Stock-Based Compensation Plans

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

The Company currently maintains the Simpson Manufacturing Co., Inc. Amended and Restated 2011 Incentive Plan (the “2011 Plan”) as its only equity incentive plan. Under the 2011 Plan, no more than 16.3 million shares of the Company’s common stock in aggregate may be issued including shares already issued pursuant to prior awards granted under the 2011 Plan. Shares of common stock underlying awards to be issued pursuant to the 2011 Plan are registered under the Securities Act. Under the 2011 Plan, the Company may grant restricted stock and restricted stock units, although the Company currently intends to award primarily performance-based and/or time-based restricted stock units ("RSUs").

The following table shows the Company’s stock-based compensation activity:



	Fiscal Years Ended December 31,
(in thousands)	2019		2018		2017
Stock-based compensation expense recognized in operating expenses	$	9,480	$	10,356	$	12,744
Tax benefit of stock-based compensation expense in provision for income taxes	2,330		2,476		4,575
Stock-based compensation expense, net of tax	$	7,150	$	7,880	$	8,169
Fair value of shares vested	$	16,760	$	15,372	$	11,043
Proceeds to the Company from the exercise of stock options	$	—	$	695	$	6,610

The Company allocates stock-based compensation expense amongst the cost of sales, research and development and other engineering expense, selling expense, or general and administrative expenses based on the job functions performed by the employees to whom the stock-based compensation is awarded. Stock-based compensation cost capitalized in inventory was immaterial for all periods presented.

The following table summarizes the Company’s unvested restricted stock unit activity for the year ended December 31, 2019:



	Shares (in thousands)		Weighted- Average Price		Aggregate Intrinsic Value * (in thousands)
Unvested Restricted Stock Units (RSUs)	Shares (in thousands)		Weighted- Average Price		Aggregate Intrinsic Value * (in thousands)
Outstanding at January 1, 2019	604		$	41.37	$	32,669
Awarded	221		57.73
Vested	(275	)	37.71
Forfeited	(87	)	57.06
Outstanding at December 31, 2019	462		$	47.75	$	37,065
Outstanding and expected to vest at December 31, 2019	458		$	47.69	$	36,763

* The intrinsic value for outstanding and expected to vest is calculated using the closing price per share of $80.23, as reported by the New York Stock Exchange on December 31, 2019.

During the year ended December 31, 2019, the Company granted 220,660 RSUs to the Company’s employees, including officers, and seven non-employee directors at an estimated weighted average fair value of $57.73 per share, based on the closing price (adjusted for certain market factors, and to a lesser extent, the present value of dividends) of the Company’s common stock on the grant date. The RSUs granted to the Company’s employees may be time-based, performance-based or time- and performance-based. Certain of the performance-based RSUs are granted to officers and key employees, where the number of performance-based awards to be issued is based on the achievement of certain Company performance criteria established in the PSU agreement over a cumulative three year period. These awards cliff vest after three years. In addition, these same officers and key employees also receive time-based RSUs, which vest pursuant to a three-year graded vesting schedule. Time- and performance based RSUs granted to the Company’s employees excluding officers and certain key employees, vest ratably over the four year life of the award, and require the underlying shares of the Company’s common stock to be subject to a performance-based adjustment during the first year.

The total intrinsic value of RSUs vested during the years ended December 31, 2019, 2018 and 2017 was $16.7 million, $9.8 million and $10.8 million, respectively, based on the market value on the vest date.

As of December 31, 2019, the Company’s aggregate unamortized stock compensation expense was approximately $7.7 million, which is entirely attributable to unvested RSUs and is expected to be recognized in expense over a weighted-average period of approximately 1.8 years.

Stock Bonus Plan

The Company also maintains a stock bonus plan, the Simpson Manufacturing Co., Inc. 1994 Employee Stock Bonus Plan (the “Stock Bonus Plan”), whereby it awards shares of the Company’s common stock to employees, who do not otherwise participate in any of the Company’s equity-based incentive plans and meet minimum service requirements as determined by the Committee. The number of shares awarded, as well as the required period of service, is determined by the Committee. Shares have generally been awarded under the Stock Bonus Plan following the year in which the respective employee reached his or her tenth, twentieth, thirtieth, fortieth or fiftieth anniversary of employment with the Company or any direct or indirect subsidiary thereof. The Company awarded 7,000 shares for service through 2019, (4,000 shares to be issued and 3,000 shares of which are expected to be settled in cash for the Company’s foreign employees). In 2018 and 2017, the Company awarded 9,000 and 12,000 shares, respectively. As a result, we recorded pre-tax compensation charges of $0.8 million, $0.8 million and $1.2 million for each of the years ended December 31, 2019, 2018 and 2017, respectively. The charges also include cash bonuses to compensate employees for income taxes payable as a result of the stock bonuses.