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Note 6 - Share-based Compensation | 9 Months Ended
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Sep. 30, 2017
Notes to Financial Statements |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 6 – Share-Based Compensation : In 2003, the stockholders of the Company approved the 2003 Incentive Stock and Awards Plan (the “2003 Plan ”), authorizing the granting of incentive stock options, non-qualified stock options, stock appreciation rights (“SARS”), restricted stock, performance shares and other stock based compensation. This plan expired in May of 2013, at which time, the stockholders of the Company approved the 2013 Incentive Stock and Awards Plan (the “2013 Plan”), authorizing the granting of incentive stock options, non-qualified stock options, SARS, restricted stock, performance shares and other stock based compensation. A total of 5,000,000 shares of common stock (subject to adjustment for expirations and cancellations of options outstanding from the 2003 Plan subsequent to its termination) have been reserved for issuance under the 2013 Plan. All options and SARS under both plans have been or will be granted with exercise prices at least equal to the fair market value of the shares on the date of grant. At September 30, 2017, the Company had 3,659,877 shares of common stock available for grant of share-based compensation under the 2013 Plan. Share-based compensation is recorded in selling and administrative expense in the consolidated statements of comprehensive income. The following table details the share-based compensation expense by type of award and the total related tax benefit for the periods presented:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Stock options and SARS |  | $ | 345,000 |  |  | $ | 238,000 |  |  | $ | 1,092,000 |  |  | $ | 1,071,000 |
Restricted stock |  |  | 80,000 |  |  |  | 78,000 |  |  |  | 243,000 |  |  |  | 229,000 |
Performance shares |  |  | 121,000 |  |  |  | 182,000 |  |  |  | 319,000 |  |  |  | 295,000 |
Total share-based compensation expense |  | $ | 546,000 |  |  | $ | 498,000 |  |  | $ | 1,654,000 |  |  | $ | 1,595,000 |
Related income tax benefit |  | $ | 29,000 |  |  | $ | 28,000 |  |  | $ | 197,000 |  |  | $ | 200,000 |
Stock options and SARS The Company grants stock options and stock settled SARS to employees that allow them to purchase shares of the Company ’s common stock. Options are also granted to outside members of the Board of Directors of the Company. The Company determines the fair value of stock options and SARS at the date of grant using the Black-Scholes valuation model. All options and SARS vest immediately at the date of grant. Awards generally expire five years after the date of grant with the exception of options granted to outside directors, which expire ten years after the date of grant. The Company issues new shares upon the exercise of stock options and SARS. A summary of stock option transactions during t he nine months ended September 30, 2017 follows:
|  | No. of |  |  | Weighted Average |
|  | Shares |  |  | Exercise Price |
Outstanding December 31, 2016 |  |  | 825,251 |  |  | $ | 10.46 |
Granted |  |  | 155,142 |  |  |  | 18.67 |
Exercised |  |  | (241,844 | ) |  |  | 8.60 |
Lapsed |  |  | (1,100 | ) |  |  | 5.86 |
Cancelled |  |  | (990 | ) |  |  | 13.44 |
Outstanding September 30, 2017 |  |  | 736,459 |  |  | $ | 12.80 |
At September 30, 2017, options outstanding, all of which were fully vested and exercisable, had an aggregate intrinsic value of $7,438,000. The weighted-average remaining contractual term was 46 months. Options exercised during the three -month period ended September 30, 2017 and 2016 had intrinsic values of $387,000 and $301,000, respectively. Options exercised during the nine -month period ended September 30, 2017 and 2016 had intrinsic values of $2,675,000 and $1,876,000, respectively. The weighted average fair value s of the Company’s 53,970 and 52,530 options granted during each of the three -month periods ended September 30, 2017 and 2016 was $6.40 and $4.53, respectively. The weighted average fair values of the Company’s 155,142 and 172,862 options granted during each of the nine -month periods ended September 30, 2017 and 2016 was $5.56 and $4.69, respectively. During the three -month periods ended September 30, 2017 and 2016, respectively, the Company received $420,000 and $327,000 in cash from stock option exercises. Additionally, during the three -month period ended September 30, 2017 and 2016, the Company received - 0 - and 2,164 shares of its common stock as payment of the exercise price in the exercise of stock options for - 0 - and 5,568 shares. During the nine -month periods ended September 30, 2017 and 2016, respectively, the Company received $1,218,000 and $1,109,000 in cash from stock option exercises. Additionally, during the nine -month period ended September 30, 2017 and 2016, the Company received 43,841 and 12,598 shares of its common stock as payment of the exercise price in the exercise of stock options for 113,143 and 35,984 shares. The tax benefit recognized for these exercises during each of the three -month periods ended September 30, 2017 and 2016 was $97,000 and $60,000, respectively. The tax benefit recognized for these exercises during the nine -month period ended September 30, 2017 and 2016 was $306,000 and $250,000, respectively. The following table summarizes information about stock options outstanding as of September 30, 2017.
Range of Exercise Price |  | Shares |  |  | Weighted Average Remaining Contractual Life (Years) |  |  | Weighted Average Exercise Price |
$ 3.82 | - | $ 5.55 |  |  | 66,000 |  |  |  | 2.36 |  |  | $ | 4.79 |
$ 5.65 | - | $ 7.36 |  |  | 213,112 |  |  |  | 1.78 |  |  | $ | 6.55 |
$ 7.96 | - | $10.38 |  |  | 50,400 |  |  |  | 4.47 |  |  | $ | 9.03 |
$16.35 | - | $21.63 |  |  | 406,947 |  |  |  | 5.07 |  |  | $ | 17.84 |
$ 3.82 | - | $21.63 |  |  | 736,459 |  |  |  | 3.83 |  |  | $ | 12.80 |
A summary of stock-settled SARS transactions during the nine months ended September 30, 2017 follows:
|  | No. of |  |  | Weighted Average |
|  | Shares |  |  | Exercise Price |
Outstanding December 31, 2016 |  |  | 325,506 |  |  | $ | 10.26 |
Granted |  |  | 43,988 |  |  |  | 16.97 |
Exercised |  |  | (128,062 | ) |  |  | 6.87 |
Lapsed |  |  | - |  |  |  | - |
Cancelled |  |  | - |  |  |  | - |
Outstanding September 30, 2017 |  |  | 241,432 |  |  | $ | 13.28 |
At September 30, 2017, SARS outstanding, all of which were fully vested and exercisable, had an aggregate intrinsic value of $2,327,000. The weighted-average remaining contractual term was 28 months. The weighted average fai r values of the Company’s 43,988 and 58,108 SARS granted during each of the nine -month periods ended September 30, 2017 and 2016 was $4.83 and $4.49, respectively. There were no SARS exercised during the three -month periods ended September 30, 2017 and 2016, respectively. There were 128,062 and 75,792 SARS exercised during the nine -month periods ended September 30, 2017 and 2016, respectively. SARS exercised during the nine -month periods ended September 30, 2017 and 2016 had intrinsic values of $1,544,000 and $928,000. The tax benefit recognized for these exercises during each of the nine -month periods ended September 30, 2017 and 2016 was $572,000 and $311,000, respectively. The following table summarizes information about SARS outstanding as of September 30, 2017:
Range of Exercise Price |  | Shares |  |  | Weighted Average Remaining Contractual Life (Years) |  |  | Weighted Average Exercise Price |
$ 5.65 | - | $ 7.36 |  |  | 94,928 |  |  |  | 1.09 |  |  | $ | 6.95 |
$16.35 | - | $21.63 |  |  | 146,504 |  |  |  | 3.17 |  |  | $ | 17.38 |
$ 5.65 | - | $21.63 |  |  | 241,432 |  |  |  | 2.35 |  |  | $ | 13.28 |
At September 30, 2017 shares available for grant as awards under the plan were 3,659,877. Options and SARS have never been repriced by the Company in any year. The following table summarizes significant assumptions utilized to determine the fair value of options and SARS.
Three months ended |  |  |  |  |  |  |  |
September 30, |  | SARS |  |  | Options |
Exercise price |  |  |  |  |  |  |  |
2017 |  |  | N/A |  |  | $ | 21.63 |
2016 |  |  | N/A |  |  | $ | 16.47 |
Market price |  |  |  |  |  |  |  |
2017 |  |  | N/A |  |  | $ | 21.63 |
2016 |  |  | N/A |  |  | $ | 16.47 |
Risk free interest rate 1 |  |  |  |  |  |  |  |
2017 |  |  | N/A |  |  |  | 1.8 | %
2016 |  |  | N/A |  |  |  | 1.1 | %
Expected award life (years) 2 |  |  | N/A |  |  |  | 5 |
Expected volatility 3 |  |  |  |  |  |  |  |
2017 |  |  | N/A |  |  |  | 37.2 | %
2016 |  |  | N/A |  |  |  | 37.1 | %
Expected dividend yield 4 |  |  |  |  |  |  |  |
2017 |  |  | N/A |  |  |  | 1.8 | %
2016 |  |  | N/A |  |  |  | 2.1 | %
Nine months ended |  |  |  |  |  |  |  |  |  |
September 30, |  | SARS |  |  | Options |
Exercise price |  |  |  |  |  |  |  |  |  |
2017 |  | $ | 16.97 |  |  |  | $16.97 | - | $21.63 |
2016 |  | $ | 16.35 |  |  |  | $16.35 | - | $18.55 |
Market price |  |  |  |  |  |  |  |  |  |
2017 |  | $ | 16.97 |  |  |  | $16.97 | - | $21.63 |
2016 |  | $ | 16.35 |  |  |  | $16.35 | - | $18.55 |
Risk free interest rate 1 |  |  |  |  |  |  |  |  |  |
2017 |  |  | 1.9 | % |  |  | 1.8% | - | 2.4% |
2016 |  |  | 1.3 | % |  |  | 1.1% | - | 1.8% |
Expected award life (years) 2 |  |  | 5 |  |  |  | 5 | - | 10 |
Expected volatility 3 |  |  |  |  |  |  |  |  |  |
2017 |  |  | 36.6 | % |  |  | 36.6% | - | 41.4% |
2016 |  |  | 36.5 | % |  |  | 36.5% | - | 40.3% |
Expected dividend yield 4 |  |  |  |  |  |  |  |  |  |
2017 |  |  | 2.1 | % |  |  | 1.8% | - | 2.1% |
2016 |  |  | 2.0 | % |  |  | 1.8% | - | 2.1% |
1 The risk-free interest rate is based on the yield of a U.S. treasury bond with a similar maturity as the expected life of the awards. 2 The expected life in years for awards granted was based on the historical exercise patterns experienced by the Company when the award is made. 3 The determination of expected stock price volatility for awards granted in each of the periods ending September 30, 2017 and 2016 was based on historical prices of Superior’s common stock over a period commensurate with the expected life. 4 The dividend yield assumption is based on the history and expectation of the Company’s dividend payouts. Restricted Stock The Company has granted restricted stock to directors and certain employees under the terms of the 2013 Plan which vest at a specified future date, generally after three years, or when certain conditions are met. The shares are subject to accelerated vesting under certain circumstances as outlined in the 2013 Plan. Expense for each of these grants is based on the fair value at the date of the grant and is being recognized on a straight-line basis over the respective service period. As of September 30, 2017, the Company had $624,000 of unrecognized compensation cost related to nonvested grants expected to be recognized over the weighted average service period of 2.0 years. A summary of restricted stock transactions during the nine months ended September 30, 2017 follows:
|  | No. of |  |  | Weighted Average |
|  | Shares |  |  | Exercise Price |
Outstanding December 31, 2016 |  |  | 123,688 |  |  | $ | 8.94 |
Granted |  |  | 34,619 |  |  |  | 16.97 |
Vested |  |  | (100,000 | ) |  |  | 7.36 |
Forfeited |  |  | - |  |  |  | - |
Outstanding September 30, 2017 |  |  | 58,307 |  |  | $ | 16.42 |
Performance Shares T he Compensation Committee of the Board of Directors has approved grants of performance shares under the terms of the 2013 Plan. Under the terms of the grants, certain employees received service-based or service-based and performance-based shares. The service-based awards vest after the service period is met, which is generally three to five years. Expense for these grants is based on the fair value on the date of the grant and is being recognized on a straight-line basis over the respective service period. The performance-based shares generally vest after five years if the performance and service targets are met. The Company evaluates the performance conditions associated with these grants each reporting period to determine the expected number of shares to be issued. Based upon this evaluation, expected expenses for these grants are being recognized based on the fair value on the date of the grant on a straight-line basis over the respective service period. The shares are subject to accelerated vesting under certain circumstances as outlined in the 2013 Plan. As of September 30, 2017, the Company had $1,733,000 of unrecognized compensation cost related to nonvested grants expected to be recognized over the weighted average service period of 3.2 years. A summary of performance share transactions during the nine months ended September 30, 2017 follows:
|  | No. of |  |  | Weighted Average |
|  | Shares |  |  | Exercise Price |
Outstanding December 31, 2016 |  |  | 101,000 |  |  | $ | 16.36 |
Granted |  |  | 50,826 |  |  |  | 18.39 |
Vested |  |  | - |  |  |  | - |
Forfeited |  |  | - |  |  |  | - |
Outstanding September 30, 2017 |  |  | 151,826 |  |  | $ | 17.04 |

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- 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
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