Quarterly report pursuant to Section 13 or 15(d)

Share-Based Compensation

v3.19.1
Share-Based Compensation
 3 Months Ended
Mar. 31, 2019
Share-Based Compensation.  
Share-Based Compensation

10.  SHARE-BASED COMPENSATION

 

Effective July 1, 2015, our eligible employees commenced participation in the 2015 Long-Term Incentive Program.  The 2015 Long-Term Incentive Program authorizes the Board to grant stock options, stock appreciation rights, restricted shares, restricted share units, performance awards, and dividend equivalents.  All grants are made by issuing new shares and no more than 4.0 million shares of common stock may be issued under the 2015 Long-Term Incentive Program.  As of March 31, 2019, we had 2.3 million shares remaining available for issuance under the 2015 Long-Term Incentive Program.

 

Share-based compensation expense is included in selling, general, and administrative expense.  The income tax effect associated with the vesting of awards is included in income tax expense.  The following table presents share-based compensation amounts recognized in our condensed consolidated statements of operations, in thousands:

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 

 

 

2019

 

2018

Share-based compensation expense

 

$

2,972

 

$

2,402

Income tax benefit realized from the vesting of awards

 

$

2,246

 

$

2,614

 

The following table presents a summary of our share-based compensation activity for the three months ended March 31 2019, in thousands, except per share amounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RSAs

 

Stock Options

 

 

Number of Shares

   

Weighted Average Grant Date Fair Value Per Share

   

Number of Shares

   

Weighted Average Grant Date Fair Value Per Share

   

Weighted Average Exercise Price Per Share

   

Aggregate
Intrinsic
Value

Balance December 31, 2018

 

499.2

 

$

41.29

 

611.4

 

$

13.10

 

$

35.45

 

$

8,685.8

Granted

 

185.9

 

$

66.63

 

103.5

 

$

21.16

 

$

58.08

 

 

 

Converted/Exercised

 

(279.9)

 

$

28.78

 

(49.5)

 

$

11.00

 

$

28.59

 

$

1,517.8

Forfeited

 

(15.2)

 

$

55.89

 

(9.7)

 

$

20.28

 

$

54.62

 

 

 

Expired

 

 

 

 

 

 

(2.7)

 

$

14.44

 

$

38.39

 

 

 

Balance March 31, 2019

 

390.0

 

$

55.89

 

653.0

 

$

14.42

 

$

38.33

 

$

17,978.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable March 31, 2019 (a)

 

 

 

 

315.3

 

$

12.12

 

$

31.66

 

$

10,682.1

(a)

The weighted average remaining contractual term for vested stock options is 6.8 years.

 

We had unrecognized share-based compensation expense relating to unvested awards as shown in the following table, dollars in thousands:

 

 

 

 

 

 

 

 

 

 

As of March 31, 2019

 

 

Unrecognized Compensation Expense
on Unvested Awards

 

Weighted Average
Remaining
Vesting Period

Unrecognized compensation expense related to unvested awards:

 

 

 

 

 

 

RSAs

 

$

13,265

 

 

1.6 years

Stock options

 

 

4,032

 

 

1.3 years

Total unrecognized compensation expense related to unvested awards

 

$

17,297

 

 

 

 

Our RSAs with performance-based conditions are evaluated on a quarterly basis with adjustments to compensation expense based on the likelihood of the performance target being achieved or exceeded.  The following table shows the range of payouts and the related expense for our outstanding RSAs with performance-based conditions, in thousands:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payout Ranges and Related Expense

RSAs with Performance-Based Conditions

 

Grant Date Fair Value

 

0%

 

25%

 

100%

 

200%

February 21, 2017

 

$

1,847

 

$

 —

 

$

462

 

$

1,847

 

$

3,694

February 19, 2018

 

$

2,110

 

$

 —

 

$

528

 

$

2,110

 

$

4,220

February 18, 2019

 

$

2,544

 

$

 —

 

$

636

 

$

2,544

 

$

5,088

 

During the first quarter of 2019, RSAs with performance-based conditions that were granted on February 22, 2016 vested based on cumulative three-year achievement of 88.6%. Total compensation expense recognized over the three-year performance period, net of forfeitures, was $1.7 million.

 

The fair value of our RSAs with a market-based condition granted under the 2015 Long-Term Incentive Program was determined using a Monte Carlo simulation.  The following are key inputs in the Monte Carlo analysis for awards granted in 2019 and 2018:

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

Measurement period (years)

 

 

2.87

 

 

 

2.87

 

Risk free interest rate

 

 

2.50

%

 

 

2.36

%

Dividend yield

 

 

0.00

%

 

 

0.00

%

Estimated fair value of market-based RSAs granted

 

$

80.74

 

 

$

103.31

 

 

The fair values of stock options granted under the 2015 Long-Term Incentive Program were calculated using the Black-Scholes Options Pricing Model.  The following table presents the assumptions used to estimate the fair values of stock options granted in 2019 and 2018:

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

Risk free interest rate

 

 

2.59

%

 

 

2.78

%

Expected volatility, using historical return volatility and implied volatility

 

 

32.50

%

 

 

32.50

%

Expected life (in years)

 

 

6.0

 

 

 

6.0

 

Dividend yield

 

 

0.00

%

 

 

0.00

%

Estimated fair value of stock options granted

 

$

21.16

 

 

$

27.44