XML 26 R13.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Benefit Plans | 12 Months Ended
--- | ---
Dec. 31, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Benefit Plans | NOTE 5. BENEFIT PLANS Stock Plans The Company adopted the 2016 Stock Incentive Plan (the “2016 Plan”), effective June 8, 2016, under which 2,000,000 shares of the common stock of the Company, plus the number of shares that remain available for grants of awards under the Company's 2007 Stock Option Plan (the “2007 Plan”) and become available as a result of forfeiture, termination, or expiration of awards previously granted under the 2007 Plan, were reserved for the grant of equity awards to its employees, directors and consultants. The equity awards have a maximum term of 7 years at an exercise price of not less than 100% of the fair market value of the Company's common stock on the date the equity award is granted. The 2016 Plan replaced the 2007 Plan. The 2016 Plan provides for the grant of awards in the form of stock options, stock appreciation rights, RSUs, the vesting of which may be performance-based or service-based, and other rights and benefits. Each RSU issued reduces the number of shares of the Company’s common stock available for grant under the 2016 Plan by two shares. There were no modifications to the 2016 Plan and no awards classified as liabilities in the year ended December 31, 2017. For the years ended December 31, 2017, 2016 and 2015, the share-based compensation expense was $3.2 million, $3.1 million and $3.4 million, respectively, before provision for income taxes. The Company recorded a tax benefit of approximately $1.3 million, $1.2 million and $1.3 million, respectively, related to the aforementioned share-based compensation expenses. There was no capitalized share-based compensation expense in the years ended December 31, 2017, 2016 and 2015. Stock Options As of December 31, 2017, a cumulative total of 8,458,600 shares subject to options have been granted with exercise prices ranging from $3.47 to $40.37. Of these, options have been exercised for the purchase of 5,620,878 shares, while options for 1,628,622 shares have been terminated, and options for 1,208,860 shares with exercise prices ranging from $23.84 to $40.37 remained outstanding under the stock plans. These options vest over five years and expire seven years after grant. To date, no options have been issued to any of the Company’s non-employee advisors. As of December 31, 2017, 2,097,594 shares remained available for issuance of awards under the stock plans. A summary of the Company’s option activity and related information for the three years ended December 31, 2017 is as follows:
|  | Number of options |  |  | Weighted- average price |  |  | Weighted- average remaining contractual term (in years) |  |  | Aggregate intrinsic value (in millions) |
Balance at December 31, 2014 |  |  | 1,343,760 |  |  | $ | 27.25 |  |  |  |  |  |  |  |  |
Options granted |  |  | 456,200 |  |  |  | 31.69 |  |  |  |  |  |  |  |  |
Options exercised |  |  | (270,650 | ) |  |  | 19.81 |  |  |  |  |  |  |  |  |
Options cancelled/forfeited/expired |  |  | (118,660 | ) |  |  | 29.58 |  |  |  |  |  |  |  |  |
Balance at December 31, 2015 |  |  | 1,410,650 |  |  |  | 29.91 |  |  |  |  |  |  |  |  |
Options granted |  |  | 881,800 |  |  |  | 25.26 |  |  |  |  |  |  |  |  |
Options exercised |  |  | (368,085 | ) |  |  | 27.34 |  |  |  |  |  |  |  |  |
Options cancelled/forfeited/expired |  |  | (339,930 | ) |  |  | 28.62 |  |  |  |  |  |  |  |  |
Balance at December 31, 2016 |  |  | 1,584,435 |  |  |  | 28.14 |  |  |  |  |  |  |  |  |
Options granted |  |  | 299,600 |  |  |  | 34.66 |  |  |  |  |  |  |  |  |
Options exercised |  |  | (398,275 | ) |  |  | 28.94 |  |  |  |  |  |  |  |  |
Options cancelled/forfeited/expired |  |  | (276,900 | ) |  |  | 28.04 |  |  |  |  |  |  |  |  |
Balance at December 31, 2017 |  |  | 1,208,860 |  |  | $ | 29.52 |  |  |  | 4.94 |  |  | $ | 21.1 |
