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Share-based Payment Arrangements | 6 Months Ended
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Jun. 27, 2020
Share-based Payment Arrangements |
(3) | Share-based Payment Arrangements
As of June 27, 2020, the Company had two employee equity incentive plans, the 2002 employee stock option and stock incentive plan (the “ESOSIP”) and the 2011 equity incentive plan (the “2011 EIP”). No further grants can be made under the ESOSIP. The Company also has a stock compensation plan for members of its Board of Directors, the Amended and Restated 2013 Directors Stock Compensation Plan (as amended and restated as of May 17, 2016, the “2013 DSCP”). 6,000,000 shares of the Company’s common stock were authorized for issuance under the 2011 EIP and 115,000 shares of the Company’s common stock were authorized for issuance under the 2013 DSCP. The ESOSIP, 2011 EIP and 2013 DSCP are each referred to herein as a “Plan,” and, collectively, as the “Plans.” Amounts recognized in the financial statements with respect to these Plans are as follows (in thousands):
|  | Twenty Six Weeks Ended |  |  | Thirteen Weeks Ended |
|  | June 27, 2020 |  |  | June 29, 2019 |  |  | June 27, 2020 |  |  | June 29, 2019 |
Total cost of the Plans during the period |  | $ | 1,201 |  |  | $ | 3,368 |  |  | $ | 570 |  |  | $ | 1,430 |
Amount of related income tax benefit recognized during the period |  |  | (1,135 | ) |  |  | (3,734 | ) |  |  | (262 | ) |  |  | (672 | )
Net cost of the Plans during the period |  | $ | 66 |  |  | $ | (366 | ) |  | $ | 308 |  |  | $ | 758 |
Included in income tax benefits recognized in the twenty-six-week periods ended June 27, 2020 and June 29, 2019 were excess tax benefits from stock-based awards of $829,000 and $2,871,000, respectively. As of June 27, 2020, there were 60,586 shares of the Company’s common stock reserved for issuance under the 2013 DSCP and 3,683,524 shares of the Company’s common stock reserved for issuance in the aggregate under the ESOSIP and 2011 EIP. Restricted Stock Units The following table summarizes information regarding the Company’s outstanding restricted stock unit (“RSU”) awards with either a performance condition or a market condition under the Plans:
|  | Number of RSUs |  |  | Weighted Average Grant Date Fair Value |
Outstanding at December 28, 2019 |  |  | 198,875 |  |  | $ | 84.37 |
Granted |  |  | 59,478 |  |  | $ | 102.66 |
Shares earned in excess of target (1) |  |  | 11,648 |  |  | $ | 77.00 |
Vested shares, including shares earned in excess of target |  |  | (76,290 | ) |  | $ | 73.44 |
Forfeited |  |  | (10,987 | ) |  | $ | 100.55 |
Outstanding at June 27, 2020 |  |  | 182,724 |  |  | $ | 93.44 |
(1) | Represents shares earned in excess of target under the February 2, 2017 RSU awards as actual results exceeded the target under the awards as a result of fiscal year 2019 results.
During the twenty-six-week period ended June 27, 2020, the Company granted RSUs with a performance condition. Outstanding RSUs at both December 28, 2019 and June 27, 2020 include RSUs with a performance condition and RSUs with a market condition, as further described below and in the Company’s 2019 Annual Report on Form 10-K. RSUs with a performance condition granted on January 31, 2020 may vest on January 31 of 2023, 2024 and 2025 based on growth in operating income and pre-tax income per diluted share from continuing operations attributable to Landstar System, Inc. and subsidiary as compared to the results from the 2019 fiscal year. The Company recognized approximately ($308,000) and $2,062,000 of share-based compensation (benefit)/expense related to RSU awards in the twenty-six-week periods ended June 27, 2020 and June 29, 2019, respectively. As of June 27, 2020, there was a maximum of $35.3 million of total unrecognized compensation cost related to RSU awards granted under the Plans with an expected average remaining life of approximately 3.3 years. With respect to RSU awards with a performance condition, the amount of future compensation expense to be recognized will be determined based on future operating results. Stock Options The following table summarizes information regarding the Company’s outstanding stock options under the Plans:
|  | Number of Options |  |  | Weighted Average Exercise Price per Share |  |  | Weighted Average Remaining Contractual Term (years) |  |  | Aggregate Intrinsic Value (000s) |
Options outstanding at December 28, 2019 |  |  | 44,467 |  |  | $ | 51.24 |  |  |  |  |  |  |  |  |
Exercised |  |  | (16,517 | ) |  | $ | 47.70 |  |  |  |  |  |  |  |  |
Options outstanding at June 27, 2020 |  |  | 27,950 |  |  | $ | 53.33 |  |  |  | 2.1 |  |  | $ | 1,514 |
Options exercisable at June 27, 2020 |  |  | 27,950 |  |  | $ | 53.33 |  |  |  | 2.1 |  |  | $ | 1,514 |
The total intrinsic value of stock options exercised during the twenty-six-week periods ended June 27, 2020 and June 29, 2019 was $1,071,000 and $1,269,000, respectively. As of June 27, 2020, there was no unrecognized compensation cost related to stock options granted under the Plans. Non-vested Restricted Stock and Deferred Stock Units The following table summarizes information regarding the Company’s outstanding shares of non-vested restricted stock and Deferred Stock Units (defined below) under the Plans:
|  | Number of Shares and Deferred Stock Units |  |  | Weighted Average Grant Date Fair Value |
Non-vested at December 28, 2019 |  |  | 64,808 |  |  | $ | 98.24 |
Granted |  |  | 26,604 |  |  | $ | 111.88 |
Vested |  |  | (27,619 | ) |  | $ | 98.91 |
Forfeited |  |  | (2,351 | ) |  | $ | 106.34 |
Non-vested at June 27, 2020 |  |  | 61,442 |  |  | $ | 103.54 |
The fair value of each share of non-vested restricted stock issued and Deferred Stock Unit granted under the Plans is based on the fair value of a share of the Company’s common stock on the date of grant. Shares of non-vested restricted stock are generally subject to vesting in three equal annual installments either on the first, second and third anniversary of the date of the grant or the third, fourth and fifth anniversary of the date of the grant, or 100% on the first or fifth anniversary of the date of the grant. For restricted stock awards granted under the 2013 DSCP plan, each recipient may elect to defer receipt of shares and instead receive restricted stock units (“Deferred Stock Units”), which represent contingent rights to receive shares of the Company’s common stock on the date of recipient separation from service from the Board of Directors, or, if earlier, upon a change in control event of the Company. Deferred Stock Units become vested 100% on the first anniversary of the date of the grant. Deferred Stock Units do not represent actual ownership in shares of the Company’s common stock and the recipient does not have voting rights or other incidents of ownership until the shares are issued. However, Deferred Stock Units do contain the right to receive dividend equivalent payments prior to settlement into shares. As of June 27, 2020, there was $4,841,000 of total unrecognized compensation cost related to non-vested shares of restricted stock and Deferred Stock Units granted under the Plans. The unrecognized compensation cost related to these non-vested shares of restricted stock and Deferred Stock Units is expected to be recognized over a weighted average period of 2.1 years.

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- Definition The entire disclosure for share-based payment arrangement. + 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 + Details
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