XML 38 R23.htm IDEA: XBRL DOCUMENT

Share-Based Compensation Plans

12 Months Ended

Dec. 31, 2020

Share-Based Compensation Plans [Abstract]

16. SHARE-BASED COMPENSATION PLANS

The Company has a 2020 Stock Incentive Plan (“2020 Employee Plan”), 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”).

The 2020 Employee Plan was established in June 2020. Under the 2020 Employee Plan, 1,400,000 common shares have been authorized to be granted as non-qualified share options, share appreciation rights, restricted share awards or performance share unit awards to officers and key employees of the Company. At December 31, 2020, there were 1,366,900 remaining shares available to be granted under the 2020 Employee Plan. The 2020 Employee Plan replaced a 2010 Employee Plan, which 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, 2020, 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, 2020, 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, 2020 there were 316,702 remaining shares available to be granted under the 2003 Director Plan.

Options and restricted shares granted under the 2020 Employee Plan, 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 2020 Employee Plan and 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 partly on growth in book value per share over the three year vesting period, compared to designated peer companies. The remaining portion 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 2020 Employee Plan, 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 $39,209 thousand, $34,018 thousand and $32,369 thousand for the years ended December 31, 2020, 2019 and 2018, respectively. The corresponding income tax benefit recorded in the consolidated statements of operations and comprehensive income (loss) for share-based compensation was $7,107 thousand, $8,384 thousand and $7,401 thousand for the years ended December 31, 2020, 2019 and 2018, respectively.

For the year ended December 31, 2020, a total of 200,929 restricted shares were granted on February 26, 2020, September 11, 2020, and November 18, 2020, with a fair value of $277.145, $207.505 and $238.0975 per share, respectively. Additionally, 16,120 performance share units were awarded on February 26, 2020, with a fair value of $277.145 per unit. No share options were granted during the year ended December 31, 2020. 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, 2020, 2019 and 2018, the Company recognized $583 thousand, $484 thousand and $403 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, 2020, 2019 and 2018, 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, 2020	170,704	$	87.18
Granted	-		-
Exercised	53,833		85.69
Forfeited/Cancelled/Expired	–		-
Outstanding at December 31, 2020	116,871		87.87	0.7	$	17,089
			.
Exercisable at December 31, 2020	116,871		87.87	0.7	$	17,089

				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

There were no share options granted in 2020, 2019 and 2018. The aggregate intrinsic value (market price less exercise price) of options exercised during the years ended December 31, 2020, 2019 and 2018 was $9,982 thousand, $16,297 thousand and $11,737 thousand, respectively. The cash received from the exercised share options for the year ended December 31, 2020 was $4,613 thousand. The tax benefit realized from the options exercised for the year ended December 31, 2020 was $1,904 thousand.

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

	At December 31, 2020
	Options Outstanding				Options Exercisable
		Weighted-
		Average	Weighted-			Weighted-
	Number	Remaining	Average		Number	Average
Range of	Outstanding	Contractual	Exercise		Exercisable	Exercise
Exercise Prices	at 12/31/20	Life	Price		at 12/31/20	Price
$86.62 - $88.31	44,000	0.2	$	86.62	44,000	$	86.62
$88.32 - $90.48	66,917	1.1		88.32	66,917		88.32
$90.49 - $110.13	5,954	0.5		91.99	5,954		91.99
	116,871	0.7		87.87	116,871		87.87

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

	Years Ended December 31,
	2020			2019			2018
		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,	495,137	$	228.02	414,407	$	217.15	421,261	$	194.01
Granted	200,929		269.86	232,601		232.36	173,065		240.59
Vested	175,413		220.88	138,322		203.41	141,982		178.31
Forfeited	37,226		246.20	13,549		221.35	37,937		212.48
Outstanding at December 31,	483,427		246.60	495,137		228.02	414,407		217.15

As of December 31, 2020, there was $88,233 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, 2020, 2019 and 2018, was $38,745 thousand, $28,135 thousand and $25,317 thousand, respectively. The tax benefit realized from the shares vested for the year ended December 31, 2020 was $8,519 thousand.

In addition to the 2020 Employee Plan, the 2010 Employee Plan, the 2009 Director Plan and the 2003 Director Plan, Group issued 593 common shares in 2020, 459 common shares in 2019 and 480 common shares in 2018 to the Company’s non-employee directors as compensation for their service as directors. These issuances had aggregate values of approximately $125 thousand, $107 thousand and $113 thousand, respectively.

Since its 1995 initial public offering, the Company has issued to certain key employees of the Company 2,718,140 restricted common shares, of which 369,164 restricted shares have been cancelled. The Company has issued to non-employee directors of the Company 175,829 restricted common shares, of which no restricted shares have been cancelled. The Company acquired 66,289, 71,437 and 65,974 common shares at a cost of $17,889 thousand, $14,181 thousand and $14,202 thousand in 2020, 2019 and 2018, 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,
	2020			2019			2018
		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,	34,850	$	-	32,382	$	-	33,454	$	-
Granted	16,120		277.15	16,855		223.45	13,325		242.39
Increase/(Decrease) on vesting units due to performance	(2,227)		-	(3,455)		-	(267)		-
Vested	6,157		277.15	10,922		223.45	12,435		242.39
Forfeited	3,695		-	-		-	1,695		-
Outstanding at December 31,	38,891		-	34,850		-	32,382		-

The Company acquired 2,587, 5,008 and 5,214 common shares at a cost of $717 thousand, $1,119 thousand and $1,264 thousand in 2020, 2019 and 2018, respectively, from employees who chose to pay required withholding taxes on performance shares units settlements by withholding shares.