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Stock Compensation Plans | 12 Months Ended
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Dec. 31, 2019
Postemployment Benefits [Abstract] |
Stock Compensation Plans | 13 - Stock Compensation Plans Equity Incentive Plans Since 1996, we have maintained an Equity Incentive Plan for Employees. During 2019, we adopted a plan that made a total of 4,500,000 shares of Class A common stock available for issuance to employees of our subsidiaries and affiliates. The plan provides for the granting of awards by our board of directors in the form of stock options, stock appreciation rights, restricted stock or any combination of the above. The plan provides that stock options may become exercisable up to five years from their date of grant, with an option price not less than fair market value on the date preceding the date of grant. We have not granted any stock appreciation rights. Since 1996, we have maintained an Equity Incentive Plan for Directors. During 2019, we adopted a plan that made 500,000 shares of Class A common stock available for issuance to our directors and the directors of our subsidiaries and affiliates.We may make awards in the form of stock options. The plan also provides for the issuance of 500 shares of restricted stock on the first business day of January in each year to each of our directors and each director of Donegal Mutual who does not serve as one of our directors. We issued 8,500 shares of restricted stock on January 2, 2019 under our director plan. We issued 8,500 shares of restricted stock on January 2, 2018 under our prior director plan. We issued 9,000 shares of restricted stock on January 3, 2017 under our prior director plan. No further shares are available for future option grants for plans in effect prior to 2019. We measure all share-based payments to employees, including grants of employee stock options, using a fair-value-based method and record such expense in our results of operations. In determining the expense we record for stock options granted to directors and employees of our subsidiaries and affiliates, we estimate the fair value of each option award on the date of grant using the Black-Scholes option pricing model. The significant assumptions we utilize in applying the Black-Scholes option pricing model are the risk-free interest rate, expected term, dividend yield and expected volatility. The risk-free interest rate is the implied yield currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected term used as the assumption in the model. We base the expected term of an option award on our historical experience for similar awards. We determine the dividend yield by dividing the per share dividend by the grant date stock price. We base the expected volatility on the volatility of our stock price over a historical period comparable to the expected term. The weighted-average grant date fair value of options we granted during 2019 was $1.15. We calculated this fair value based upon a risk-free interest rate of 1.64%, an expected life of three years, an expected volatility of 17% and an expected dividend yield of 4%. The weighted-average grant date fair value of options we granted during 2018 was $1.66. We calculated this fair value based upon a risk-free interest rate of 2.68%, an expected life of three years, an expected volatility of 22% and an expected dividend yield of 4%. The weighted-average grant date fair value of options we granted during 2017 was $1.81. We calculated this fair value based upon a risk-free interest rate of 2.01%, an expected life of three years, an expected volatility of 19% and an expected dividend yield of 3%. We charged compensation expense for our stock compensation plans against income before income taxes of $1.4 million, $1.7 million and $2.0 million for the years ended December 31, 2019, 2018 and 2017, respectively, with a corresponding income tax benefit of $288,901, $354,412 and $692,164. At December 31, 2019 and 2018, our total unrecognized compensation cost related to non-vested share-based compensation granted under our stock compensation plans was $2.0 million and $2.5 million, respectively. We expect to recognize this cost over a weighted average period of 1.9 years. During 201 9 , we received cash from option exercises under all stock compensation plans of $2.9 million. We realized actual tax benefits for the tax deductions from option exercises of share-based compensation of $64,765 for 2019. During 2018, we received cash from option exercises under all stock compensation plans of $1.1 million. We realized actual tax benefits for the tax deductions from option exercises of share-based compensation of $25,938 for 2018. During 2017, we received cash from option exercises under all stock compensation plans of $13.4 million. We realized actual tax benefits for the tax deductions from option exercises of share-based compensation of $873,515 for 2017. Information regarding activity in our stock option plans follows:
