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Retirement and Share-based Compensation Plans | 12 Months Ended
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Dec. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Retirement and Share-based Compensation Plans | Retirement and Share-based Compensation Plans We have adopted a contributory defined contribution plan which is qualified under Section 401(k) of the Internal Revenue Code. The plan covers substantially all of our full-time employees subject to minimum eligibility requirements. Employees can contribute a percentage of their annual salary (up to a maximum annual contribution of $18,500 in 2018, $18,000 in 2017 and 2016) to the plan. We contribute an additional amount, subject to limitations, based on the voluntary contribution of the employee. Further, the plan provides for additional employer contributions based on the discretion of the Board of Directors. Plan contributions charged to expense were $1.7 million, $1.4 million and $1.3 million for the years ended December 31, 2018, 2017 and 2016, respectively. The following table summarizes compensation expense recognized for employees and directors as a result of share-based compensation:
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
| (Dollars in thousands)
ESOP | $ | 2,194 |  |  | $ | 1,474 |  |  | $ | 2,522 |
Employee Incentive Plans | 5,434 |  |  | 2,155 |  |  | 1,207 |
Director Equity Plans | 966 |  |  | 812 |  |  | 685 |
| $ | 8,594 |  |  | $ | 4,441 |  |  | $ | 4,414 |
The principal purpose of the American Equity Investment Employee Stock Ownership Plan ("ESOP") is to provide each eligible employee with an equity interest in us. Employees become eligible once they have completed a minimum of six months of service. Employees become 100% vested after two years of service. Our contribution to the ESOP is determined by the Board of Directors. In 2016, we adopted the 2016 Employee Incentive Plan which authorized the issuance of up to 2,500,000 shares of our Common stock in the form of grants of options, stock appreciation rights, restricted stock awards and restricted stock units. At December 31, 2018, we had 1,967,395 shares of common stock available for future grant under the 2016 Employee Incentive Plan. The 2009 Employee Incentive Plan, which expired in June 2014, authorized the issuance of up to 2,500,000 shares of our common stock in the form of grants of options, stock appreciation rights, restricted stock awards and restricted stock units. All options granted under this plan had six or ten year terms and a three year vesting period after which they become fully exercisable immediately. We have a long-term performance incentive plan under which certain members of our senior management team are granted restricted stock units pursuant to the 2016 Employee Incentive Plan. During 2018, 2017 and 2016, we granted 105,617, 84,476 and 208,565 restricted stock units under this plan, respectively. For the 2018 and 2017 grant, vesting is tied to threshold, target and maximum performance goals for the three year periods ending December 31, 2020 and December 31, 2019, respectively. Fifty percent of the restricted stock units will vest if we meet threshold goals, 100% of the restricted stock units will vest if we meet target performance goals and 150% of the restricted stock units will vest if we meet maximum performance goals. For the 2016 grant, vesting is tied to threshold and target performance goals for the three year period ending December 31, 2018. Fifty percent of the restricted stock units will vest if we meet threshold goals and 100% of the restricted stock units will vest if we meet target performance goals. Compensation expense is recognized over the three year vesting period based on the likelihood of meeting threshold, target and maximum goals. Restricted stock units that ultimately vest are payable in an equal number of shares of our common stock. Restricted stock units are accounted for as equity awards and the estimated fair value of restricted stock units is based upon the closing price of our common stock on the date of grant. During 2018, 2017 and 2016, we issued 36,270, 39,826 and 43,373, respectively, shares of restricted common stock under the 2016 Employee Incentive Plan to certain employees. These shares will generally vest on the date three years following the grant date provided the participant remains employed with us. The 2017 grant included 6,727 shares that vested on the date one year following the grant date provided the participant remained employed with us. Compensation expense is recognized over the one year or three year vesting period. Shares vest immediately for participants over 65 years of age with 10 years of service with us, and compensation expense under this plan for these participants was recognized upon approval of the incentive award by the compensation committee. During 2016, the shares of restricted stock granted during 2015 were canceled due to an administrative issue related to the grant, which was made under an expired equity plan. During 2016, we issued 21,806 shares of common stock to the employees impacted by the cancellation taking into consideration the canceled 2015 grants. During 2018, we granted 85,500 time-based restricted stock units under the 2016 Employee Incentive Plan to certain employees. These restricted stock units will generally vest on the date one year following the grant date provided the participant remains employed with us. The 2018 grant