as reported, included $4.3 million and $6.5 million, respectively, of stock-based compensation costs, including the benefit or expense of phantom stock awards, and $1.0 million and $1.5 million of income tax benefits, respectively, related to the stock-based compensation plans.

During the three months ended September 30, 2020, and 2019, the Company did not grant any RSU awards. During the three months ended September 30, 2020, the Company did not grant any PRSU awards. During the three months ended September 30, 2019, the Company granted 8,260 in PRSU awards. During the nine months ended September 30, 2020 and 2019, the Company granted 172,728 and 263,574 in RSU awards, respectively. During the nine months ended September 30, 2020 and 2019, the Company granted 72,143 and 66,130 in PRSU awards, respectively. The Company has not granted stock options since 2009 and at September 30, 2020, had none outstanding.

The Company uses the fair value of the common stock on the date of award to measure compensation cost for restricted stock unit awards. Compensation cost is recognized over the vesting period of the award using the straight-line method.

The following table summarizes the Company’s RSU and PRSU awards at or for the nine months ended September 30, 2020:


	RSU Awards			PRSU Awards
		Weighted-Average			Weighted-Average
		Grant-Date			Grant-Date
	Shares	Fair Value		Shares	Fair Value

Non-vested at December 31, 2019	428,295	$	24.42	34,186	$	22.38
Granted	172,728		19.66	72,143		20.38
Vested	(241,246)		22.38	(35,149)		20.54
Forfeited	(5,545)		24.62	—		—
Non-vested at September 30, 2020	354,232	$	23.48	71,180	$	21.26
Vested but unissued at September 30, 2020	217,642	$	23.26	62,515	$	21.35

As of September 30, 2020, there was $6.3 million of total unrecognized compensation cost related to RSU and PRSU awards granted. That cost is expected to be recognized over a weighted-average period of 2.5 years. The total fair value of awards vested for the three months ended September 30, 2020 and 2019 was $0.2 million and $0.7 million, respectively. The total fair value of awards vested for the nine months ended September 30, 2020 and 2019 was $5.2 million and $6.9

million, respectively. The vested but unissued RSU and PRSU awards consist of awards made to employees and directors who are eligible for retirement. According to the terms of these awards, which provide for vesting upon retirement, these employees and directors have no risk of forfeiture. These shares will be issued at the original contractual vesting and settlement dates.

Phantom Stock Plan: The Company maintains a non-qualified phantom stock plan as a supplement to its profit sharing plan for officers who have achieved the designated level and completed one year of service. The Company adjusts its liability under this plan to the fair value of the shares at the end of each period.

The following table summarizes the Phantom Stock Plan at or for the nine months ended September 30, 2020:


Phantom Stock Plan	Shares	Fair Value
Outstanding at December 31, 2019	109,226	$	21.61
Granted	10,392		14.58
Distributions	(890)		11.73
Outstanding at September 30, 2020	118,728	$	10.52
Vested at September 30, 2020	118,677	$	10.52

The Company recorded stock-based compensation benefit for the Phantom Stock Plan of $0.1 million and $0.2 million for the three months ended September 30, 2020 and 2019, respectively. The total fair value of the distributions from the Phantom Stock Plan was $3,000 and less than $1,000 for the three months ended September 30, 2020 and 2019, respectively.

The Company recorded stock-based compensation benefit for the Phantom Stock Plan of $1.2 million and $0.1 million for the nine months ended September 30, 2020 and 2019, respectively. The total fair value of the distributions from the Phantom Stock Plan was less than $10,000 and $23,000 for the nine months ended September 30, 2020 and 2019, respectively.