Forward Air Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Shareholder's Equity, Stock Options and Net Income per Share (Notes)

Shareholder's Equity, Stock Options and Net Income per Share (Notes)

12 Months Ended

Dec. 31, 2016

Shareholders’ Equity, Stock Options and Net Income per Share [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Shareholders' Equity, Stock Options and Net Income per Share

Preferred Stock

There are 5,000,000 shares of preferred stock with a par value of $0.01 authorized, but no shares have been issued to date.

Cash Dividends

During the fourth quarter of 2016, the Company’s Board of Directors declared a cash dividend of $0.15 per share of Common Stock. During the first, second and third quarters of 2016 and each quarter of 2015 and 2014, the Company's Board of Directors declared a cash dividend of $0.12 per share of Common Stock. On February 7, 2017, the Company’s Board of Directors declared a $0.15 per share dividend that will be paid in the first quarter of 2017. The Company expects to continue to pay regular quarterly cash dividends, though each subsequent quarterly dividend is subject to review and approval by the Board of Directors.

Repurchase of Common Stock

On February 7, 2014, our Board of Directors approved a stock repurchase authorization for up to 2,000,000 shares of the Company’s Common Stock. During the years ended December 31, 2016, 2015 and 2014, we repurchased 676,773 shares of common stock for $29,986, or $44.31 per share, 422,404 shares of common stock for $19,992, or $47.33 per share and 881,979 shares of common stock for $39,972, or $45.32 per share, respectively.

On July 21, 2016, our Board of Directors canceled the Company's 2014 repurchase plan and approved a stock repurchase plan that authorized the repurchase of up to 3,000,000 shares of the Company's Common Stock. Under the 2016 repurchase plan, during the year ended December 31, 2016, we repurchased 233,516 shares of Common Stock for $9,997, or $42.80 per share. As of December 31, 2016, 2,766,484 shares remain that may be repurchased.

Share-Based Compensation

The Company had previously reserved for issuance 4,500,000 common shares under the 1999 Stock Option and Incentive Plan (the “1999 Plan”). In May 2008, with the approval of shareholders, the Company amended and restated the 1999 Stock Option and Incentive Plan (the “1999 Amended Plan”) to reserve for issuance an additional 3,000,000 common shares, increasing the total number of reserved common shares under the 1999 Amended Plan to 7,500,000. Options issued under these plans have seven to ten-year terms and vested over a one to five year period.

In May 2016, with the approval of shareholders, the Company adopted the 2016 Omnibus Incentive Compensation Plan (the “Omnibus Plan”) to reserve for issuance 2,000,000 common shares. With the adoption of the Omnibus Plan, no further awards will be issued under the 1999 Amended Plan. As of December 31, 2016, there were approximately 1,976,119 shares remaining available for grant under the Omnibus Plan.

Employee Activity - Options

The following tables summarize the Company’s employee stock option activity and related information for the years ended December 31, 2016, 2015 and 2014:



	2016					2015					2014
				Weighted-					Weighted-					Weighted-
				Average					Average					Average
	Options			Exercise		Options			Exercise		Options			Exercise
	(000)			Price		(000)			Price		(000)			Price

Outstanding at beginning of year	786			$	32	1,363			$	28	1,732			$	27
Granted	137			44		96			50		106			43
Exercised	(346		)	24		(659		)	26		(450		)	28
Forfeited	(13		)	35		(14		)	29		(25		)	37
Outstanding at end of year	564			$	41	786			$	32	1,363			$	28
Exercisable at end of year	331			$	37	586			$	28	1,160			$	26
Weighted-average fair value of options granted during the year	$	12				$	15				$	14
Aggregate intrinsic value for options exercised	$	7,803				$	16,191				$	7,259
Average aggregate intrinsic value for options outstanding	$	2,305
Average aggregate intrinsic value for exercisable options	$	2,516



						Outstanding			Exercisable
					Weighted-	Weighted-			Weighted-
Range of				Number	Average	Average		Number	Average
Exercise				Outstanding	Remaining	Exercise		Exercisable	Exercise
Price				(000)	Contractual Life	Price		(000)	Price
$	22.47	-	22.47	14	0.1	$	22.47	14	$	22.47
28.61		-	28.61	76	1.1	28.61		76	28.61
36.55		-	37.14	138	2.6	36.87		138	36.87
41.32		-	43.67	210	5.3	43.15		56	42.48
44.49		-	48.32	40	5.2	45.93		18	45.20
50.71		-	52.03	86	5.1	50.79		29	50.79
$	22.47	-	52.03	564	3.9	$	40.52	331	$	37.00