includes 6,000 restricted stock units that will vest on the date three years following the grant date provided the participant remains employed with us. Compensation expense is recognized over the one year or three year vesting period. Restricted stock units that ultimately vest are payable in an equal number of shares of our common stock. Restricted stock units are accounted for as equity awards and the estimated fair value of restricted stock units is based upon the closing price of our common stock on the date of grant. The 2013 Director Equity and Incentive Plan authorizes the grant of options, stock appreciation rights, restricted stock awards and restricted stock units convertible into or based upon our common stock of up to 250,000 shares to our Directors. During 2018, 2017 and 2016, we issued 28,600, 33,000 and 47,500 shares of common stock, respectively, all of which are restricted stock, and which vest the earlier of the next annual meeting date or one year from the grant date provided the individual remains a Director during that time period. At December 31, 2018, we had 54,900 shares of common stock available for future grant under the 2013 Director and Equity Incentive Plan. During 2014, we established the 2014 Independent Insurance Agent Restricted Stock and Restricted Stock Unit Plan, which was amended during 2016. Under the amended plan, agents of American Equity Life may receive grants of restricted stock and restricted stock units based upon their individual sales. The plan authorizes grants of up to 1,800,000 shares of our common stock. At December 31, 2018, we had 667,626 shares of common stock available for future grant under the amended 2014 Independent Insurance Agent Restricted Stock and Restricted Stock Unit Plan. We recognize commission expense and an increase to additional paid-in capital as share-based compensation equal to the fair value of the restricted stock and restricted stock units as they are earned. In January 2017, American Equity Life's agents were granted 363,624 restricted stock units based on their production during 2016, and we recorded commission expense (capitalized as deferred policy acquisition costs) of $2.6 million in 2016. In January 2018, agents vested in 138,820 restricted stock units granted in January 2017 based on their continued service as an independent agent and their 2017 individual sales of our products, and for which we recorded commission expense (capitalized as deferred policy acquisition costs) of $1.3 million in 2017. In January 2019, agents vested in 57,562 restricted stock units granted in January 2017 based on their continued service as an independent agent and their 2018 individual sales of our products, and for which we recorded commission expense (capitalized as deferred policy acquisition costs) of $1.6 million in 2018. In January 2016, American Equity Life's agents were granted 650,683 restricted stock units based on their production during 2015. In January 2017, agents vested in 246,532 restricted stock units granted in January 2016 based on their continued service as an independent agent and their 2016 individual sales of our products, and for which we recorded commission expense (capitalized as deferred policy acquisition costs) of $1.7 million in 2016. In January 2018, agents vested in 100,586 restricted stock units granted in January 2016 based on their continued service as an independent agent and their 2017 individual sales of our products, and for which we recorded commission expense (capitalized as deferred policy acquisition costs) of $2.2 million in 2017. In January 2019, agents vested in 89,367 restricted stock units granted in January 2016 based on their continued service as an independent agent and their 2018 individual sales of our products, and for which we recorded commission expense (capitalized as deferred policy acquisition costs) of $2.4 million in 2018. For the restricted stock units granted to agents in January of 2017 and 2016, 20% of the restricted stock units vested one year from the grant date if the agent was in good standing with American Equity Life at that date. The remaining 80% of the restricted stock units granted to retirement eligible individuals vest over a three year period if the agent remains in good standing with American Equity Life. The remaining 80% of the restricted stock units granted to non-retirement eligible individuals vest based on the agent's individual sales and continued service as an independent agent over a period of time not to exceed five years. In January 2015, American Equity Life's agents were granted 27,985 shares of restricted stock and 221,489 restricted stock units based on their production during 2014. In January 2017, agents vested in 36,609 restricted stock units granted in January 2015 based on their continued service as an independent agent and their 2016 individual sales of our products, and for which we recorded commission expense (capitalized as deferred policy acquisition costs) of $0.6 million in 2016. In January 2018, agents vested in 32,815 restricted stock units granted in January 2015 based on their continued service as an independent agent and their 2017 individual sales of our products, and for which we recorded commission expense (capitalized as deferred policy acquisition costs) of $0.8 million in 2017. In January 2019, agents vested in 28,575 restricted stock units granted in January 2015 based on their continued service as an independent agent and their 2018 individual sales of our products, and for which we recorded commission expense (capitalized as deferred policy acquisition costs) of $0.9 million in 2018. The restricted stock was granted to retirement eligible individuals and vested immediately upon grant. 