|  | Number of Options |  |  | Weighted- Average Exercise Price Per Share |
Outstanding at December 31, 2016 |  |  | 9,338,648 |  |  | $ | 14.95 |
Granted - 2017 |  |  | 943,000 |  |  |  | 17.58 |
Exercised - 2017 |  |  | (924,019 | ) |  |  | 14.45 |
Forfeited - 2017 |  |  | (93,167 | ) |  |  | 15.43 |
Outstanding at December 31, 2017 |  |  | 9,264,462 |  |  |  | 15.26 |
Granted - 2018 |  |  | 1,063,000 |  |  |  | 13.69 |
Exercised - 2018 |  |  | (79,961 | ) |  |  | 13.74 |
Forfeited - 2018 |  |  | (222,639 | ) |  |  | 16.00 |
Outstanding at December 31, 2018 |  |  | 10,024,862 |  |  |  | 15.09 |
Granted - 2019 |  |  | 1,045,400 |  |  |  | 14.97 |
Exercised - 2019 |  |  | (217,498 | ) |  |  | 13.23 |
Forfeited - 2019 |  |  | (416,774 | ) |  |  | 15.88 |
Outstanding at December 31, 2019 |  |  | 10,435,990 |  |  | $ | 15.09 |
Exercisable at: |  |  |  |  |  |  |  |
December 31, 2017 |  |  | 6,946,677 |  |  | $ | 14.90 |
December 31, 2018 |  |  | 7,936,659 |  |  | $ | 15.02 |
December 31, 2019 |  |  | 8,449,389 |  |  | $ | 15.13 |
Shares available for future option grants at December 31, 201 9 totaled 4.0 million shares under all plans. The following table summarizes information about stock options outstanding at December 31, 201 9 :
Grant Date |  | Exercise Price |  |  | Number of Options Outstanding |  |  | Weighted-Average Remaining Contractual Life |  |  | Number of Options Exercisable |
July 27, 2011 |  | $ | 12.50 |  |  |  | 907,101 |  |  |  | 2.0 years |  |  |  | 907,101 |
December 20, 2012 |  |  | 14.50 |  |  |  | 1,009,819 |  |  |  | 3.0 years |  |  |  | 1,009,819 |
December 19, 2013 |  |  | 15.90 |  |  |  | 1,991,804 |  |  |  | 4.0 years |  |  |  | 1,991,804 |
December 18, 2014 |  |  | 15.80 |  |  |  | 1,270,581 |  |  |  | 5.0 years |  |  |  | 1,270,581 |
December 17, 2015 |  |  | 13.64 |  |  |  | 1,191,845 |  |  |  | 1.0 years |  |  |  | 1,191,845 |
December 15, 2016 |  |  | 16.48 |  |  |  | 1,202,808 |  |  |  | 2.0 years |  |  |  | 1,202,808 |
December 21, 2017 |  |  | 17.60 |  |  |  | 799,832 |  |  |  | 3.0 years |  |  |  | 533,168 |
December 20, 2018 |  |  | 13.69 |  |  |  | 1,016,800 |  |  |  | 4.0 years |  |  |  | 338,930 |
March 4, 2019 |  |  | 13.51 |  |  |  | 10,000 |  |  |  | 4.2 years |  |  |  | 3,333 |
December 19 , 201 9 |  |  | 14.98 |  |  |  | 1,035,400 |  |  |  | 5.0 years |  |  |  | — |
|  |  | Total |  |  |  | 10,435,990 |  |  |  |  |  |  |  | 8,449,389 |
Employee Stock Purchase Plan Since 1996, we have maintained an Employee Stock Purchase Plan. During 2011, we adopted a plan that made 300,000 shares of our Class A common stock available for issuance. During 2019, we amended the plan to make 500,000 shares of our Class A common stock available for issuance. The plan extends over a 10-year period and provides for shares to be offered to all eligible employees at a purchase price equal to the lesser of 85% of the fair market value of our Class A common stock on the last day before the first day of each enrollment period (June 1 and December 1 of each year) under the plan or 85% of the fair market value of our Class A common stock on the last day of each subscription period (June 30 and December 31 of each year). A summary of plan activity follows:
|  | Shares Issued |
|  | Price |  |  | Shares |
January 1, 2017 |  |  | 13.76 |  |  |  | 18,512 |
July 1, 2017 |  |  | 13.52 |  |  |  | 25,155 |
January 1, 2018 |  |  | 13.34 |  |  |  | 20,662 |
July 1, 2018 |  |  | 11.57 |  |  |  | 27,802 |
January 1, 2019 |  |  | 11.60 |  |  |  | 24,834 |
July 1, 2019 |  |  | 12.24 |  |  |  | 22,926 |
On January 1, 2020, we issued 20,424 shares at a price of $12.28 per share under this plan. Agency Stock Purchase Plan Since 1996, we have maintained an Agency Stock Purchase Plan. During 2015, we adopted a plan that made 350,000 shares of our Class A common stock available for issuance to agents of our insurance subsidiaries and Donegal Mutual. The plan permits an agent to invest up to $12,000 per subscription period (April 1 to September 30 and October 1 to March 31 of each year) under various methods. We issue stock at the end of each subscription period at a price equal to 90% of the average market price during the last ten trading days of each subscription period. During 2019, 2018 and 2017, we issued 110,836, 117,935 and 104,418 shares, respectively, under this plan. The expense we recognized under the plan was not material.

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- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + 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 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 712 -URI http://asc.fasb.org/topic&trid=2197446 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 710 -URI http://asc.fasb.org/topic&trid=2127225 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 + Details
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