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Note 6 - Share-based Compensation | 9 Months Ended
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Sep. 30, 2018
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, 2018, the Company had 3,456,944 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, |
|  | (In thousands) |  |  | (In thousands) |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Stock options and SARS |  | $ | 16 |  |  | $ | 345 |  |  | $ | 960 |  |  | $ | 1,092 |
Restricted stock |  |  | 140 |  |  |  | 80 |  |  |  | 404 |  |  |  | 243 |
Performance shares |  |  | 221 |  |  |  | 121 |  |  |  | 503 |  |  |  | 319 |
Total share-based compensation expense |  | $ | 377 |  |  | $ | 546 |  |  | $ | 1,867 |  |  | $ | 1,654 |
Related income tax benefit |  | $ | 44 |  |  | $ | 29 |  |  | $ | 229 |  |  | $ | 197 |
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. Options and SARS vest immediately at the date of grant or after a two -year period. Awards 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 the nine months ended September 30, 2018 follows:
|  | No. of |  |  | Weighted Average |
|  | Shares |  |  | Exercise Price |
Outstanding December 31, 2017 |  |  | 633,877 |  |  | $ | 13.33 |
Granted |  |  | 141,630 |  |  |  | 22.20 |
Exercised |  |  | (60,058 | ) |  |  | 10.08 |
Lapsed |  |  | (1,800 | ) |  |  | 5.88 |
Cancelled |  |  | (2,620 | ) |  |  | 20.05 |
Outstanding September 30, 2018 |  |  | 711,029 |  |  | $ | 15.36 |
At September 30, 2018, 667,784 options outstanding were fully vested and exercisable, and 43,245 options outstanding have a remaining vesting period of 1.84 years. The aggregate intrinsic value of outstanding options was $3.2 million and weighted-average remaining contractual term was 37 months. Options exercised during the three -month period ended September 30, 2018 and 2017 had intrinsic values of $0.1 million and $0.4 million, respectively. Options exercised during the nine -month period ended September 30, 2018 and 2017 had intrinsic values of $0.9 million and $2.7 million, respectively. During the three -month period ended September 30, 2018, 43,245 options were granted with a fair value of $4.39, but do not vest until August 3, 2020. During the three -month period ended September 30, 2017, 53,970 options were granted with a fair value of $6.40. The weighted average fair values of the Company’s 141,630 and 155,142 options granted during each of the nine -month periods ending September 30, 2018 and 2017 were $5.93 and $5.56, respectively. As of September 30, 2018, the Company had $0.2 million in unrecognized compensation related to nonvested grants to be recognized over the remaining service period of 1.84 years. During the three -month periods ended September 30, 2018 and 2017, respectively, the Company received $0.1 million and $0.4 million in cash from stock option exercises. Additionally, during the three -month periods ended September 30, 2018 and 2017, respectively, the Company received no shares of its common stock as payment of the exercise price in the exercise of stock options. During the nine -month periods ended September 30, 2018 and 2017, respectively, the Company received $0.4 million and $1.2 million in cash from stock option exercises. Additionally, during the nine -month periods ended September 30, 2018 and 2017, the Company received 6,894 and 43,841 shares of its common stock as payment of the exercise price in the exercise of stock options for 26,234 and 113,143 shares. The tax benefit recognized for these exercises during the three -month periods ended September 30, 2018 and 2017 was $0.1 million and $0.1 million, respectively. The tax benefit recognized for these exercises during the nine -month periods ended September 30, 2018 and 2017 was $0.1 million and $0.3 million, respectively. The following table summarizes information about stock options outstanding as of September 30, 2018:
|  |  |  |  |  |  |  | Weighted Average |  |  |  |  |
Range of |  |  |  |  |  | Remaining |  |  | Weighted Average |
Exercise Price |  | Shares |  |  | Contractual Life (Years) |  |  | Exercise Price |
$ 3.82 | - | $ 5.88 |  |  | 89,000 |  |  | 2.86 |  |  | $ | 5.33 |
$ 7.36 | - | $10.38 |  |  | 126,767 |  |  | 1.55 |  |  | $ | 7.85 |
$16.35 | - | $18.66 |  |  | 352,232 |  |  | 3.15 |  |  | $ | 17.49 |
$21.63 | - | $24.28 |  |  | 143,030 |  |  | 4.58 |  |  | $ | 23.03 |
$ 3.82 | - | $24.28 |  |  | 711,029 |  |  | 3.12 |  |  | $ | 15.36 |
A summary of stock-settled SARS transactions during the nine months ended September 30, 2018 follows:
|  | No. of |  |  | Weighted Average |
|  | Shares |  |  | Exercise Price |
Outstanding December 31, 2017 |  |  | 146,504 |  |  | $ | 17.38 |
Granted |  |  | 48,515 |  |  |  | 23.59 |
Exercised |  |  | (12,125 | ) |  |  | 17.92 |
Lapsed |  |  | - |  |  |  | - |
Cancelled |  |  | - |  |  |  | - |
Outstanding September 30, 2018 |  |  | 182,894 |  |  | $ | 18.99 |
At September 30, 2018, SARS outstanding, all of which were fully vested and exercisable, had an aggregate intrinsic value of $0.2 million. The weighted-average remaining contractual term was 34 months. The weighted average fair values of the Company’s 48,515 and 43,988 SARS granted during the nine -month periods ended September 30, 2018 and 2017 was $6.06 and $4.83, respectively. There were no SARS exercised during the three -month period ended September 30, 2018 and 2017, respectively. There were 12,125 and 128,062 SARS exercised during the nine -month periods ended September 30, 2018 and 2017, respectively. SARS exercised during the nine -month periods ended September 30, 2018 and 2017 had intrinsic values of $0.1 million and $1.5 million. The tax benefit recognized for these exercises during the nine -month period ended September 30, 2018 and 2017 was $0.1 million and $0.6 million, respectively. The following table summarizes information about SARS outstanding as of September 30, 2018:
|  |  |  |  |  |  |  | Weighted Average |  |  |  |  |
Range of |  |  |  |  |  | Remaining |  |  | Weighted Average |
Exercise Price |  | Shares |  |  | Contractual Life (Years) |  |  | Exercise Price |
$16.35 | - | $18.66 |  |  | 134,379 |  |  | 2.33 |  |  | $ | 17.33 |
$23.59 | - | $23.59 |  |  | 48,515 |  |  | 4.33 |  |  | $ | 23.59 |
$16.35 | - | $23.59 |  |  | 182,894 |  |  | 2.86 |  |  | $ | 18.99 |
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 |  |  |  |  |  |  |  |
2018 |  |  | N/A |  |  | $ | 18.86 |
2017 |  |  | N/A |  |  | $ | 21.63 |
Market price |  |  |  |  |  |  |  |
2018 |  |  | N/A |  |  | $ | 18.86 |
2017 |  |  | N/A |  |  | $ | 21.63 |
Risk free interest rate 1 |  |  |  |  |  |  |  |
2018 |  |  | N/A |  |  |  | 2.7 | %
2017 |  |  | N/A |  |  |  | 1.8 | %
Expected award life (years) 2 |  |  |  |  |  |  |  |
2018 |  |  | N/A |  |  |  | 3 |
2017 |  |  | N/A |  |  |  | 5 |
Expected volatility 3 |  |  |  |  |  |  |  |
2018 |  |  | N/A |  |  |  | 35.4 | %
2017 |  |  | N/A |  |  |  | 37.2 | %
Expected dividend yield 4 |  |  |  |  |  |  |  |
2018 |  |  | N/A |  |  |  | 2.1 | %
2017 |  |  | N/A |  |  |  | 1.8 | %
Nine months ended |  |  |  |  |  |  |  |  |  |
September 30, |  | SARS |  |  | Options |
Exercise price |  |  |  |  |  |  |  |  |  |
2018 |  | $ | 23.59 |  |  |  | $18.86 | - | $24.28 |
2017 |  | $ | 16.97 |  |  |  | $16.97 | - | $21.63 |
Market price |  |  |  |  |  |  |  |  |  |
2018 |  | $ | 23.59 |  |  |  | $18.86 | - | $24.28 |
2017 |  | $ | 16.97 |  |  |  | $16.97 | - | $21.63 |
Risk free interest rate 1 |  |  |  |  |  |  |  |  |  |
2018 |  |  | 2.6 | % |  |  | 2.6% | - | 2.9% |
2017 |  |  | 1.9 | % |  |  | 1.8% | - | 2.4% |
Expected award life (years) 2 |  |  |  |  |  |  |  |  |  |
2018 |  |  | 3 |  |  |  | 3 | - | 10 |
2017 |  |  | 5 |  |  |  | 5 | - | 10 |
Expected volatility 3 |  |  |  |  |  |  |  |  |  |
2018 |  |  | 35.4 | % |  |  | 35.4% | - | 42.1% |
2017 |  |  | 36.6 | % |  |  | 36.6% | - | 41.4% |
Expected dividend yield 4 |  |  |  |  |  |  |  |  |  |
2018 |  |  | 1.6 | % |  |  | 1.6% | - | 2.1% |
2017 |  |  | 2.1 | % |  |  | 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, 2018 and 2017 was based on historical Superior common stock prices 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, 2018, the Company had $0.9 million of unrecognized compensation cost related to nonvested grants expected to be recognized over the weighted average service period of 1.58 years.
A summary of restricted stock transactions during the nine months ended September 30, 2018 follows:
|  |  |  |  |  | Weighted Average |
|  | No. of |  |  | Grant Date |
|  | Shares |  |  | Fair Value |
Outstanding December 31, 2017 |  |  | 61,378 |  |  | $ | 17.89 |
Granted |  |  | 24,908 |  |  |  | 23.56 |
Vested |  |  | - |  |  |  | - |
Forfeited |  |  | - |  |  |  | - |
Outstanding September 30, 2018 |  |  | 86,286 |  |  | $ | 19.52 |
Performance Shares In the nine months ended September 30, 2018, the Compensation Committee of the Board of Directors 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 based on the fair value on the date of the grant and are being recognized 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, 2018, the Company had $2.9 million of unrecognized compensation cost related to nonvested grants expected to be recognized over the weighted average service period of 2.93 years.
A summary of performance share transactions during the nine months ended September 30, 2018 follows:
|  |  |  |  |  | Weighted Average |
|  | No. of |  |  | Grant Date |
|  | Shares |  |  | Fair Value |
Outstanding December 31, 2017 |  |  | 118,492 |  |  | $ | 17.84 |
Granted |  |  | 84,838 |  |  |  | 24.56 |
Vested |  |  | - |  |  |  | - |
Forfeited |  |  | (8,952 | ) |  |  | 24.98 |
Outstanding September 30, 2018 |  |  | 194,378 |  |  | $ | 20.08 |

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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://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 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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