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Compensation Plans

12 Months Ended

Dec. 31, 2018

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

Compensation Plan

14.

Compensation Plans

In May 2017, the Company’s shareholders approved the 2017 Stock Incentive Plan (the “2017 SIP”) under which employees, independent contractors, and non-employee directors may be granted stock options, restricted stock, deferred stock awards, and stock appreciation rights, any of which may or may not require the satisfaction of performance objectives. Vesting requirements are determined by the Compensation Committee of the Board of Directors. The Company has reserved 750,000 shares for issuance under the 2017 SIP, of which 543,000 shares remain available for future grants as of December 31, 2018.

In April 2007, the Company adopted and the shareholders approved the 2007 Stock Incentive Plan (the “2007 SIP”), which had similar provisions as the 2017 SIP. The 2007 SIP plan expired April 24, 2017. The Company had reserved 2,550,000 shares for issuance under the 2007 SIP, of which 2,182,000 shares were issued. No further grants will be made from the 2007 SIP.

Compensation expense related to stock options is recognized based on the grant-date fair value of the awards estimated using the Black-Scholes option pricing model. Compensation expense related to deferred stock, restricted stock, and restricted stock units is recognized based on the grant-date fair value of the Company’s common stock, using either the actual share price or an estimated value using the Monte Carlo valuation model. The total stock-based compensation cost included in the Statements of Income was $5.8 million, $3.7 million, and $3.1 million in 2018, 2017, and 2016, respectively.

Stock Options

There were no stock options granted in 2018, 2017 or 2016.

The following table summarizes the stock option activity of the 2007 SIP:

		Shares				Weighted Average Exercise Price				Weighted Average Grant Date Fair Value				Weighted Average Remaining Contractual Life (Years)
Outstanding at December 31, 2015			11,838				8.95				6.69				3.3
Granted			—				—				—				—
Exercised			—				—				—
Canceled			—				—				—				—
Outstanding at December 31, 2016			11,838				8.95				6.69				2.3
Granted			—				—				—				—
Exercised			—				—				—				—
Canceled			—				—				—				—
Outstanding at December 31, 2017			11,838				8.95				6.69				1.3
Granted			—				—				—				—
Exercised			(4,616	)			8.28				6.90				—
Canceled			(1,750	)			8.69				4.57				0.3
Outstanding at December 31, 2018			5,472				9.60				7.20				0.9
Exercisable Options Outstanding at December 31, 2018			5,472				9.60				7.20				0.9
Non-Vested Options Outstanding at December 31, 2018			—				—				—				—

At December 31, 2018, the aggregate intrinsic value of all options, including exercisable options, was $0.2 million.

Deferred Stock

Deferred stock awards vest based on the passage of time or the Company’s attainment of performance objectives. Upon vesting, these awards convert one-for-one to common stock.

In 2018, 5,767 deferred stock awards were issued to non-employee directors that will vest in May 2019 and 6,751 deferred stock awards were issued to non-employee directors that will vest in May 2021.

In 2017, 5,432 deferred stock awards were issued to non-employee directors that will vest in May 2018 and 6,360 deferred stock awards were issued to non-employee directors that will vest in May 2020.

In 2016, 3,881 deferred stock awards were issued to non-employee directors that vested in May 2017 and 5,292 deferred stock awards were issued to non-employee directors that will vest in May 2019.

Compensation expense related to these awards is amortized ratably over the vesting period. Compensation expense related to these awards was $0.7 million, $0.7 million and $0.6 million in 2018, 2017, and 2016, respectively.

At December 31, 2018, there was $0.7 million of unrecognized compensation cost related to deferred stock that is expected to be recognized over a period of three years.

Restricted Stock Units

The Company grants restricted stock units to senior employees. Some of these RSU’s are retention awards and have only time-based vesting. Other RSU’s have a vesting “double trigger.” The vesting of these RSU’s is dependent on the achievement of corporate objectives established by the Compensation Committee of the Board of Directors, including stock performance relative to industry indices, return on net operating assets, and the passage of time.

During 2018, 172,000 restricted stock units were issued. Compensation costs related to these restricted stock units was $8.1 million, of which $2.2 million was recognized in 2018. The costs are being recognized ratably over the remaining periods required before the units vest, which range from 24 to 26 months.

During 2017, 114,000 restricted stock units were issued. Compensation costs related to these restricted stock units was $4.3 million, of which $1.2 million was recognized in 2017. The costs are being recognized ratably over the remaining periods required before the units vest, which ranged from 24 to 26 months.

During 2016, 62,000 restricted stock units were issued. Compensation costs related to these restricted stock units was $3.4 million, of which $0.8 million was recognized in 2016. The costs are being recognized ratably over the remaining periods required before the units vest, which ranged from 24 to 28 months.

At December 31, 2018, there was $8.5 million of unrecognized compensation cost related to restricted stock units that is expected to be recognized over a period of 2.3 years.