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Note 11 - Share Based Compensation and Employee Benefit Plans

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

11. SHARE BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS:

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan that allows eligible employees to contribute up to $10,625 of their base earnings every six months toward the semi-annual purchase of the Company’s Class A Common Stock. The employee’s purchase price is 85% of the lesser of the closing price of the Class A Common Stock on the first business day or the last business day of the semi-annual offering period, as reported by The NASDAQ Global Select Market. Employees may purchase shares having a fair market value of up to $25,000 (measured as of the first day of each semi-annual offering period) for each calendar year. Under the Employee Stock Purchase Plan, there are approximately 250,500 shares remaining of the 900,000 shares of the Company’s Class A Common Stock that have been reserved for issuance. The Company issued 64,090 shares under the Employee Stock Purchase Plan during the year ended December 31, 2014 and 79,681 shares during the year ended December 31, 2013. Of the 6,297 employees eligible to participate, 837 elected to participate in the plan as of December 31, 2014.

Non-Employee Director Stock Option Plan

On May 16, 2006, the Board of Directors and shareholders adopted the Rush Enterprises, Inc. 2006 Non-Employee Director Stock Option Plan (the “Director Plan”), reserving 1,500,000 shares of Class A Common Stock for issuance upon exercise of any awards granted under the plan. This Director Plan was Amended and Restated on May 20, 2008 to expand the type of award that may be granted under the plan to include Class A Common Stock awards. The Director Plan was also amended on May 18, 2010 to reduce the number of shares reserved for issuance under the plan by 1,000,000 shares of Class A Common Stock.

The Director Plan is designed to attract and retain highly qualified non-employee directors. Prior to 2008, each non-employee director received options to purchase 20,000 shares of the Company’s Class A Common Stock upon their respective date of appointment and each year on the date that they are elected or reelected by the shareholders to serve on the Board of Directors. Each option has a ten year term from the grant date and vested immediately. Currently, each non-employee director receives a grant of the Company’s Class A Common Stock equivalent to a compensation value of $125,000. In 2013, three non-employee directors received a grant of 4,512 shares of the Company’s Class A Common Stock and one non-employee director received a grant of 2,707 shares of the Company’s Class A Common Stock and $50,000 cash, for total compensation equivalent to $125,000. In 2014, four non-employee directors received a grant of 3,877 shares of the Company’s Class A Common Stock, one non-employee director received a grant of 3,101 shares of the Company’s Class A Common Stock and $25,000 cash, for total compensation equivalent to $125,000, and one non-employee director received a grant of 2,326 shares of the Company’s Class A Common Stock and $50,000 cash, for total compensation equivalent to $125,000. Under the Director Plan, there are approximately 218,000 shares remaining for issuance of the 500,000 shares of the Company’s Class A Common Stock that have been reserved for issuance. The Company granted 20,935 shares of Class A Common Stock under the Director Plan during the year ended December 31, 2014 and 16,243 shares of Class A Common Stock under the Director Plan during the year ended December 31, 2013.

Employee Incentive Plans

In May 2007, the Board of Directors and shareholders adopted the Rush Enterprises, Inc. 2007 Long-Term Incentive Plan (the “2007 Incentive Plan”). The 2007 Incentive Plan provides for the grant of stock options (which may be nonqualified stock options or incentive stock options for tax purposes), stock appreciation rights issued independent of or in tandem with such options (“SARs”), restricted stock awards and performance awards. The 2007 Incentive Plan replaced the Rush Enterprises, Inc. Long-Term Incentive Plan (“Incentive Plan”) effective May 22, 2007. The 2007 Incentive Plan was Amended and Restated on May 20, 2014 to increase the number of shares available for issuance under the plan to 6,050,000 shares of Class A Common Stock and 1,450,000 shares of Class B Common Stock.

The aggregate number of shares of common stock subject to stock options or SARs that may be granted to any one participant in any year under the 2007 Incentive Plan is 100,000 shares of Class A Common Stock or 100,000 shares of Class B Common Stock. Each option, granted pursuant to the 2007 Incentive Plan, has a ten year term from the grant date and vests in three equal annual installments beginning on the third anniversary of the grant date. The Company has 6,050,000 shares of Class A Common Stock and 1,450,000 shares of Class B Common Stock reserved for issuance upon exercise of any awards granted under the Company’s 2007 Incentive Plan. As of December 31, 2014, approximately 1,805,000 shares of Class A Common Stock and 1,013,000 shares of Class B Common Stock are available for issuance upon exercise of any awards granted under the Company’s 2007 Incentive Plan. The Company issues new shares of its Class A or Class B Common Stock upon the exercise of stock options or vesting of restricted stock units. During the year ended December 31, 2014, the Company granted 459,058 options to purchase Class A Common Stock, 25,550 restricted Class A Common Stock units and 207,370 restricted Class B Common Stock units under the 2007 Incentive Plan. During the year ended December 31, 2013, the Company granted 400,633 options to purchase Class A Common Stock and 241,930 restricted Class A Common Stock units under the 2007 Incentive Plan.

Valuation and Expense Information

Stock-based compensation expense related to stock options, restricted stock awards, restricted stock units and employee stock purchases was $11.3 million for the year ended December 31, 2014, $8.6 million for the year ended December 31, 2013, and $7.3 million for the year ended December 31, 2012.

Cash received from options exercised and shares purchased under all share-based payment arrangements was $12.5 million for the year ended December 31, 2014, $10.0 million for the year ended December 31, 2013, and $5.1 million for the year ended December 31, 2012.

