Stock-Based Compensation

12 Months Ended

Dec. 31, 2018

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

13. Stock-Based Compensation

The Company maintains two equity compensation plans under which stock-based compensation has been granted, the 2017 Long-Term Incentive Plan, (the “LTIP”) and the 2007 Long-Term Incentive Plan (Amended and Restated as of May 1, 2014) (the “2007 LTIP” and, collectively with the LTIP, the “Long-Term Incentive Plans”). Upon the adoption of the LTIP, awards were no longer granted under the 2007 LTIP. The LTIP was approved by our stockholders and provides for grants of (a) incentive stock options qualified as such under U.S. federal income tax laws, (b) stock options that do not qualify as incentive stock options, (c) stock appreciation rights, (d) restricted stock awards, (e) restricted stock units, (f) performance awards, (g) phantom stock, (h) stock bonuses, (i) dividend equivalents, or (j) any combination of such awards. The LTIP permits the granting of up to 900,000 shares to directors, officers and other employees of the Company. Grants of awards to employees are approved by the Compensation Committee of the Board of Directors and grants to independent members of the Board of Directors are approved by the Board of Directors. All awards are made with an exercise price or base price, as the case may be, that is not less than the full fair market value per share on the date of grant. No stock option or stock appreciation right may be exercised more than 10 years from the date of grant.

Shares issued as a result of stock option exercises or stock grants are made available from authorized unissued shares of common stock or treasury stock.

Stock Options

The Company has not awarded any stock options since 2013. Stock options granted to employees or directors vested ratably over a three- or four-year vesting period and were granted with an exercise price equal to the market price of the Company’s stock on the date of grant. The Company used the Black-Scholes-Merton option-pricing model to estimate the fair value of options as of the date of grant. All stock options were fully expensed as of December 31, 2016.

Following is a summary of stock option activity for the three-year period ending December 31, 2018:

	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2016		730,605		$	16.40
Exercised		(443,283	)	$	14.03
Forfeited		(933	)	$	24.68
Expired		(40,672	)	$	21.40
Outstanding and Exercisable at December 31, 2016		245,717		$	19.82		4.4 years	$	4,396
Exercised		(79,797	)	$	15.43
Outstanding and Exercisable at December 31, 2017		165,920		$	21.92		4.2 years	$	2,292
Exercised		(88,053	)	$	21.54
Expired		(1,103	)	$	21.16
Outstanding and Exercisable at December 31, 2018		76,764		$	22.33		2.9 years	$	446

Other data relating to option activity for the years ended December 31 are as follows:

(dollars in thousands)	2018		2017		2016
Intrinsic value of options exercised	$	1,277	$	1,721	$	7,832
Fair value of options vested		—		—		372

The following table summarizes information with respect to stock options outstanding and exercisable under the Company’s plans at December 31, 2018:

	Options Outstanding and Exercisable
Exercise Price	Number Of Options		Weighted - Average Exercise Price		Weighted - Average Remaining Contractual Term
$17.18 – $17.18		7,587	$	17.18		1.2 years
$17.48 – $17.48		15,654	$	17.48		3.1 years
$24.18 – $24.18		17,948	$	24.18		2.2 years
$24.68 – $24.68		35,575	$	24.68		3.5 years
		76,764	$	22.35		2.9 years

Time-Vested Stock Awards

The company grants time-vested stock awards under the LTIP in the form of restricted stock awards, restricted stock units or equity-settled phantom stock. The grant date fair value of the time-vested stock awards is equal to the closing market price of the Company’s common stock on the date of grant. Time-vested stock awards granted under the LTIP to eligible employees in

2018

generally vest ratably, on an annual basis, over three years. Time-vested stock awards granted under the LTIP to non-employee directors in

2018 vest over a one year period.

