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Share-Based Payments | 12 Months Ended
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Dec. 31, 2019
Share-based Payment Arrangement [Abstract] |
Share-based Payment Arrangement [Text Block] | Share-Based Payments Active Plans As of December 31, 2019, the following four plans were available for the issuance of share-based payment awards:
• | The 2014 Omnibus Stock Plan, As Amended and Restated Effective as of May 2, 2018 (the "Stock Plan");
• | The Cash Incentive Plan, As Amended and Restated as of May 1, 2014 (the "Cash Plan");
• | The Employee Stock Purchase Plan (2009) ("ESPP"); and
• | The Amended and Restated Stock Purchase Plan for Independent Insurance Agencies (2010), Amended and Restated as of February 1, 2017 (the "Agent Plan").
The following table provides information regarding the approval of these plans:
Plan | Approvals
Stock Plan | Approved effective as of May 1, 2014 by stockholders on April 23, 2014. Most recently amended and restated plan was approved effective May 2, 2018 by stockholders on May 2, 2018.
Cash Plan | Approved effective April 1, 2005 by stockholders on April 27, 2005. Most recently amended and restated plan was approved effective May 1, 2014 by stockholders on April 23, 2014.
ESPP | Approved by stockholders on April 29, 2009 effective July 1, 2009.
Agent Plan | Approved by stockholders on April 26, 2006. Most recently amended and restated plan was approved on December 13, 2016 by the Parent's Board of Directors' Salary and Employee Benefits Committee. The amendment was effective February 1, 2017.
The types of awards that can be issued under each of these plans are as follows:
Plan | Types of Share-Based Payments Issued
Stock Plan | 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. The maximum exercise period for an option grant under this plan is 10 years from the date of the grant. Dividend equivalent units ("DEUs") are earned during the vesting period on RSU grants. The DEUs are reinvested in the Parent's common stock at fair value on each dividend payment date. The requisite service period for grants to employees under this plan is the lesser of: (i) the stated vested date, which is typically three years from issuance; or (ii) the date the employee becomes eligible to retire.
Cash Plan | Cash incentive units (“CIUs”). The initial dollar value of each CIU 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 CIUs granted will be increased or decreased to reflect our performance on specified performance indicators compared to targeted peer companies. The requisite service period for grants under this plan is the lesser of: (i) the stated vested date, which is typically three years from issuance; or (ii) the date the employee becomes eligible to retire.
ESPP | Enables employees to purchase shares of the Parent’s 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.
Agent Plan | Quarterly offerings to 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. Only our independent retail insurance agencies and wholesale general agencies, and certain eligible persons associated with the agencies, are eligible to participate in this plan.
Shares authorized and available for issuance as of December 31, 2019 are as follows:
As of December 31, 2019 | Authorized | Available for Issuance | Awards Outstanding
Stock Plan | 4,750,000 |  | 3,208,968 |  | 760,639 |
ESPP | 1,500,000 |  | 356,229 |  | — |
Agent Plan | 3,000,000 |  | 1,728,471 |  | — |
Retired Plans The following plans are closed for the issuance of new awards, although awards outstanding continue in effect according to the terms of the applicable award agreements:
December 31, 2019 | Types of Share-Based Payments Issued | Reserve Shares | Awards Outstanding 1
Plan
2005 Omnibus Stock Plan ("2005 Stock Plan") | Qualified and nonqualified 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. The maximum exercise period for an option grant under this plan is 10 years from the date of the grant. DEUs are earned during the vesting period on RSU grants. The DEUs are reinvested in the Parent's common stock at fair value on each dividend payment date. | 1,985,129 |  | 59,729 |
Parent's Stock Compensation Plan for Non-employee Directors ("Directors Stock Compensation Plan") | Directors could elect to receive a portion of their annual compensation in shares of the Parent's common stock. | 44,468 |  | 44,468 |
