Quarterly report pursuant to Section 13 or 15(d)

Share-Based Payments

v3.19.1
Share-Based Payments
 3 Months Ended
Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Share-Based Payments
Share-Based Payments

The Company’s general practice has been to make a single annual grant of share-based compensation in the first quarter to key employees and to make other employee grants only in connection with new employment or promotions.  Forms of share-based compensation granted to employees by the Company include stock options, non-vested shares of common stock (“non-vested shares”), and performance shares.  The Company also typically makes a single annual grant of non-vested shares to non-employee directors in conjunction with the annual election of non-employee directors to the Board of Directors. Share-based compensation is based on the grant date fair value of the instrument and is recognized ratably over the requisite service period, or vesting period.  All share-based compensation expense is recognized in salaries, wages and employee benefits.

Employee Activity - Stock Options
 
Stock option grants to employees generally expire seven years from the grant date and typically vest ratably over a three-year period.  The Company historically used the Black-Scholes option-pricing model to estimate the grant-date fair value of options granted.  The Company did not make any stock option grants in the three months ended March 31, 2019.
 
 
 
 
The following tables summarize the Company’s employee stock option activity and related information:
Three months ended March 31, 2019







Weighted-



Weighted-

Aggregate

Average



Average

Intrinsic

Remaining

Options

Exercise

Value

Contractual

(000)

Price

(000)

Term
Outstanding at December 31, 2018
538


$
51





Granted
—


—





Exercised
(18
)

46





Forfeited
—


—





Outstanding at March 31, 2019
520


$
52


$
5,031


4.5
Exercisable at March 31, 2019
308


$
46


$
4,598


3.5
 

Three months ended

March 31,
2019

March 31,
2018
Share-based compensation for options
$
439


$
342

Tax benefit for option compensation
$
105


$
88

Unrecognized compensation cost for options, net of estimated forfeitures
$
2,768


$
2,589

Weighted average period over which unrecognized compensation will be recognized (years)
1.9



 
 
 
 
 
 
 
 
 
 
 
 

Employee Activity - Non-vested Shares

Non-vested share grants to employees vest ratably over a three-year period.  The non-vested shares’ fair values were estimated using closing market prices on the day of grant. The following tables summarize the Company’s employee non-vested share activity and related information:

Three months ended March 31, 2019



Weighted-

Aggregate

Non-vested

Average

Grant Date

Shares

Grant Date

Fair Value

(000)

Fair Value

(000)
Outstanding and non-vested at December 31, 2018
315


$
55



Granted
108


59



Vested
(114
)

61



Forfeited
(2
)

54



Outstanding and non-vested at March 31, 2019
307


$
58


$
17,861


Three months ended

March 31,
2019

March 31,
2018
Share-based compensation for non-vested shares
$
2,042


$
1,399

Tax benefit for non-vested share compensation
$
486


$
360

Unrecognized compensation cost for non-vested shares, net of estimated forfeitures
$
15,251


$
11,747

Weighted average period over which unrecognized compensation will be recognized (years)
2.1



 
 
 
 
 
 
 
 
 
 

Employee Activity - Performance Shares

The Company annually grants performance shares to key employees.  Under the terms of the performance share agreements, following the end of a three-year performance period, the Company will issue to these employees a calculated number of common stock shares based on meeting certain performance targets. For shares granted during the three months ended March 31, 2019, 50% of the performance share issuances will be based on meeting earnings before interest, taxes, depreciation and amortization ("EBITDA") per share targets and the remaining 50% of the performance share issuances will be based on the three year performance of the Company’s total shareholder return ("TSR") as compared to the TSR of a selected peer group. All performance shares granted during the three months ended March 31, 2018 were based on achieving total shareholder return targets.

Depending upon the EBITDA per share targets met, 0% to 200% of the granted shares may ultimately be issued. For shares granted based on total shareholder return, 0% of the shares will be issued if the Company's total shareholder return outperforms 25% or less of the peer group, but 200% of the shares will be issued if the Company's total shareholder return performs better than 90% of the peer group.  

The fair value of the performance shares granted based on meeting EBITDA per share targets were estimated using the closing market prices on the day of grant and the probability of meeting these targets as of the date of grant.

The fair value of the performance shares granted based on the three year performance of the Company’s total shareholder return was estimated using a Monte Carlo simulation. The weighted average assumptions used in the Monte Carlo estimate were as follows:

Three months ended

March 31,
2019

March 31,
2018
Expected stock price volatility
23.4
%

24.3
%
Weighted average risk-free interest rate
2.5
%

2.2
%

The following tables summarize the Company’s employee performance share activity, assuming median share awards, and related information:
Three months ended March 31, 2019



Weighted-

Aggregate

Performance

Average

Grant Date

Shares

Grant Date

Fair Value

(000)

Fair Value

(000)
Outstanding and non-vested at December 31, 2018
65


$
58



Granted
27


61



Additional shares awarded based on performance
—


—



Vested
(23
)

64



Forfeited
—


—



Outstanding and non-vested at March 31, 2019
69


$
62


$
4,318


Three months ended

March 31,
2019

March 31,
2018
Share-based compensation for performance shares
$
348


$
335

Tax benefit for performance share compensation
$
83


$
86

Unrecognized compensation cost for performance shares, net of estimated forfeitures
$
2,806


$
2,343

Weighted average period over which unrecognized compensation will be recognized (years)
2.3



 
 
 
 
 
 
 
 
 
 

 
 
 
 

Non-employee Director Activity - Non-vested Shares

Grants of non-vested shares to non-employee directors vest ratably over the elected term to the Board of Directors, or approximately one year.  The following tables summarize the Company’s non-employee non-vested share activity and related information:

Three months ended March 31, 2019



Weighted-

Aggregate

Non-vested

Average

Grant Date

Shares

Grant Date

Fair Value

(000)

Fair Value

(000)
Outstanding and non-vested at December 31, 2018
15


$
59



Granted
—


—



Vested
—


—



Forfeited
—


—



Outstanding and non-vested at March 31, 2019
15


$
59


$
886


Three months ended

March 31,
2019

March 31,
2018
Share-based compensation for non-vested shares
$
218


$
185

Tax benefit for non-vested share compensation
$
52


$
47

Unrecognized compensation cost for non-vested shares, net of estimated forfeitures
$
142


$
65

Weighted average period over which unrecognized compensation will be recognized (years)
0.2