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Note 11 - Share-based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Text Block]

In May 2013, the shareholders 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, stock appreciation rights (“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 previous plan) have been reserved for issuance under the 2013 Plan. All options and SARs 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 December 31, 2021, the Company had 2,125,120 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 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 (in thousands):

	Years Ended December 31,
	2021		2020		2019
Stock options and SARs	$	1,420	$	1,321	$	407
Restricted stock		2,241		777		835
Performance shares		349		432		243
Total share-based compensation expense	$	4,010	$	2,530	$	1,485

Related income tax benefit	$	760	$	286	$	262

Stock Options and Stock Appreciation Rights (“SARs”)

The Company grants stock options and stock-settled SARs to employees that allow them to purchase shares of the Company’s common stock. 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. Assumptions regarding volatility, risk-free interest rate, expected term and dividend yield are required for the Black-Scholes model. The risk-free interest rate is based on the yield of a U.S. treasury bond with a similar maturity to the award’s expected life. The expected life for awards granted is based on the historical exercise patterns experienced by the Company when the award is made. The determination of expected stock price volatility for awards is based on historical Superior common stock prices over a period commensurate with the expected life. The dividend yield assumption is based on the history and expectation of the Company’s dividend payouts.

The following table summarizes significant assumptions utilized to determine the fair value of stock options and SARs:

	Years Ended December 31,
	2021			2020		2019
Stock Options:
Risk free interest rate		0.2% - 1.6%			0.1% - 1.4%		1.7% - 2.5%
Expected award life (years)		3-10			3-10		3-10
Expected volatility		46.9% - 65.0%			35.6% - 61.5%		34.2% - 38.8%
Expected dividend yield		1.6% - 2.2%			1.9% - 5.3%		2.3% - 2.5%
Weighted average fair value per share at grant date	$	9.91		$	2.36	$	3.96

SARs:
Risk free interest rate		0.2	%		0.2% - 1.4%		2.4	%
Expected award life (years)		3			3		3
Expected volatility		64.3	%		35.6% - 55.8%		34.8	%
Expected dividend yield		1.6	%		3.6% - 5.3%		2.3	%
Weighted average fair value per share at grant date	$	10.09		$	2.18	$	3.97

All stock options and SARs granted prior to August 3, 2018 vested immediately when granted. Awards issued thereafter vest either one or two years after the grant date. Employee awards expire five years after the grant date, and those issued to directors expire ten years after the grant date. The Company issues new shares upon the exercise of stock options and SARs. Stock options and SARs granted in tandem with stock options are subject to accelerated vesting under certain circumstances as outlined in the 2013 Plan.

A summary of stock option transactions during the year ended December 31, 2021 follows:


						Weighted Average		Aggregate
		No. of			Weighted Average	Remaining Life		Intrinsic Value
		Shares			Exercise Price	(in years)		(in thousands)
Outstanding, January 1, 2021		970,022		$	12.92	3.74	$	11,128
Granted		143,712			25.00
Exercised		(305,018	)		10.27
Lapsed or cancelled	(28,778)				14.74
Outstanding, December 31, 2021		779,938			16.12	3.27		5,097
Exercisable, December 31, 2021		438,705			15.03	2.68		3,153

Intrinsic value is the difference between the market value of our common stock and the exercise price of each stock option multiplied by the number of stock options outstanding for those stock options where the market value exceeds their exercise price. Options exercised during the years ended December 31, 2021, 2020 and 2019 had intrinsic values of $4.5 million, $1.2 million and $0.8 million, respectively. During the years ended December 31, 2021, 2020 and 2019, the Company received $2.7 million, $1.9 million and $0.3 million, respectively, in cash from stock option exercises. Current tax benefits of $0.9 million, $0.2 million and $0.1 million were recognized for these exercises during the years ended December 31, 2021, 2020 and 2019, respectively. Additionally, during the years ended December 31, 2021, 2020 and 2019, the Company received 17,365, 13,237 and 12,450 shares, respectively, of its common stock as payment of the exercise price in the exercise of stock options for 24,591, 19,232 and 33,172 shares, respectively, of its common stock. As of December 31, 2021, the Company had $0.9 million in unrecognized compensation related to nonvested stock options to be recognized over the remaining weighted average vesting period of 1.2 years.

A summary of stock-settled SARs transactions during the year ended December 31, 2021 follows:


					Weighted Average		Aggregate
	No. of			Weighted Average	Remaining Life		Intrinsic Value
	Shares			Exercise Price	(in years)		(in thousands)
Outstanding, January 1, 2021	317,128		$	13.47	3.36	$	2,031
Granted	31,687			25.75
Exercised	(57,756	)		12.54
Outstanding, December 31, 2021	291,059			14.99	2.65		2,205
Exercisable, December 31, 2021	129,268			16.40	1.83		777

SARs exercised during the years ended December 31, 2021 and 2020 had intrinsic values of $0.8 million and $0.3 million, respectively. There were no SARs exercised during the year ended December 31, 2019. Current tax benefits of $0.1 million were recognized for these exercises during each of the years ended December 31, 2021 and 2020. As of December 31, 2021, the Company had $0.2 million in unrecognized compensation related to nonvested SARs to be recognized over the remaining weighted average vesting period of 1.0 year.

Restricted Stock

The Company has granted shares of restricted stock to directors and certain employees, which vest at a specified future date, generally after three years, over five 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.

A summary of restricted stock transactions during the year ended December 31, 2021 follows:

				Weighted Average
	No. of			Grant Date
	Shares			Fair Value
Outstanding, January 1, 2021		157,244		$	16.84
Granted		345,015			20.99
Vested		(37,930	)		21.61
Forfeited		(6,163	)		21.64
Outstanding, December 31, 2021		458,166			19.51

As of December 31, 2021, the Company had $6.1 million of unrecognized compensation cost related to nonvested restricted stock grants expected to be recognized over the remaining weighted average vesting period of 3.0 years.

Performance Shares

The Company has granted performance shares, which either contain only service-based vesting conditions or service-based and performance-based vesting conditions. 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 awards 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. Expenses for grants of performance shares are recognized on a straight-line basis over the respective service period based on the grant date fair value and expected number of shares to be issued. The awards are subject to accelerated vesting on a pro rata basis under certain circumstances as outlined in the 2013 Plan, except in those circumstances in which award agreements or change in control agreements specify full vesting.

A summary of performance share transactions during the year ended December 31, 2021 follows:

				Weighted Average
	No. of			Grant Date
	Shares			Fair Value
Outstanding, January 1, 2021		186,264		$	18.28
Granted		116,405			22.13
Vested		(57,255	)		17.54
Forfeited		(51,891	)		15.73
Outstanding, December 31, 2021		193,523			21.50

As of December 31, 2021, the Company had $2.6 million of unrecognized compensation cost related to nonvested performance share grants expected to be recognized over the remaining weighted average service period of 4.1 years.