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Share-Based Payments | 12 Months Ended
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Dec. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Shared-Based Payments | Share-Based Payments The following is a brief description of each of our share-based compensation plans: 2014 Omnibus Stock Plan The Parent's 2014 Omnibus Stock Plan ("Stock Plan") was approved effective as of May 1, 2014 by stockholders on April 23, 2014. Under the Stock Plan, the Parent's Board of Directors' Salary and Employee Benefits Committee ("SEBC") may grant qualified and nonqualified stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units ("RSUs"), stock grants, and other awards valued in whole or in part by reference to the Parent's common stock, in such amounts and with such terms and conditions as it shall determine, subject to the provisions of the Stock Plan. Each award granted under the Stock Plan (except unconditional stock grants and stock grants issued under the Parent's Non-Employee Directors' Compensation and Deferral Plan, as amended and restated effective as of May 1, 2014) shall be evidenced by an agreement containing such restrictions as the SEBC may, in its sole discretion, deem necessary or desirable and which are not in conflict with the terms of the Stock Plan. The maximum exercise period for an option grant under this plan is 10 years from the date of the grant. During 2014, we granted 4,023 RSUs and had no forfeitures under the Stock Plan. No options to purchase common stock were granted in 2014 under the Stock Plan. As of December 31, 2014, 3,500,000 shares of the Parent's common stock were authorized under the Stock Plan and 3,491,894 shares remained available for issuance under the Stock Plan. For RSUs granted under the Stock Plan in 2014, dividend equivalent units ("DEUs") are earned during the vesting period. The DEUs are reinvested in the Parent's common stock at fair value on each dividend payment date. We accrued DEUs equivalent to 43 shares of the Parent's common stock in 2014. No shares were issued pursuant to vested DEUs in 2014. The DEUs are subject to the same vesting period and conditions set forth in the award agreements for the related RSUs. 2005 Omnibus Stock Plan The Parent's 2005 Omnibus Stock Plan was approved effective as of April 1, 2005 by stockholders on April 27, 2005, and was amended and restated effective as of May 1, 2010 on April 28, 2010 ("2005 Stock Plan"). With the approval of the 2014 Stock Plan, no further grants are available under the 2005 Stock Plan, although awards outstanding under the 2005 Stock Plan continue in effect according to the terms thereof and any applicable award agreements. In addition, with the 2005 Stock Plan's approval, no further grants were available under the: (i) Parent's Stock Option Plan III, as amended ("Stock Option Plan III"); (ii) Parent's Stock Option Plan for Directors, as amended ("Stock Option Plan for Directors"); or (iii) Parent's Stock Compensation Plan for Non-employee Directors, as amended ("Stock Compensation Plan for Non-employee Directors"), but awards outstanding under these plans continue in effect according to the terms of those plans and any applicable award agreements. Under the 2005 Stock Plan, the SEBC could grant stock options, SARs, restricted stock, RSUs, phantom stock, stock bonuses, and other awards in such amounts and with such terms and conditions as it determined, subject to the provisions of the 2005 Stock Plan. Each award granted under the 2005 Stock Plan (except unconditional stock grants and the cash component of Director compensation) was evidenced by an agreement containing such restrictions as the SEBC, in its sole discretion, deemed necessary or desirable and which were not in conflict with the terms of the 2005 Stock Plan. The maximum exercise period for an option granted under this plan was 10 years from the date of the grant. We granted, net of forfeitures, 354,357 RSUs in 2014, 376,163 RSUs in 2013, and 326,213 RSUs in 2012 under the 2005 Stock Plan. No options to purchase common stock were granted in 2014, 2013, or 2012. As of December 31, 2014, 3,035,652 shares of the Parent's common stock were in the reserve for the 2005 Stock Plan. During the vesting period, DEUs are earned on RSUs. The DEUs are reinvested in the Parent's common stock at fair value on each dividend payment date. We accrued DEUs equivalent to 24,010 shares of the Parent's common stock in 2014, 23,505 shares in 2013, and 32,558 shares in 2012. In addition, 30,991 shares of the Parent's common stock were issued pursuant to vested DEUs in 2014, 39,296 shares were issued pursuant to vested DEUs in 2013, and 48,224 shares were issued pursuant to vested DEUs in 2012. The DEUs are subject to the same vesting period and conditions set forth in the award agreements for the related RSUs. Cash Incentive Plan The Parent's Cash Incentive Plan was approved effective April 1, 2005 by stockholders on April 27, 2005, and amended and restated effective as of May 1, 2010 and May 1, 2014 (the “Cash Incentive Plan”) pursuant