20% of the restricted stock units vested one year from the grant date if the agent was in good standing with American Equity Life at that date. The remaining 80% of the restricted stock units granted vest based on the agent's individual sales and continued service as an independent agent over a period of time not to exceed five years. Our 1996 Stock Option Plan, 2000 Employee Stock Option Plan, 2000 Directors Stock Option Plan and 2011 Director Stock Option Plan authorized grants of options to officers, directors and employees for an aggregate of up to 3,475,000 shares of our common stock. All options granted under these plans have ten year terms and a six month or three year vesting period after which they become fully exercisable immediately. At December 31, 2018, we had 18,000 shares of common stock available for future grant under the 2011 Director Stock Option Plan. During 2007, 2010 and 2012 we established Independent Insurance Agent Stock Option plans. Under these plans, agents of American Equity Life received grants of options to acquire shares of our common stock based upon their individual sales. The plans authorize grants of options to agents for an aggregate of up to 8,000,000 shares of our common stock. We recognize commission expense and an increase to additional paid-in capital as share-based compensation equal to the fair value of the options as they are earned. Changes in the number of stock options granted to employees and agents outstanding during the years ended December 31, 2018, 2017 and 2016 are as follows:
| Number of Shares |  | Weighted-Average Exercise Price per Share |  | Total Exercise Price
| (Dollars in thousands, except per share data)
Outstanding at January 1, 2016 | 3,443,991 |  |  | $ | 15.17 |  |  | $ | 52,240 |
Granted | — |  |  | — |  |  | — |
Canceled | (24,700 | ) |  | 14.83 |  |  | (366 | )
Exercised | (500,345 | ) |  | 9.97 |  |  | (4,989 | )
Outstanding at December 31, 2016 | 2,918,946 |  |  | 16.06 |  |  | 46,885 |
Granted | — |  |  | — |  |  | — |
Canceled | (57,200 | ) |  | 13.66 |  |  | (781 | )
Exercised | (881,481 | ) |  | 15.90 |  |  | (14,020 | )
Outstanding at December 31, 2017 | 1,980,265 |  |  | 16.20 |  |  | 32,084 |
Granted | — |  |  | — |  |  | — |
Canceled | (40,850 | ) |  | 18.87 |  |  | (771 | )
Exercised | (717,550 | ) |  | 13.99 |  |  | (10,040 | )
Outstanding at December 31, 2018 | 1,221,865 |  |  | 17.41 |  |  | $ | 21,273 |
The following table summarizes information about stock options outstanding at December 31, 2018:
| Stock Options Outstanding and Vested
Range of Exercise Prices | Number of Awards |  | Remaining Life (yrs) |  | Weighted-Average Exercise Price Per Share
$5.07 - $8.02 | 122,500 |  |  | 0.36 |  | $ | 6.77 |
$9.27 - $11.35 | 252,515 |  |  | 1.54 |  | 9.97 |
$12.04 - $24.79 | 846,850 |  |  | 1.84 |  | 21.17 |
$5.07 - $24.79 | 1,221,865 |  |  | 1.63 |  | 17.41 |
The aggregate intrinsic value for stock options outstanding and vested awards was $12.9 million at December 31, 2018. For the years ended December 31, 2018, 2017 and 2016, the total intrinsic value of options exercised by officers, directors and employees was $3.0 million, $1.5 million and $4.0 million, respectively. Intrinsic value for stock options is calculated as the difference between the exercise price of the underlying awards and the price of our common stock as of the reporting date. Cash received from stock options exercised for the years ended December 31, 2018, 2017 and 2016 was $10.0 million, $14.0 million and $5.0 million, respectively. We have deferred compensation arrangements with certain officers, directors, and consultants, whereby these individuals agreed to take our common stock at a future date in lieu of cash payments at the time of service. The common stock is to be issued in conjunction with a "trigger event," as that term is defined in the individual agreements. At both December 31, 2018 and 2017, these individuals have earned, and we have reserved for future issuance, 364,000 shares of common stock, respectively, pursuant to these arrangements. No equity-based deferred compensation arrangements were in effect during 2018, 2017 or 2016. We have deferred compensation agreements with certain former officers whereby these individuals have deferred certain salary and bonus compensation which is deposited into the American Equity Officer Rabbi Trust (Officer Rabbi Trust). The amounts deferred for certain former employees are invested in assets at the direction of the former employee. The assets of the Officer Rabbi Trust are included in our assets and a corresponding deferred compensation liability is recorded. The deferred compensation liability is recorded at the fair market value of the assets in the Officer Rabbi Trust with the change in fair value included as a component of compensation expense. The deferred compensation liability related to these agreements was $1.5 million and $2.0 million at December 31, 2018 and 2017, respectively. The Officer Rabbi Trust held 32,597 shares and 34,539 shares of our common stock at December 31, 2018 and 2017, respectively, which are treated as treasury shares.

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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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