A summary of the Company’s stock option activity and related information for the year ended December 31, 2014, follows:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
Options	Shares			Price		Life (in Years)		Value

Balance of Outstanding Options at January 1, 2014		3,642,156		$	16.41
Granted		459,058			30.27
Exercised		(902,238	)		12.21
Forfeited		(16,000	)		26.86

Balance of Outstanding Options at December 31, 2014		3,182,976		$	19.55		6.02	$	39,792,666

Expected to vest after December 31, 2014		1,950,078		$	23.61		7.49	$	16,465,041
Vested and exercisable at December 31, 2014		1,114,912		$	12.47		3.43	$	22,420,955

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the weighted-average of the closing price as of December 31, 2014, of the Company’s Class A common of $32.05. The total intrinsic value of options exercised was $18.7 million during the year ended December 31, 2014, $10.5 million during the year ended December 31, 2013, and $5.6 million during the year ended December 31, 2012.

A summary of the status of the number of shares underlying Company’s non-vested stock options as of December 31, 2014, and changes during the year ended December 31, 2014, follows:

				Weighted
				Average
	Number of			Grant Date
Non-vested Shares	Shares			Fair Value

Non-vested at January 1, 2014		2,152,940		$	9.13
Granted		459,058			15.86
Vested		(557,934	)		5.97
Forfeited		(16,000	)		13.43

Non-vested at December 31, 2014		2,038,064		$	11.48

The total fair value of vested options was $3.3 million during the year ended December 31, 2014, $3.4 million during the year ended December 31, 2013, and $2.4 million during the year ended December 31, 2012. The weighted-average grant date fair value of options granted was $15.86 per share during the year ended December 31, 2014, $12.69 per share during the year ended December 31, 2013, and $10.95 per share during the year ended December 31, 2012.

Stock Awards

The Company granted restricted stock units to its employees under the 2007 Incentive Plan and unrestricted stock awards to its non-employee directors under the Director Plan during the year ended December 31, 2014. The shares granted to employees vest in three equal installments on the first, second and third anniversary of the grant date and are forfeited in the event the recipient’s employment or relationship with the Company is terminated prior to vesting. The fair value of the restricted stock awards and units to the Company’s employees is amortized to expense on a straight-line basis over the restricted stock’s vesting period. The shares granted to non-employee directors are expensed on the grant date.

The following table presents a summary of the Company’s non-vested restricted stock awards and non-vested restricted stock units outstanding at December 31, 2014:

				Weighted
				Average				Weighted
				Remaining		Aggregate		Average
				Contractual		Intrinsic		Grant Date
Stock Awards and Units	Shares			Life (in Years)		Value		Fair Value

Outstanding Non-vested shares at January 1, 2014		302,015						$	21.81
Granted		253,855							26.81
Vested		(152,520	)						22.95
Forfeited		(1,000	)						25.76

Outstanding Non-vested at December 31, 2014		402,350			8.71	$	11,553,831	$	24.53

Expected to vest after December 31, 2014		398,268			8.71	$	11,459,524

The total fair value of the shares issued upon the vesting of stock awards during the year ended December 31, 2013 was $3.5 million. The weighted-average grant date fair value of stock awards and units granted was $26.81 per share during the year ended December 31, 2014, $22.12 per share during the year ended December 31, 2013, and $21.98 per share during the year ended December 31, 2012.

As of December 31, 2014, there was $15.8 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Incentive Plan and the 2007 Incentive Plan. That cost is expected to be recognized over a weighted-average period of 2.7 years.

Defined Contribution Plan

The Company has a defined contribution plan (the “Rush 401k Plan”), which is available to all Company employees and the employees of certain affiliates. Each employee who has completed 90 days of continuous service is entitled to enter the Rush 401k Plan on the first day of the following month. Participating employees may contribute from 1% to 50% of total gross compensation. However, certain highly compensated employees are limited to a maximum contribution of 15% of total gross compensation. Effective January 1, 2011, for the first 10% of an employee’s contribution, the Company contributed an amount equal to 15% of the employees’ contributions for those employees with less than five years of service and an amount equal to 30% of the employees’ contributions for those employees with more than five years of service. Effective February 1, 2012, for the first 10% of an employee’s contribution, the Company contributed an amount equal to 20% of the employees’ contributions for those employees with less than five years of service and an amount equal to 40% of the employees’ contributions for those employees with more than five years of service. The Company incurred expenses related to the Rush 401k Plan of approximately $5.2 million during the year ended December 31, 2014, $4.4 million during the year ended December 31, 2013, and $3.7 million during the year ended December 31, 2012.

Deferred Compensation Plan

On November 6, 2010 the Board of Directors of the Company adopted the Rush Enterprises, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) pursuant to which selected employees and directors may elect to defer a portion of their annual compensation. The Deferred Compensation Plan also provides the Company with the discretion to make matching contributions to participants’ accounts. The Company established a rabbi trust to finance obligations under the Deferred Compensation Plan with corporate-owned variable life insurance contracts. Participants are 100% vested in their respective deferrals and the earnings thereon. The first deferral election period began on January 1, 2011. The Company’s liability related to the Deferred Compensation Plan was $3.0 million on December 31, 2014 and $1.7 million on December 31, 2013. The related cash surrender value of the life insurance contracts was $2.9 million on December 31, 2014 and $1.6 million on December 31, 2013.

The Company currently does not provide any post-retirement benefits nor does it provide any post-employment benefits.

- 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.

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