XML 106 R23.htm IDEA: XBRL DOCUMENT

Share-Based Compensation Plans

12 Months Ended

Dec. 31, 2019

Share-Based Compensation Plans [Abstract]

16. SHARE-BASED COMPENSATION PLANS

The Company has a 2010 Stock Incentive Plan (“2010 Employee Plan”), a 2009 Non-Employee Director Stock Option and Restricted Stock Plan (“2009 Director Plan”) and a 2003 Non-Employee Director Equity Compensation Plan (“2003 Director Plan”).

Under the 2010 Employee Plan, 4,000,000 common shares have been authorized to be granted as non-qualified share options, incentive share options, share appreciation rights, restricted share awards or performance share unit awards to officers and key employees of the Company. At December 31, 2019, there were 2,303,555 remaining shares available to be granted under the 2010 Employee Plan. The 2010 Employee Plan replaced a 2002 Employee Plan, which replaced a 1995 Employee Plan; therefore, no further awards will be granted under the 2002 Employee Plan or the 1995 Employee Plan. Through December 31, 2019, only non-qualified share options, restricted share awards and performance share unit awards had been granted under the employee plans. Under the 2009 Director Plan, 37,439 common shares have been authorized to be granted as share options or restricted share awards to non-employee directors of the Company. At December 31, 2019, there were 34,957 remaining shares available to be granted under the 2009 Director Plan. The 2009 Director Plan replaced a 1995 Director Plan, which expired. Under the 2003 Director Plan, 500,000 common shares have been authorized to be granted as share options or share awards to non-employee directors of the Company. At December 31, 2019 there were 324,913 remaining shares available to be granted under the 2003 Director Plan.

Options and restricted shares granted under the 2010 Employee Plan and the 2002 Employee Plan vest at the earliest of 20% per year over five years or in accordance with any applicable employment agreement. Options and restricted shares granted under the 2003 Director Plan generally vest at 33% per year over three years, unless an alternate vesting period is authorized by the Board. Options and restricted shares granted under the 2009 Director Plan will vest as provided in the award agreement. All options are exercisable at fair market value of the stock at the date of grant and expire ten years after the date of grant.

Performance Share Unit awards granted under the 2010 Employee Plan will vest 100% after three years. The Performance Share Unit awards represent the right to receive between and 0 and 1.75 shares of stock for each unit awarded depending upon performance in relation to certain metrics. The performance share unit valuation will be based 50% on growth in book value per share over the three year vesting period, compared to designated peer companies. The remaining 50% of the performance share valuation will be based upon operating return on equity for each of the separate operating years within the vesting period.

For share options, restricted shares and performance share units granted under the 2010 Employee Plan, the 2002 Employee Plan, the 2009 Director Plan and the 2003 Director Plan, share-based compensation expense recognized in the consolidated statements of operations and comprehensive income (loss) was $34,018 thousand, $32,369 thousand and $30,297 thousand for the years ended December 31, 2019, 2018 and 2017, respectively. The corresponding income tax benefit recorded in the consolidated statements of operations and comprehensive income (loss) for share-based compensation was $8,384 thousand, $7,401 thousand and $14,824 thousand for the years ended December 31, 2019, 2018 and 2017, respectively. In accordance with ASU 2016-09, the income tax effect resulting from the change in the value of share based compensation awards between grant date and settlement date has been recorded as part of the income tax benefit in the consolidation statements of operations and comprehensive income (loss) effective January 1, 2017. Prior to that date, the income tax impact of the change in value of share based compensation awards between grant date and settlement date was recorded within additional paid in capital in the Consolidated Balance Sheets.

For the year ended December 31, 2019, a total of 232,601 restricted shares were granted on February 27, 2019, May 15, 2019, May 23, 2019, September 18, 2019, and November 19, 2019, with a fair value of $223.45, $247.93, $249.83, $260.555 and $266.2325 per share, respectively. Additionally, 16,855 performance share units were awarded on February 27, 2019, with a fair value of $223.45 per unit. No share options were granted during the year ended December 31, 2019. For share options granted during previous years, the fair value per option was calculated on the date of the grant using the Black-Scholes option valuation model.

The Company recognizes, as an increase to additional paid-in capital, a realized income tax benefit from dividends, charged to retained earnings and paid to employees on equity classified non-vested equity shares. In addition, the amount recognized in additional paid-in capital for the realized income tax benefit from dividends on those awards is included in the pool of excess tax benefits available to absorb tax deficiencies on share-based payment awards. For the years ended December 31, 2019, 2018 and 2017, the Company recognized $484 thousand, $403 thousand and $626 thousand, respectively, of additional paid-in capital due to tax benefits from dividends on restricted shares.

A summary of the option activity under the Company’s shareholder approved plans as of December 31, 2019, 2018 and 2017, and changes during the year then ended is presented in the following tables:

				Weighted-
		Weighted-		Average
		Average		Remaining	Aggregate
(Aggregate Intrinsic Value in thousands)		Exercise		Contractual	Intrinsic
Options	Shares	Price/Share		Term	Value
Outstanding at January 1, 2019	279,164	$	83.84
Granted	–		-
Exercised	108,460		78.58
Forfeited/Cancelled/Expired	–		-
Outstanding at December 31, 2019	170,704		87.18	1.4	$	32,376
			.
Exercisable at December 31, 2019	170,704		87.18	1.4	$	32,376

				Weighted-
		Weighted-		Average
		Average		Remaining	Aggregate
(Aggregate Intrinsic Value in thousands)		Exercise		Contractual	Intrinsic
Options	Shares	Price/Share		Term	Value
Outstanding at January 1, 2018	360,364	$	84.10
Granted	-		-
Exercised	81,200		84.99
Forfeited/Cancelled/Expired	-		-
Outstanding at December 31, 2018	279,164		83.84	1.9	$	37,386

Exercisable at December 31, 2018	279,164		83.84	1.9	$	37,386

				Weighted-
		Weighted-		Average
		Average		Remaining	Aggregate
(Aggregate Intrinsic Value in thousands)		Exercise		Contractual	Intrinsic
Options	Shares	Price/Share		Term	Value
Outstanding at January 1, 2017	454,994	$	84.88
Granted	-		-
Exercised	94,630		87.84
Forfeited/Cancelled/Expired	-		-
Outstanding at December 31, 2017	360,364		84.10	2.7	$	49,428

Exercisable at December 31, 2017	360,364		84.10	2.7	$	49,428

There were no share options granted in 2019, 2018 and 2017. The aggregate intrinsic value (market price less exercise price) of options exercised during the years ended December 31, 2019, 2018 and 2017 was $16,297 thousand, $11,737 thousand and $14,130 thousand, respectively. The cash received from the exercised share options for the year ended December 31, 2019 was $8,523 thousand. The tax benefit realized from the options exercised for the year ended December 31, 2019 was $3,198 thousand.

The following table summarizes information about share options outstanding for the period indicated:

	At December 31, 2019
	Options Outstanding				Opotions Exercisable
		Weighted-
		Average	Weighted-			Weighted-
	Number	Remaining	Average		Number	Average
Range of	Outstanding	Contractual	Exercise		Exercisable	Exercise
Exercise Prices	at 12/31/19	Life	Price		at 12/31/19	Price
$84.6300 - $85.6300	31,100	0.2	$	84.63	31,100	$	84.63
$85.6400 - $87.4700	59,900	1.2		86.62	59,900		86.62
$87.4800 - $89.4100	73,750	2.1		88.32	73,750		88.32
$89.4200 - $110.1300	5,954	1.5		91.99	5,954		91.99
	170,704	1.4		87.18	170,704		87.18

The following table summarizes the status of the Company’s non-vested shares and changes for the periods indicated:

	Years Ended December 31,
	2019			2018			2017
		Weighted-			Weighted-			Weighted-
		Average			Average			Average
		Grant Date			Grant Date			Grant Date
Restricted (non-vested) Shares	Shares	Fair Value		Shares	Fair Value		Shares	Fair Value
Outstanding at January 1,	414,407	$	217.15	421,261	$	194.01	435,338	$	164.21
Granted	232,601		-	173,065		240.59	160,185		234.01
Vested	138,322		-	141,982		178.31	152,397		151.80
Forfeited	13,549		-	37,937		212.48	21,865		187.82
Outstanding at December 31,	495,137		-	414,407		217.15	421,261		194.01

As of December 31, 2019, there was $79,780 thousand of total unrecognized compensation cost related to non-vested share-based compensation expense. That cost is expected to be recognized over a weighted-average period of 3.4 years. The total fair value of shares vested during the years ended December 31, 2019, 2018 and 2017, was $28,135 thousand, $25,317 thousand and $23,134 thousand, respectively. The tax benefit realized from the shares vested for the year ended December 31, 2019 was $5,774 thousand.

In addition to the 2010 Employee Plan, the 2009 Director Plan and the 2003 Director Plan, Group issued 459 common shares in 2019, 480 common shares in 2018 and 404 common shares in 2017 to the Company’s non-employee directors as compensation for their service as directors. These issuances had aggregate values of approximately $107 thousand, $113 thousand and $94 thousand, respectively.

Since its 1995 initial public offering, the Company has issued to certain key employees of the Company 2,525,422 restricted common shares, of which 331,938 restricted shares have been cancelled. The Company has issued to non-employee directors of the Company 167,618 restricted common shares, of which no restricted shares have been cancelled. The Company acquired 71,437, 65,974 and 60,453 common shares at a cost of $14,181 thousand, $14,202 thousand and $14,240 thousand in 2019, 2018 and 2017, respectively, from employees who chose to pay required withholding taxes and/or the exercise cost on option exercises or restricted share vestings by withholding shares.

The following table summarized the status of the Company’s non-vested performance share unit awards and changes for the period indicated:

	Years Ended December 31,
	2019			2018			2017
		Weighted-			Weighted-			Weighted-
		Average			Average			Average
		Grant Date			Grant Date			Grant Date
Performance Share Unit Awards	Shares	Fair Value		Shares	Fair Value		Shares	Fair Value
Outstanding at January 1,	32,382	$	-	33,454	$	-	21,223	$	-
Granted	16,855		223.45	13,325		242.39	11,245		234.03
Increase/(Decrease) on vesting units due to performance	(3,455)		-	(267)		-	986		-
Vested	10,922		223.45	12,435		242.39	-		-
Forfeited	-		-	1,695		-	-		-
Outstanding at December 31,	34,850		-	32,382		-	33,454		-

The Company acquired 5,008 and 5,214 common shares at a cost of $1,119 thousand and $1,264 thousand in 2019 and 2018, respectively, from employees who chose to pay required withholding taxes on performance shares units settlements by withholding shares.