Note 17—Deferred Compensation Agreements and Stock-Based Compensation

Primoris Long-Term Retention Plan (“LTR Plan”) — We adopted a long-term retention plan for certain senior managers and executives. The voluntary plan provides for the deferral of one half of the participant’s annual earned bonus for one year. Generally, except in the case of death, disability or involuntary separation from service, the deferred compensation is vested to the participant only if actively employed by us on the payment date of bonus amounts the following year. The amount of compensation deferred under this plan is calculated each year. Total deferred compensation liability under this plan as of December 31, 2018 and 2017 was $7.3 million and $5.7 million, respectively.

Participants in the long term retention plan may elect to purchase our common stock at a discounted price. For bonuses earned in 2018 and 2017, the participants could use up to one sixth of their bonus amount to purchase shares of stock. The purchase price was calculated as 75% of the average market closing price for the month of December 2018 and December 2017, respectively. The discount is treated as compensation to the participant.

Stock-based compensation — In May 2013, the shareholders approved and we adopted the Primoris Services Corporation 2013 Long-term Incentive Equity Plan (“Equity Plan”). Our Board of Directors has granted 403,985 Restricted Stock Units (“Units”) to executives under the Equity Plan. The grants were documented in RSU Award Agreements which provide for a vesting schedule and require continuing employment of the executive. The Units are subject to earlier acceleration, termination, cancellation or forfeiture as provided in the underlying RSU Award Agreement. The table below presents the activity for 2018:


Nonvested RSUs	Units	Weighted Average Grant Date Fair Value per Unit
Balance at December 31, 2017	85,415	$	23.76
Granted	144,920		25.53
Vested	(28,471)		23.76
Balance at December 31, 2018	201,864		25.03

During 2017, 10,000 Units were granted with a weighted-average grant date fair value per unit of $22.90. During 2016, 100,553 Units were granted with a weighted-average grant-date fair value per unit of $23.87. The total fair value of Units that vested during 2018, 2017 and 2016 was $0.7 million, $1.7 million and $0.6 million, respectively.

At December 31, 2018, a total of 202,121 Units were vested. The vesting schedule for the remaining Units is as follows:


		Number of Units
For the Years Ending December 31,		to Vest
2019		57,227
2020		11,067
2021		128,889
2022		2,340
2023		2,341
		201,864

Under guidance of ASC 718, “Compensation — Stock Compensation”, stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the stock-based award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the award).

The fair value of the Units was based on the closing market price of our common stock on the day prior to the date of the grant. Stock compensation expense for the Units is being amortized using the straight-line method over the service period. For the years ended December 31, 2018, 2017, and 2016, we recognized $1.3 million, $1.1 million, and $1.6 million respectively, in compensation expense. At December 31, 2018, approximately $3.7 million of unrecognized compensation expense remains for the Units, which will be recognized over a weighted average period of 2.6 years.

Vested Units accrue “Dividend Equivalents” (as defined in the Equity Plan) which are accrued as additional Units. At December 31, 2018, a total of 5,121 Dividend Equivalent Units were accrued.