to stockholder approvals on April 28, 2010 and April 23, 2014, respectively. Under the Cash Incentive Plan, the SEBC may grant cash incentive units in such amounts and with such terms and conditions as it shall determine, subject to the provisions of the Cash Incentive Plan. The initial dollar value of these grants will be adjusted to reflect the percentage increase or decrease in the total shareholder return on the Parent's common stock over a specified performance period. In addition, for certain grants, the number of cash incentive units granted will be increased or decreased to reflect our performance on specified indicators as compared to targeted peer companies. Each award granted under the Cash Incentive Plan shall be evidenced in such form as the SEBC may, in its sole discretion, deem necessary or desirable, subject to the terms of the Cash Incentive Plan. We granted, net of forfeitures, 60,305 cash incentive units during 2014, 55,365 cash incentive units during 2013, and 46,961 cash incentive units during 2012. Stock Option Plan III As of December 31, 2014, there were 223,440 shares of the Parent's common stock in the reserve for Stock Option Plan III, under which future grants ceased being available with the approval of the 2005 Stock Plan. Under Stock Option Plan III, employees were granted qualified and nonqualified stock options, with or without SARs, and restricted or unrestricted stock: (i) at not less than fair value on the date of grant, and (ii) subject to certain vesting restrictions determined by the SEBC. Restricted stock awards could be subject to achievement of performance objectives as determined by the SEBC. The maximum exercise period for an option grant under this plan was 10 years from the date of the grant. Stock Option Plan for Directors As of December 31, 2014, 36,000 shares of the Parent's common stock remained in the reserve for the Stock Option Plan for Directors, under which future grants ceased being available with the approval of the 2005 Stock Plan. Non-employee directors participated in this plan and automatically received an annual nonqualified option to purchase 6,000 shares of the Parent's common stock at not less than fair value on the date of grant, which is typically on March 1. Options under this plan vested on the first anniversary of the grant and must be exercised by the tenth anniversary of the grant. Stock Compensation Plan for Non-employee Directors As of December 31, 2014, there were 94,290 shares of the Parent's common stock available for issuance pursuant to outstanding stock option awards under the Stock Compensation Plan for Non-employee Directors, under which future grants ceased being available with the approval of the 2005 Stock Plan. Under the Stock Compensation Plan for Non-employee Directors, directors could elect to receive a portion of their annual compensation in shares of the Parent's common stock. There were no issuances under this plan in 2014, 2013, and 2012. Employee Stock Purchase Plan On April 29, 2009, the Parent’s stockholders approved the Parent’s Employee Stock Purchase Plan (2009) (“ESPP”). This plan replaced the previous employee stock purchase savings plan under which no further purchases could be made as of July 1, 2009. Under the ESPP, there were 1,500,000 shares of the Parent's common stock authorized and 764,098 shares available for purchase as of December 31, 2014. The ESPP is available to all employees who meet the plan's eligibility requirements. The ESPP provides for the issuance of options to purchase shares of common stock. The purchase price is the lower of: (i) 85% of the closing market price at the time the option is granted; or (ii) 85% of the closing price at the time the option is exercised. Shares are generally issued on June 30 and December 31 of each year. Under the ESPP, we issued 106,832 shares to employees during 2014, 122,951 shares during 2013, and 129,081 shares during 2012. Agent Stock Purchase Plan On July 27, 2010, the SEBC approved the Parent’s Amended and Restated Stock Purchase Plan for Independent Insurance Agencies ("Agent Plan") which made immaterial amendments to the plan approved by stockholders on April 26, 2006. Under the Agent Plan, there were 3,000,000 shares of the Parent’s common stock authorized and 2,019,296 shares available for purchase as of December 31, 2014. The Agent Plan provides for quarterly offerings in which our independent retail insurance agencies and wholesale general agencies, and certain eligible persons associated with the agencies, with contracts with the Insurance Subsidiaries can purchase the Parent's common stock at a 10% discount with a one year restricted period during which the shares purchased cannot be sold or transferred. Under the Agent Plan, we issued 78,724 shares in 2014, 86,388 shares in 2013, and 89,723 shares in 2012, and charged to expense $0.2 million in each year, with a corresponding income tax benefit of $0.1 million in each year. A summary of the stock option transactions under our share-based payment plans is as follows:
|  | Number of Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life in Years |  | Aggregate Intrinsic Value ($ in thousands)
Outstanding at December 31, 2013 |  | 903,439 |  |  | $ | 19.75 |  |  |  |  |  |
Granted in 2014 |  | — |  |  | — |  |  |  |  |  |
Exercised in 2014 |  | 161,940 |  |  | 20.41 |  |  |  |  |  |
Forfeited or expired in 2014 |  | 6,960 |  |  | 28.09 |  |  |  |  |  |
Outstanding at December 31, 2014 |  | 734,539 |  |  | $ | 19.52 |  |  | 3.42 |  | $ | 5,695 |
Exercisable at December 31, 2014 |  | 734,539 |  |  | $ | 19.52 |  |  | 3.42 |  | $ | 5,695 |
The total intrinsic value of options exercised was $0.8 million during 2014, $1.3 million in 2013, and $0.8 million in 2012. A summary of the RSU transactions under our share-based payment plans is as follows:
|  | Number of Shares |  | Weighted Average Grant Date Fair Value
Unvested RSU awards at December 31, 2013 |  | 1,096,780 |  |  | $ | 18.73 |
Granted in 2014 |  | 374,963 |  |  | 21.58 |
Vested in 2014 |  | 378,150 |  |  | 17.47 |
Forfeited in 2014 |  | 16,583 |  |  | 19.19 |
Unvested RSU awards at December 31, 2014 |  | 1,077,010 |  |  | $ | 20.18 |
As of December 31, 2014, total unrecognized compensation expense related to unvested RSU awards granted under our stock plans was $4.7 million. That expense is expected to be recognized over a weighted-average period of 1.6 years. The total intrinsic value of RSUs vested was $8.5 million for 2014, $9.1 million for 2013, and $8.4 million for 2012. In connection with the vested RSUs, the total value of the DEU shares that vested was $0.7 million in 2014, and $0.9 million during both 2013 and 2012. At December 31, 2014, the liability recorded in connection with our Cash Incentive Plan was $21.9 million. The fair value of the liability is re-measured at each reporting period through the settlement date of the awards, which is three years from the date of grant based on an amount expected to be paid. A Monte Carlo simulation is performed to approximate the projected fair value of the cash incentive units that, in accordance with the Cash Incentive Plan, is adjusted to reflect our performance on specified indicators as compared to targeted peer companies. The remaining cost associated with the cash incentive units is expected to be recognized over a weighted average period of 1.1 years. The cash incentive unit payments made were $9.0 million in 2014, $4.7 million in 2013, and $3.0 million in 2012. In determining expense to be recorded for stock options granted under our share-based compensation plans, the fair value of each option award is estimated on the date of grant using the Black Scholes option valuation model ("Black Scholes"). The following are the significant assumptions used in applying Black Scholes: (i) the risk-free interest rate, which is the implied yield currently available on U.S. Treasury zero-coupon issues with an equal remaining term; (ii) the expected term, which is based on historical experience of similar awards; (iii) the dividend yield, which is determined by dividing the expected per share dividend during the coming year by the grant date stock price; and (iv) the expected volatility, which is based on the volatility of the Parent's stock price over a historical period comparable to the expected term. In applying Black Scholes, we use the weighted average assumptions illustrated in the following table:
|  | ESPP
|  | 2014 |  | 2013 |  | 2012
Risk-free interest rate |  | 0.07 | % |  | 0.11 |  | 0.12
Expected term |  | 6 months |  |  | 6 months |  | 6 months
Dividend yield |  | 2.0 | % |  | 2.4 |  | 2.9
Expected volatility |  | 21 | % |  | 19 |  | 24
The grant date fair value of RSUs is based on the market price of our common stock on the grant date, adjusted for the present value of our expected dividend payments. The expense recognized for share-based awards is based on the number of shares or units expected to be issued at the end of the performance period and the grant date fair value, and is amortized over the requisite service period. The weighted-average fair value of options and stock per share, including RSUs granted for the Parent's stock plans, during 2014, 2013, and 2012 is as follows:
|  | 2014 |  | 2013 |  | 2012
RSUs |  | $ | 21.58 |  |  | 21.03 |  |  | 17.62 |
ESPP: |  |  |  |  |  |  |  |
Six month option |  | 1.24 |  |  | 0.97 |  |  | 1.05 |
Discount of grant date market value |  | 3.87 |  |  | 3.24 |  |  | 2.70 |
Total ESPP |  | 5.11 |  |  | 4.21 |  |  | 3.75 |
Agent Plan: |  |  |  |  |  |  |  |  |
Discount of grant date market value |  | 2.42 |  |  | 2.40 |  |  | 1.76 |
Share-based compensation expense charged against net income before tax was $18.6 million for the year ended December 31, 2014 with a corresponding income tax benefit of $6.2 million. Share-based compensation expense that was charged against net income before tax was $19.9 million for the year ended December 31, 2013 and $13.8 million for the year ended December 31, 2012 with corresponding income tax benefits of $6.8 million and $4.8 million, respectively.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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