Exercisable at December 31, 2017 |  |  | 325,680 |  |  | $ | 28.65 |  |  |  | 4.04 |  |  | $ | 6.0 |
Expected to vest after December 31, 2017 |  |  | 680,049 |  |  | $ | 29.78 |  |  |  | 5.28 |  |  | $ | 11.7 |
The intrinsic value of stock options at any point in time is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock. The aggregate intrinsic value of options exercised and sold under the Company’s stock option plans was $6.2 million, $4.2 million and $5.7 million for the years ended December 31, 2017, 2016 and 2015, respectively, determined as of the date of option exercise. As of December 31, 2017, there was approximately $4.3 million of total unrecognized compensation cost related to unvested share-based compensation option arrangements granted under the Company’s stock plans, which is expected to be recognized over a weighted-average period of 2.7 years. The following table indicates the options outstanding and options exercisable by exercise price with the weighted-average remaining contractual life for the options outstanding and the weighted-average exercise price at December 31, 2017:
|  | Options Outstanding |  |  | Options Exercisable |
Exercise price |  | Number outstanding at December 31, 2017 |  |  | Weighted- average remaining contractual life (Years) |  |  | Weighted- average grant date value |  |  | Number exercisable at December 31, 2017 |  |  | Weighted- average grant date value |
$20 – 25 |  |  | 481,510 |  |  |  | 5.13 |  |  | $ | 24.59 |  |  |  | 125,505 |  |  | $ | 24.58 |
$25 – 30 |  |  | 57,505 |  |  |  | 3.14 |  |  | $ | 28.05 |  |  |  | 37,300 |  |  | $ | 28.91 |
$30 – 35 |  |  | 654,265 |  |  |  | 4.94 |  |  | $ | 33.07 |  |  |  | 160,635 |  |  | $ | 32.09 |
$35 – 40 |  |  | 8,780 |  |  |  | 5.32 |  |  | $ | 38.61 |  |  |  | 2,240 |  |  | $ | 38.18 |
$40 – 45 |  |  | 6,800 |  |  |  | 6.67 |  |  | $ | 40.37 |  |  |  | — |  |  | $ | — |
$20 – 45 |  |  | 1,208,860 |  |  |  | 4.94 |  |  | $ | 29.52 |  |  |  | 325,680 |  |  | $ | 28.65 |
The Company utilizes the Black-Scholes option-pricing model to estimate the fair value of share-based compensation at the date of grant, which requires the use of accounting judgment and financial estimates, including estimates of the expected term option holders will retain their vested stock options before exercising them, the estimated volatility of the Company’s stock price over the expected term and the expected number of options that will be forfeited prior to the completion of their vesting requirements. Application of alternative assumptions could produce significantly different estimates of the fair value of share-based compensation amounts recognized in the Consolidated Statements of Income. The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model using the following weighted-average assumptions:
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Expected term (in years) |  |  | 5.0 |  |  |  | 5.0 |  |  |  | 5.0 |
Expected volatility |  |  | 26.1 | % |  |  | 28.7 | % |  |  | 31.1 | %
Expected dividend yields |  |  | 3.0 | % |  |  | 4.1 | % |  |  | 3.2 | %
Risk-free interest rates |  |  | 2.0 | % |  |  | 1.2 | % |  |  | 1.6 | %
The Company monitors option exercise behavior to determine the appropriate homogenous groups for estimation purposes. Currently, the Company’s option activity is separated into two categories: directors and employees. The expected term of the options represents the estimated period of time until exercise and is based on historical experience, giving consideration to the option terms, vesting schedules and expectations of future behavior. Expected stock volatility is based on historical stock price volatility of the Company and the risk-free interest rates are based on U.S. Treasury yields in effect on the date of the option grant for the estimated period the options will be outstanding. The expected dividend yield is based upon the current dividend annualized as a percentage of the grant exercise price. The weighted average grant date fair value per share was $6.28, $4.14 and $6.60 during the years ended December 31, 2017, 2016 and 2015, respectively. Restricted Stock Units The following table summarizes the activity of the Company’s RSUs, which includes service-based and performance-based awards, for the three years ended December 31, 2017:
|  |  |  |  |  | Weighted- |  |  | Aggregate |
|  |  |  |  |  | average |  |  | intrinsic |
|  | Number |  |  | grant date |  |  | value |
|  | of shares |  |  | fair value |  |  | (in millions) |
Balance at December 31, 2014 |  |  | 311,583 |  |  | $ | 29.78 |  |  |  |  |
RSUs granted |  |  | 79,300 |  |  |  | 31.86 |  |  |  |  |
RSUs vested |  |  | (89,915 | ) |  |  | 27.97 |  |  |  |  |
RSUs cancelled/forfeited/expired |  |  | (80,320 | ) |  |  | 31.35 |  |  |  |  |
Balance at December 31, 2015 |  |  | 220,648 |  |  |  | 30.70 |  |  |  |  |
RSUs granted |  |  | 31,900 |  |  |  | 25.75 |  |  |  |  |
RSUs vested |  |  | (59,008 | ) |  |  | 29.69 |  |  |  |  |
RSUs cancelled/forfeited/expired |  |  | (68,300 | ) |  |  | 29.33 |  |  |  |  |
Balance at December 31, 2016 |  |  | 125,240 |  |  |  | 30.66 |  |  |  |  |
RSUs granted |  |  | 70,960 |  |  |  | 34.53 |  |  |  |  |
RSUs vested |  |  | (36,336 | ) |  |  | 26.99 |  |  |  |  |
RSUs cancelled/forfeited/expired |  |  | (66,200 | ) |  |  | 32.63 |  |  |  |  |
Balance at December 31, 2017 |  |  | 93,664 |  |  | $ | 33.62 |  |  | $ | 4.4 |
Performance-based RSUs vest over five years, with 60% of the shares immediately vesting after three years when the performance criteria has been determined to have been met and 20% of the remaining shares vesting annually at the anniversary of the performance determination date, subject to continuous employment of the participant. There were 112,834 performance-based RSUs expected to vest as of December 31, 2017. Service-based RSUs have been issued to the Company’s directors and generally vest over twelve to fourteen months. There were 17,600 service-based RSUs expected to vest as of December 31, 2017. No forfeitures are currently expected. The total fair value of RSUs that vested during the years ended December 31, 2017, 2016 and 2015 based on the weighted average grant date values was $1.0 million, $1.8 million and $2.5 million, respectively. Share-based compensation expense for RSUs for the year ended December 31, 2017, 2016 and 2015 was $1.4 million, $1.0 million and $1.7, respectively. As of December 31, 2017, the total unrecognized compensation expense related to unvested RSUs was $1.7 million and is expected to be recognized over a weighted-average period of 2.2 years. Employee Stock Ownership and 401(k) Plans The McGrath RentCorp Employee Stock Ownership and 401(k) Plan (the “KSOP”) provides that each participant may annually contribute an elected percentage of his or her salary, not to exceed the statutory limit. Each employee who has at least three months of service with the Company and is 21 years or older, is eligible to participate in the KSOP. The Company, at its discretion, may make matching contributions. Contributions are expensed in the year approved by the Board of Directors. Dividends on the Company’s stock held by the KSOP are treated as ordinary dividends and, in accordance with existing tax laws, are deducted by the Company in the year paid. For the year ended December 31, 2016 dividends deducted by the Company were $0.3 million, which resulted in a tax benefit of approximately $0.1 million in 2017. At December 31, 2017, the KSOP held 258,482 shares, or less than 2% of the Company’s total common shares outstanding. These shares are included in basic and diluted earnings per share calculations.

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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -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