Following is a summary of time-vested stock awards activity for the three-year period ending December 31, 2018:

	Shares			Per Share Weighted - Average Grant Date Fair Value
Outstanding unvested at January 1, 2016		201,949		$	24.58
Granted		112,912		$	24.66
Vested		(88,301	)	$	25.18
Forfeited		(3,144	)	$	26.09
Outstanding unvested at December 31, 2016		223,416		$	25.26
Granted		66,352		$	37.49
Vested		(99,774	)	$	25.19
Forfeited		(1,346	)	$	31.22
Outstanding unvested at December 31, 2017		188,648		$	29.55
Granted		93,280		$	30.22
Vested		(96,840	)	$	28.91
Forfeited		(9,657	)	$	27.02
Outstanding unvested at December 31, 2018		175,431		$	30.40

Performance Awards

The Company grants performance awards under the LTIP. Under these awards, shares of the Company’s common stock may be earned based on the Company’s performance compared to defined metrics. The number of shares earned under a performance award may vary from zero to 200% of the target shares awarded, based upon the Company’s performance compared to the metrics. The metrics used for the grant are determined by the Compensation Committee of the Board of Directors and may be either based on internal measures such as the Company’s financial performance compared to target or on a market-based metric such as the Company’s stock performance compared to a peer group. Performance awards cliff vest upon attainment of at least the minimum stated performance targets and minimum service requirements and are paid in common shares of the Company’s stock. During 2018, management concluded that it was probable that the minimum performance threshold would not be met for certain performance shares that were granted during 2016 and 2017. As a result, the Company reversed $

0.7

million in stock compensation from previous accruals.

The Company recognizes stock-based compensation expense related to market-based performance awards based on the grant date fair value, which is computed using a Monte Carlo simulation. The Company recognizes stock-based compensation expense related to internal measure-based performance awards based on the grant date fair value, which is the closing price of the Company’s stock on the date of grant. The Company adjusts the stock-based compensation expense related to internal metric-based performance awards according to its determination of the potential achievement of the performance target at each reporting date. The fair value of performance grants are expensed over the service period of approximately 2.8 years.

Following is a summary of performance share award activity for the three-year period ending December 31, 2018:

	Shares			Per Share Weighted- Average Grant Date Fair Value
Outstanding at January 1, 2016		143,608		$	32.68
Granted at target		79,661		$	28.25
Earned for performance above target		20,650		$	31.01
Vested		(98,270	)	$	27.74
Forfeited		(1,626	)	$	32.96
Outstanding at December 31, 2016		144,023		$	32.92
Granted at target		47,454		$	47.12
Forfeited for performance below target		(24,873	)	$	36.40
Vested		(39,407	)	$	40.15
Forfeited		(222	)	$	37.22
Outstanding at December 31, 2017		126,975		$	35.29
Granted at target		66,764		$	34.52
Forfeited for performance below target		(42,584	)	$	29.73
Vested		(29,655	)	$	33.35
Forfeited		(9,247	)	$	30.85
Outstanding at December 31, 2018		112,253		$	39.73

Stock-based Compensation Expense

The Company recognized stock-based compensation expense of approximately $3.2 million, $4.4 million and $4.7 million for the years ended December 31, 2018, 2017 and 2016, respectively, in selling, general and administrative expenses. As of December 31, 2018, there was approximately $4.4 million of total unrecognized stock-based compensation expense related to awards granted under the Plans. This included $2.6 million of unrecognized compensation cost related to unvested time-vested stock awards expected to be recognized over a remaining weighted average vesting period of approximately 1.6 years and $1.8 million of unrecognized compensation cost related to unvested performance awards, expected to be recognized over a remaining weighted average vesting period of approximately 1.6 years.

Time-vested stock awards granted to non-employee directors in 2018 vest at the end of a one year period and those granted prior to 2018 vest over a period of three years. The grant provision of the time-vested stock awards granted to non-employee directors prior to 2018 contain provisions which call for the vesting of all shares awarded upon a change in control or resignation from the board for any reason except breach of fiduciary duty. As a result of these provisions, the fair value of time-vested stock awards granted to the non-employee directors after 2013 and all directors after 2016, was expensed on the date of the grant.