	Year ended
	December 31, 2016		December 31, 2015		December 31, 2014
Shared-based compensation for options	$	1,473	$	1,386	$	1,302
Tax benefit for option compensation	$	546	$	542	$	497
Unrecognized compensation cost for options, net of estimated forfeitures	$	1,784
Weighted average period over which unrecognized compensation will be recognized (years)	1.8

Employee Activity – Non-vested shares

Non-vested share grants to employees vest ratably over a three-year period. The following tables summarize the Company's employee non-vested share activity and related information:



	Year ended
	2016					2015					2014
				Weighted-					Weighted-					Weighted-
	Non-vested			Average		Non-vested			Average		Non-vested			Average
	Shares			Grant Date		Shares			Grant Date		Shares			Grant Date
	(000)			Fair Value		(000)			Fair Value		(000)			Fair Value

Outstanding and non-vested at beginning of year	191			$	46	190			$	40	186			$	35
Granted	134			44		100			51		99			42
Vested	(94		)	44		(93		)	39		(94		)	43
Forfeited	(9		)	45		(6		)	45		(1		)	37
Outstanding and non-vested at end of year	222			$	45	191			$	46	190			$	40
Aggregate grant date fair value	$	10,108				$	8,773				$	7,585
Total fair value of shares vested during the year	$	4,064				$	4,694				$	4,008



	Year ended
	December 31, 2016		December 31, 2015		December 31, 2014
Shared-based compensation for non-vested shares	$	4,614	$	4,070	$	3,626
Tax benefit for non-vested share compensation	$	1,712	$	1,591	$	1,385
Unrecognized compensation cost for non-vested shares, net of estimated forfeitures	$	5,900
Weighted average period over which unrecognized compensation will be recognized (years)	1.8

Employee Activity – Performance shares

In 2016, 2015 and 2014, the Company granted performance shares to key employees. Under the terms of the performance share agreements, on the third anniversary of the grant date, the Company will issue to the employees a calculated number of common stock shares based on the three year performance of the Company's total shareholder return as compared to the total shareholder return of a selected peer group. No shares may be issued if the Company total shareholder return outperforms 30% or less of the peer group, but the number of shares issued may be doubled if the Company total shareholder return performs better than 90% of the peer group.

The following tables summarize the Company's employee performance share activity, assuming median share awards, and related information:



	Year ended
	2016					2015					2014
				Weighted-					Weighted-					Weighted-
	Non-vested			Average		Non-vested			Average		Non-vested			Average
	Shares			Grant Date		Shares			Grant Date		Shares			Grant Date
	(000)			Fair Value		(000)			Fair Value		(000)			Fair Value

Outstanding and non-vested at beginning of year	77			$	52	74			$	44	88			$	37
Granted	29			49		27			67		23			48
Additional shares awarded based on performance	7			40		—			—		19			30
Vested	(33		)	40		(24		)	45		(56		)	30
Forfeited	—			—		—			—		—			—
Outstanding and non-vested at end of year	80			$	55	77			$	52	74			$	44
Aggregate grant date fair value	$	4,373				$	4,016				$	3,279



	Year ended
	December 31, 2016		December 31, 2015		December 31, 2014
Shared-based compensation for performance shares	$	1,447	$	1,308	$	1,098
Tax benefit for performance share compensation	$	537	$	512	$	419
Unrecognized compensation cost for performance shares, net of estimated forfeitures	$	1,709
Weighted average period over which unrecognized compensation will be recognized (years)	1.7

Employee Activity – Employee Stock Purchase Plan

Under the ESPP, at December 31, 2016, the Company is authorized to issue up to a remaining 381,813 shares of Common Stock to employees of the Company. For the years ended December 31, 2016, 2015 and 2014, participants under the ESPP purchased 11,174, 10,805, and 8,530 shares, respectively, at an average price of $39.50, $41.55, and $41.51 per share, respectively. The weighted-average fair value of each purchase right under the ESPP granted for the years ended December 31, 2016, 2015 and 2014, which is equal to the discount from the market value of the Common Stock at the end of each six month purchase period, was $6.46, $5.82, and $7.74 per share, respectively. Share-based compensation expense of $72, $61, and $66 was recognized in salaries, wages and employee benefits, during the years ended December 31, 2016, 2015 and 2014, respectively.

