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Note 6 - Share-based Payments

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Text Block]

6. Share-Based Payments

Stock Incentive Awards

The following stock incentive awards were granted under the 2014 Stock Incentive Plan during the six months ended June 30, 2020.

Award	Grant Date	Shares/ Units Granted		Weighted Average Grant-Date Fair Value per Award		Vesting
Restricted Stock Units Granted:
With Dividend Equivalent:
To Key Management Employees	February 3, 2020		3,000	$	54.0450	25% per year through February 6, 2024
To Executive Officers	February 12, 2020		15,300	$	54.0607	25% per year through February 6, 2024
Without Dividend Equivalent:
To Nonexecutive Employees	April 20, 2020		14,975	$	40.18	100% April 8, 2024
Stock Performance Awards Granted:
Under Executive Agreement	February 12, 2020		47,600	$	47.10	December 31, 2022
Under Legacy Agreement	February 12, 2020		7,400	$	52.20	December 31, 2022
Restricted Stock Granted to Nonemployee Directors	April 20, 2020		17,400	$	44.85	33% per year through April 8, 2023

The vesting of restricted stock units is accelerated in the event of a change in control, disability, death or retirement, subject to proration in certain cases, and subject to forfeiture under the terms of the restricted stock unit award agreements. Certain restricted stock units granted to executive officers and certain key employees are eligible to receive dividend equivalent payments on all unvested awards over the awards respective vesting periods. The grant-date fair value of each restricted stock unit paying a dividend equivalent was the average of the high and low market price per share on the date of grant. The grant-date fair value of each restricted stock unit that does not pay a dividend equivalent was the average of the high and low market price per share on the date of grant, discounted for the value of the dividend exclusion on those restricted stock units over the unit’s vesting period.

Under the performance share awards the aggregate award for performance at target is 55,000 shares. For target performance the participants would earn an aggregate of 27,500 common shares for achieving the target set for the Company’s 3-year average adjusted ROE. The participants would also earn an aggregate of 27,500 common shares based on the Company’s total shareholder return relative to the total shareholder return of the companies that comprise the Edison Electric Institute Index over the performance measurement period of January 1, 2020 through December 31, 2022, with the beginning and ending share values based on the average closing price of a share of the Company’s common stock for the 20 trading days immediately following January 1, 2020 and the average closing price for the 20 trading days immediately preceding January 1, 2023. Actual payment may range from zero to 150% of the target amount, or up to 82,500 common shares. There are no voting or dividend rights related to these shares until the shares, if any, are issued at the end of the performance measurement period. The terms of these awards are such that the entire award will be classified and accounted for as equity, as required under ASC 718, Compensation – Stock Compensation, and will be measured over the performance period based on the grant-date fair value of the award. The grant-date fair value of each performance share award was determined using a Monte Carlo fair valuation simulation model.

Under the 2020 Performance Award Agreements, payment and the amount of payment in the event of retirement, resignation for good reason or involuntary termination without cause is to be made at the end of the performance period based on actual performance, subject to proration in certain cases, except that the payment of performance awards granted to an officer who is party to an Executive Employment Agreement with the Company is to be made at target at the date of any such event. The vesting of these awards is accelerated and paid at target in the event of a change in control.

The restricted shares granted to the Company’s nonemployee directors are eligible for full dividend and voting rights. Restricted shares not vested and dividends on those restricted shares are subject to forfeiture under the terms of the restricted stock award agreements. The grant-date fair value of each restricted share was the average of the high and low market price per share on the date of grant.

The end of the period over which compensation expense is recognized for the above share-based awards for the individual grantees is the earlier of the indicated vesting period for the respective awards or the date the grantee becomes eligible for retirement as defined in their award agreement.

As of June 30, 2020, the remaining unrecognized compensation expense related to outstanding, unvested stock-based compensation was approximately $4.8 million (before income taxes) which will be amortized over a weighted-average period of 2.3 years.

Amounts of compensation expense recognized under the Company’s stock-based payment programs for the three- and six-month periods ended June 30, 2020 and 2019 are presented in the table below:

	Three months ended				Six months ended
	June 30,				June 30,
(in thousands)	2020		2019		2020		2019
Stock Performance Awards Granted to Executive Officers	$	712	$	1,418	$	2,412	$	2,531
Restricted Stock Dividend Equivalent Units Granted to Executive Officers and Key Employees		106		383		785		810
Restricted Stock Granted to Nonemployee Directors		236		204		440		369
Restricted Stock Units Granted to Nonexecutive Employees		141		143		275		234
ESPP (15% discount)		42		-		95		-
Totals	$	1,237	$	2,148	$	4,007	$	3,944