XML 35 R21.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Share-Based Compensation | 12 Months Ended
--- | ---
Dec. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Share-Based Compensation | Share-Based Compensation In February 2015, the Company adopted the 2015 Incentive Award Plan (the "2015 Plan"), replacing the 2005 Equity Incentive Plan (the "2005 Plan") which expired in January 2015. The 2015 Plan was approved at the Company's Annual Meeting of Shareholders in May 2015. A maximum of 4,900,000 shares of common stock under the 2015 Plan are authorized for issuance upon exercise of stock options, stock appreciation rights and other awards, or upon vesting of RSU or deferred stock awards. As of December 31, 2018, the Company had 75,250 RSUs and 80,000 stock options granted and outstanding and 4,744,750 shares of common stock available for future grant under the 2015 Plan. The following table presents a summary of cash received, compensation costs recognized and excess tax expense (benefit), related to the Company's share-based awards:
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
|  | (Amounts in thousands)
Cash received from stock option exercises |  | $ | 358 |  |  | $ | 2,162 |  |  | $ | 1,632 |
Compensation cost, all share-based awards |  | 145 |  |  | 60 |  |  | 142 |
Excess tax expense (benefit), all share-based awards |  | 4 |  |  | 8 |  |  | (913 | )
Stock Option Awards Stock option awards become exercisable at a rate of 25% per year beginning one year from the date granted, are granted at the closing price of the Company's stock on the date of grant, and expire after 10 years. In February 2018, the Compensation Committee of the Company's Board of Directors awarded a total of 80,000 stock options to four senior executives under the 2015 Plan which will vest over the four-year requisite service period. The fair values of these stock options were estimated on the date of grant using a closed-form option valuation model (Black-Scholes). No stock options were awarded in 2017 and 2016 under the 2015 Plan. The following table provides the assumptions used in the calculation of grant-date fair values of these stock options based on the Black-Scholes option pricing model:
Weighted-average grant-date fair value | $ | 8.09 |
Expected volatility | 33.18 | %
Risk-free interest rate | 2.62 | %
Expected dividend yield | 5.40 | %
Expected term in months | 72 |
Expected volatility is based on historical volatility of the Company’s stock over the term of the stock options. The Company estimated the expected term of stock options, which represents the period of time that stock options granted are expected to be outstanding, by using historical exercise patterns and post-vesting termination behavior. The risk free interest rate is determined based on U.S. Treasury yields with equivalent remaining terms in effect at the time of the grant. The following table presents a summary of the stock option activity for the year ended December 31, 2018:
| Shares |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value (in 000’s)
Outstanding at January 1, 2018 | 42,500 |  |  | $ | 44.72 |  |  |  |  |
Granted | 80,000 |  |  | $ | 43.01 |  |  |  |  |
Exercised | (8,000) |  |  | $ | 44.75 |  |  |  |  |
Canceled or expired | (15,000 | ) |  | $ | 48.52 |  |  |  |  |
Outstanding at December 31, 2018 | 99,500 |  |  | $ | 42.77 |  |  | 7.9 |  | $ | 890 |
Exercisable at December 31, 2018 | 19,500 |  |  | $ | 41.78 |  |  | 3.2 |  | $ | 194 |
The aggregate intrinsic values in the table above represent the total pre-tax intrinsic value (the difference between the Company’s closing stock price and the stock option exercise price, multiplied by the number of in-the-money stock options) that would have been received by the stock option holders had all stock options been exercised on December 31, 2018. The aggregate intrinsic values of stock options exercised were $42,000, $371,000, and $591,000 for 2018, 2017, and 2016, respectively. The total fair value of stock options vested during 2018, 2017, and 2016 was $0, $142,000, and $142,000, respectively. The following table presents information regarding stock options outstanding at December 31, 2018:
| Options Outstanding |  | Options Exercisable
Range of Exercise Prices | Number of Options |  | Weighted-Average Remaining Contractual Life (Years) |  | Weighted- Average Exercise Price |  | Number of Options |  | Weighted- Average Exercise Price
$33.61-$42.46 | 7,000 |  | 0.7 |  | $ | 35.48 |  |  | 7,000 |  | $ | 35.48 |
$43.01-$45.30 | 92,500 |  | 8.5 |  | $ | 43.32 |  |  | 12,500 |  | $ | 45.30 |