Non-employee Directors – Non-vested shares

In May 2006, the Company’s shareholders approved the Company’s 2006 Non-Employee Director Stock Plan (the “2006 Plan”). The Company’s shareholders then approved the Company’s Amended and Restated Non-Employee Director Stock Plan (the “Amended Plan”) on May 22, 2007. The Amended Plan was then further amended and restated on December 17, 2008. Under the Amended Plan, on the first business day after each Annual Meeting of Shareholders, each non-employee director will automatically be granted an award (the “Annual Grant”), in such form and size as the Board determines from year to year. Unless otherwise determined by the Board, Annual Grants will become vested and nonforfeitable one year after the date of grant so long as the non-employee director’s service with the Company does not earlier terminate. Each director may elect to defer receipt of the shares under a non-vested share award until the director terminates service on the Board of Directors. If a director elects to defer receipt, the Company will issue deferred stock units to the director, which do not represent actual ownership in shares and the director will not have voting rights or other incidents of ownership until the shares are issued. However, the Company will credit the director with dividend equivalent payments in the form of additional deferred stock units for each cash dividend payment made by the Company.

In May 2016, with the approval of shareholders, the Company further amended the Amended Plan to reserve for issuance an additional 160,000 common shares, increasing the total number of reserved common shares and shares available for grant under the Amended Plan to 360,000 and 159,259, respectively.

The following tables summarize the Company's non-employee non-vested share activity and related information:



	Year ended
	2016					2015					2014
	Non-vested					Non-vested					Non-vested
	Shares and			Weighted-		Shares and			Weighted-		Shares and			Weighted-
	Deferred			Average		Deferred			Average		Deferred			Average
	Stock Units			Grant Date		Stock Units			Grant Date		Stock Units			Grant Date
	(000)			Fair Value		(000)			Fair Value		(000)			Fair Value

Outstanding and non-vested at beginning of year	15			$	51	15			$	44	15			$	38
Granted	16			44		14			51		15			44
Vested	(15		)	51		(14		)	43		(15		)	38
Forfeited	—			—		—			—		—			—
Outstanding and non-vested at end of year	16			$	44	15			$	51	15			$	44
Aggregate grant date fair value	$	688				$	740				$	650
Total fair value of shares vested during the year	$	639				$	727				$	632



	Year ended
	December 31, 2016		December 31, 2015		December 31, 2014
Shared-based compensation for non-vested shares	$	728	$	661	$	589
Tax benefit for non-vested share compensation	$	263	$	259	$	225
Unrecognized compensation cost for non-vested shares, net of estimated forfeitures	$	246
Weighted average period over which unrecognized compensation will be recognized (years)	0.4

Non-employee Directors - Options

In addition to the above activity, each May from 1995 to 2005, options were granted to the non-employee directors of the Company. The options have terms of ten years and are fully exercisable. The following table summarizes the Company’s non-employee stock option activity and related information for the years ended December 31, 2015 and 2014:



	2015					2014
				Weighted-					Weighted-
				Average					Average
	Options			Exercise		Options			Exercise
	(000)			Price		(000)			Price

Outstanding at beginning of year	8			$	26	26			$	23
Granted	—			—		—			—
Exercised	(8		)	26		(18		)	22
Forfeited	—			—		—			—
Outstanding and exercisable at end of year	—			$	—	8			$	26
Aggregate intrinsic value for options exercised	$	208				$	412
Average aggregate intrinsic value for options outstanding and exercisable

Net Income per Share

The following table sets forth the computation of net income per basic and diluted share:



	2016			2015			2014
Numerator:
Net income and comprehensive income	$	27,670		$	55,575		$	61,169
Income allocated to participating securities	(212		)	(369		)	(404		)
Numerator for basic and diluted income per share - net income	27,458			55,206			60,765

Denominator:
Denominator for basic net income per share - weighted-average shares (in thousands)	30,283			30,728			30,599
Effect of dilutive stock options (in thousands)	130			277			431
Effect of dilutive performance shares (in thousands)	31			35			42
Denominator for diluted net income per share - adjusted weighted-average shares (in thousands)	30,444			31,040			31,072
Basic net income per share	$	0.91		$	1.80		$	1.99
Diluted net income per share	$	0.90		$	1.78		$	1.96

The number of instruments that could potentially dilute net income per basic share in the future, but that were not included in the computation of net income per diluted share because to do so would have been anti-dilutive for the periods presented, are as follows:



	2016	2015	2014
Anti-dilutive stock options (in thousands)	310	184	99
Anti-dilutive performance shares (in thousands)	—	24	—
Total anti-dilutive shares (in thousands)	310	208	99

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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+ Details