1 Awards outstanding under the 2005 Stock Plan consisted of 32,906 shares deferred by our non-employee directors and 26,823 stock options. RSU Transactions 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, 2018 |  | 846,305 |  |  | $ | 44.00 |
Granted in 2019 |  | 265,680 |  |  | 63.60 |
Vested in 2019 |  | (337,525 | ) |  | 36.08 |
Forfeited in 2019 |  | (27,735 | ) |  | 51.89 |
Unvested RSU awards at December 31, 2019 |  | 746,725 |  |  | $ | 53.48 |
As of December 31, 2019, total unrecognized compensation expense related to unvested RSU awards granted under our Stock Plan was $8.9 million. That expense is expected to be recognized over a weighted-average period of 1.7 years. The total intrinsic value of RSUs vested was $22.0 million for 2019, $18.0 million for 2018, and $16.0 million for 2017. In connection with vested RSUs, the total value of the DEUs that vested was $0.8 million in 2019 and 2018, and $0.9 million in 2017. Option Transactions A summary of the stock option transactions under our 2005 Stock Plan is as follows:
|  | Number of Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life in Years |  | Aggregate Intrinsic Value ($ in thousands)
Outstanding at December 31, 2018 |  | 126,735 |  |  | $ | 14.37 |  |  |  |  |  |
Granted in 2019 |  | — |  |  | — |  |  |  |  |  |
Exercised in 2019 |  | (99,912 | ) |  | 13.74 |  |  |  |  |  |
Forfeited or expired in 2019 |  | — |  |  | — |  |  |  |  |  |
Outstanding at December 31, 2019 |  | 26,823 |  |  | $ | 16.71 |  |  | 0.33 |  | $ | 1,300 |
Exercisable at December 31, 2019 |  | 26,823 |  |  | $ | 16.71 |  |  | 0.33 |  | $ | 1,300 |
The total intrinsic value of options exercised was $5.2 million in 2019, $4.5 million in 2018, and $4.0 million in 2017. CIU Transactions The liability recorded in connection with our Cash Plan was $8.6 million at December 31, 2019 and $21.6 million at December 31, 2018. The decrease of $13 million in the liability recorded is primarily due to the structural changes we made to our Cash Plan in early 2017. The remaining cost associated with the CIUs is expected to be recognized over a weighted average period of 1.1 years. The CIU payments made were $18.4 million in 2019, $20.2 million in 2018, and $14.2 million in 2017. ESPP and Agent Plan Transactions A summary of ESPP and Agent Plan share issuances is as follows:
| 2019 | 2018 | 2017
ESPP Issuances | 72,952 |  | 70,448 |  | 75,093 |
Agent Plan Issuances | 47,888 |  | 41,134 |  | 49,794 |
Fair Value Measurements 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. The grant date fair value of each option award is estimated 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
|  | 2019 |  | 2018 |  | 2017
Risk-free interest rate |  | 2.33 | % |  | 1.88 |  | 1.07
Expected term |  | 6 months |  |  | 6 months |  | 6 months
Dividend yield |  | 1.2 | % |  | 1.3 |  | 1.3
Expected volatility |  | 26 | % |  | 18 |  | 24
The weighted-average fair value of options and stock per share, including RSUs granted under the Parent's stock plans, during 2019, 2018, and 2017 was as follows:
|  | 2019 |  | 2018 |  | 2017
RSUs |  | $ | 63.60 |  |  | 55.96 |  |  | 42.66 |
ESPP: |  |  |  |  |  |  |  |
Six month option |  | 4.32 |  |  | 2.67 |  |  | 2.73 |
Discount of grant date market value |  | 9.99 |  |  | 8.50 |  |  | 7.06 |
Total ESPP |  | 14.31 |  |  | 11.17 |  |  | 9.79 |
Agent Plan: |  |  |  |  |  |  |  |  |
Discount of grant date market value |  | 7.00 |  |  | 5.99 |  |  | 5.04 |
The fair value of the CIU liability is remeasured 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 CIUs that, in accordance with the CIU agreements established under the Cash Plan, is adjusted to reflect our performance on specified indicators compared to targeted peer companies. Expense Recognition The following table provides share-based compensation expense in 2019, 2018, and 2017:
($ in millions) | 2019 |  | 2018 |  | 2017
Share-based compensation expense, pre-tax | $ | 24.5 |  |  | 19.3 |  |  | 31.2 |
Income tax benefit, including the benefit related to stock grants that vested during the year | (8.2 | ) |  | (7.0 | ) |  | (15.0 | )
Share-based compensation expense, after-tax | $ | 16.3 |  |  | 12.3 |  |  | 16.2 |

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