As of December 31, 2018, the Company had $0.5 million of unrecognized compensation expense related to stock options awarded under the 2015 Plan, which will be recognized ratably over the remaining vesting period of approximately 3.1. Restricted Stock Unit Awards In February 2016, the Compensation Committee of the Company’s Board of Directors granted performance-based vesting RSU awards to the Company’s senior management and key employees under the 2015 Plan. The following table presents the RSU grants summary at December 31, 2018:
Grant year | 2016 |
Three-year performance period ending December 31, | 2018 |
Vesting shares, target (net of forfeited) | 75,250 |
Vesting shares, maximum (net of forfeited) | 141,094 |
No RSUs were awarded in 2018 and 2017 under the 2015 Plan. The following table presents a summary of RSU awards activity, based on target vesting, during the years indicated:
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
| Shares |  | Weighted- Average Fair Value per Share |  | Shares |  | Weighted- Average Fair Value per Share |  | Shares |  | Weighted- Average Fair Value per Share
Outstanding at January 1 | 169,000 |  |  | $ | 53.66 |  |  | 271,000 |  |  | $ | 51.09 |  |  | 263,250 |  |  | $ | 45.94 |
Granted | — |  |  | $ | — |  |  | — |  |  | $ | — |  |  | 95,750 |  |  | $ | 53.49 |
Vested | — |  |  | $ | — |  |  | (82,000 | ) |  | $ | 45.17 |  |  | (78,500 | ) |  | $ | 36.82 |
Forfeited/Canceled | (8,000 | ) |  | $ | 53.49 |  |  | (20,000 | ) |  | $ | 53.62 |  |  | (9,500 | ) |  | $ | 50.46 |
Expired | (85,750 | ) |  | $ | 53.80 |  |  | — |  |  | $ | — |  |  | — |  |  | $ | — |
Outstanding at December 31 | 75,250 |  |  | $ | 53.51 |  |  | 169,000 |  |  | $ | 53.66 |  |  | 271,000 |  |  | $ | 51.09 |
The RSU awards vest at the end of a three-year performance period beginning with the year of the grant, and then only if, and to the extent that, the Company’s performance during the performance period achieves the threshold established by the Compensation Committee of the Company’s Board of Directors. Performance thresholds are based on the Company’s cumulative underwriting income, annual underwriting income, and net earned premium growth. As of December 31, 2018, 20,500 target RSUs granted in 2016 have been forfeited because the recipients were no longer employed by the Company. Expired shares represent shares that did not meet the vesting requirements. The fair value of each RSU grant was determined based on the closing price of the Company's common stock on the grant date for awards classified as equity and on each reporting date for awards classified as a liability. Compensation cost is recognized based on management’s best estimate of the performance goals that will be achieved. If the minimum performance goals are not met, no compensation cost will be recognized and any recognized compensation cost would be reversed. In March 2018, based on certification by the Compensation Committee of the Company's Board of Directors of the results of the three-year performance period ended December 31, 2017, all of the outstanding RSUs granted in 2015 expired unvested because the Company did not meet the minimum three-year performance threshold. In March 2017, a total of approximately $3.6 million was paid upon vesting of 61,445 RSUs awarded in 2014 resulting from the attainment of performance goals above the target threshold during the three-year performance period ended December 31, 2016. In February 2016, 88,074 shares of common stock, net of 58,822 shares withheld for payroll taxes, were issued upon vesting of 146,896 RSUs awarded in 2013 resulting from the attainment of performance goals above the target threshold during the three-year performance period ended December 31, 2015. At December 31, 2016, the Company determined that it was probable that the Company's Board of Directors would modify the payment method for the vested 2014 grant awards and pay for the vested awards in cash in lieu of shares of the Company's common stock. As a result, the 2014 grants were reclassified from equity to liability awards at December 31, 2016. $3.4 million of the amount previously recognized in additional paid-in capital for the 2014 grant awards was reclassified to other liabilities in the consolidated balance sheets at December 31, 2016. Additional $0.2 million was reclassified from additional paid-in capital to other liabilities at the vesting date of February 28, 2017 for the 2014 grant awards, based on the additional amount of awards vested from December 31, 2016 to the vesting date.

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration