Employee Benefits

12 Months Ended

Dec. 31, 2019

NOTE 12 – EMPLOYEE BENEFITS

Healthcare

We participate in multiple healthcare plans, of which our primary plan is partially self-funded with an insurance company paying benefits in excess of stop loss limits per individual. Our healthcare benefit expense (net of employee contributions) was approximately $21.9 million, $17.8 million and $17.4 million for the years ended

December 31, 2019, 2018 and 2017, respectively, for all plans. An accrual for estimated healthcare claims incurred but not reported (“IBNR”) is included within accrued compensation on the Consolidated Balance Sheets and was $2.6 million and $2.3 million as of December 31, 2019 and 2018, respectively.

Workers’ Compensation

We participate in multiple workers’ compensation plans. Under these plans, for a significant portion of our business, we use a high deductible program to cover losses above the deductible amount on a per claim basis. We accrue for the estimated losses occurring from both asserted and unasserted claims. Workers’ compensation liability for premiums is included in other current liabilities on the Consolidated Balance Sheets. Insurance claims and reserves include accruals of estimated settlements for known claims, as well as accruals of actuarial estimates of IBNR claims. In estimating these reserves, historical loss experience and judgments about the expected levels of costs per claim are considered. These claims are accounted for based on actuarial estimates of the undiscounted claims, including IBNR. We believe the use of actuarial methods to account for these liabilities provides a consistent and effective way to measure these highly judgmental accruals.

Workers’ compensation expense totaled $15.4 million, $12.8 million and $13.5 million

for the years ended December 31, 2019, 2018 and 2017, respectively, and is included in cost of sales on the Consolidated Statements of Operations and Comprehensive Income. Workers’ compensation known claims and IBNR reserves included on the Consolidated Balance Sheets were as follows (in thousands)


	As of December 31,
	2019		2018
Included in other current liabilities	$	6,777	$	5,795
Included in other long-term liabilities		10,874		9,447

	$	17,651	$	15,242

We also had an insurance receivable for claims that exceeded the stop loss limit

for fully insured policies

included on the Consolidated Balance Sheets. This receivable offsets an equal liability included within the reserve amounts noted above and was as follows (in thousands):


	As of December 31,
	2019		2018
Included in other non-current assets	$	2,098	$	1,888

Retirement Plans

We participate in multiple 401(k) plans, whereby we provide a matching contribution of wages deferred by employees and can also make discretionary contributions to each plan. Certain plans allow for discretionary employer contributions only. These plans cover substantially all our eligible employees. During the years ended December 31, 2019, 2018 and 2017, we recognized 401(k) plan expenses of $2.0 million, $1.7 million and $1.6 million, respectively, which is included in administrative expenses on the accompanying Consolidated Statements of Operations and Comprehensive Income.

Share-Based Compensation

Common Stock Awards

During the years ended December 31, 2019, 2018 and 2017, we granted approximately

eight

thousand,

five

thousand and

six

thousand shares of restricted stock, respectively, at a price of $52.13, $60.65 and $50.50 per

share, respectively, which represents market price on the grant dates to

non-employee

members of our board of directors. The stock issued in 2019 and 2018 vest over a one year service term whereas the stock issued in 2017 vested on the grant date since there was no service period associated with those awards. Accordingly, we recorded $0.4 million, $0.2 million and $0.3 million in compensation expense for the years ended December 31, 2019, 2018 and 2017, respectively, related to these grants within administrative expenses on the Consolidated Statements of Operations and Comprehensive Income at the time of grant. The weighted-average grant date fair value is the same as the issue price for all shares granted in 2019, 2018 and 2017.

In addition,

in each of

the years ended December 31, 2019, 2018 and 2017, we granted approximately 0.1 million shares of our common stock under our 2014 Omnibus Incentive Plan to our employees. The shares granted during each year ended December 31, 2019, 2018 and 2017 vest in

three

equal installments (rounded to the nearest whole share) annually on April 20

through 2022.

We recorded share-based compensation expense associated with these non-performance-based awards issued to employees of $4.3 million, $4.0 million and $2.7 million for the years ended December 31, 2019, 2018 and 2017, respectively, within administrative expense on the Consolidated Statements of Operations and Comprehensive Income.

As of December 31, 2019, there was $4.8 million of unrecognized compensation expense related to these nonvested common stock awards issued to

non-employee

members of our board of directors and our employees. This expense is subject to future adjustments for forfeitures and is expected to be recognized on a straight-line basis over the remaining weighted-average period of 1.8 years. Shares forfeited are returned as treasury shares and available for future issuances. See the table below for changes in shares and related weighted average fair market value per share.

Employees –

Performance-Based Stock Awards

During the year ended December 31, 2019, we

issued

under our 2014 Omnibus Incentive Plan approximately

thousand shares of our common stock to certain officers, which vest in

two

equal installments on each of April 20, 2020 and April 20, 2021. These shares were issued in connection with the performance-based targets established in 2018. In addition, during the year ended December 31, 2019, we established, and our board of directors approved, performance-based targets in connection with common stock awards to be issued to certain officers in 2020 contingent upon achievement of these targets. Share-based compensation expense associated with these performance-based awards was $3.0 million

$2.0

million

and

$1.0 million

for the years ended December 31 2019

, 2018

and 2017, respectively.

As of December 31, 2019, there was $3.5 million of unrecognized compensation expense related to nonvested performance-based common stock awards. This expense is subject to future adjustments for forfeitures and is expected to be recognized over the remaining weighted-average period of 1.6 years using the graded-vesting method. See the table below for changes in shares and related weighted average fair market value per share.

Employees – Performance-Based Restricted Stock Units

During the year ended December 31, 2018, we established, and our board of directors approved, performance-based stock units in connection with common stock awards which we issued to certain employees during the year ended December 31, 2019. In addition, during the year ended December 31, 2019, we established, and our board of directors approved, performance-based stock units in connection with common stock awards to be issued to certain employees in 2020 contingent upon achievement of a performance target, which was met in 2019, as well as a

one-year

service period. These units will be accounted for as equity-based awards that will be settled with a fixed number of common shares. Share-based compensation expense associated with these performance-based units was $0.7 million

$1.6 million

and $2.6 million

for the years ended December 31 2019

2018

and 2017, respectively.

As of December 31, 2019, there was $0.2 million of unrecognized compensation expense related to nonvested performance-based stock units. This expense is subject to future adjustments for forfeitures and is expected to be recognized on a straight-line basis over the remaining weighted-average period of 0.3 years. See the table below for changes in shares and related weighted average fair market value per share.

Share-Based Compensation Summary

During the years ended December 31, 2019, 2018 and 2017, our employees surrendered approximately 45 thousand, 41 thousand and 11 thousand, respectively, of our common stock to satisfy tax withholding obligations arising in connection with the vesting of common stock awards issued under our 2014 Omnibus Incentive Plan. We recognized excess tax benefits of approximately $0.3 million, $0.5 million and $0.6 million for the years ended December 31, 2019, 2018 and 2017, respectively, within the income tax provision on the Consolidated Statements of Operations and Comprehensive Income.

Amounts for each category of equity-based award for employees as of December 31, 2019 and changes during the year ended December 31, 2019 were as follows:


	Common Stock Awards					Performance-Based Stock Awards					Performance-Based Restricted Stock Units
	Awards			Weighted Average Grant Date Fair Value Per Share		Awards			Weighted Average Grant Date Fair Value Per Share		Units			Weighted Average Grant Date Fair Value Per Share
Nonvested awards/units at December 31, 2018		173,189		$	47.40		115,698		$	52.25		13,248		$	56.05
Granted		88,529			50.94		82,692			45.65		13,933			51.62
Vested		(106,660	)		42.30		(31,404	)		41.00		(12,808	)		56.05
Forfeited/Cancelled		(2,176	)		52.13		(6,697	)		65.60		(1,187	)		53.26

Nonvested awards/units at December 31, 2019		152,882		$	52.93		160,289		$	50.49		13,186		$	51.62

During the years ended December 31, 2019, 2018 and 2017, we recorded the following stock compensation expense, by income statement category (in thousands):


	2019		2018		2017
Cost of sales	$	374	$	846	$	965
Selling		194		451		571
Administrative		8,159		6,549		5,055

	$	8,727	$	7,846	$	6,591

Administrative stock compensation expense includes all stock compensation earned by our administrative personnel, while c

st of sales and selling stock compensation represents all stock compensation earned by our installation and sales employees, respectively.

As of December 31, 2019, approximately 2.2 million of the 3.0 million shares of common stock authorized for issuance were available for issuance under the 2014 Omnibus Incentive Plan.