Quarterly report pursuant to Section 13 or 15(d)

Share-Based Compensation

v3.10.0.1
Share-Based Compensation
 9 Months Ended
Sep. 30, 2018
Share-Based Compensation.  
Share-Based Compensation

10. SHARE-BASED COMPENSATION

 

Our eligible employees currently participate in the 2015 LTIP.  The 2015 LTIP 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 LTIP.  As of September 30, 2018, we had 2.6 million shares available under the 2015 LTIP.

 

Share-based compensation expense is included in selling, general, and administrative expense.  The income tax effect associated with vesting of awards is included in income tax expense.  The following table presents the amounts recognized in our Condensed Consolidated Statements of Operations, in thousands:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

 

 

2018

 

2017

 

2018

 

2017

Share-based compensation expense

 

$

2,848

 

$

2,372

 

$

8,244

 

$

7,473

Income tax benefit realized from award vestings

 

$

545

 

$

1,619

 

$

3,140

 

$

2,634

 

The following table presents a summary of our share-based compensation activity for the nine months ended September 30, 2018, in thousands, except per share amounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RSAs

 

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, 2017

 

591.2

 

$

30.92

 

683.5

 

$

11.13

 

$

28.97

 

$

31,969.7

Granted

 

91.7

 

$

85.43

 

77.3

 

$

27.44

 

$

74.50

 

 

 

Converted/Exercised

 

(142.4)

 

$

26.77

 

(134.5)

 

$

10.91

 

$

28.37

 

$

6,246.7

Forfeited

 

(40.2)

 

$

39.76

 

(14.9)

 

$

16.98

 

$

45.46

 

 

 

Balance September 30, 2018

 

500.3

 

$

41.30

 

611.4

 

$

13.10

 

$

34.45

 

$

14,990.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable September 30, 2018 (a)

 

 

 

 

203.8

 

$

10.65

 

$

27.55

 

$

5,965.9

(a)

The weighted average remaining contractual term for vested options is 7.0 years.

 

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

 

 

 

 

 

 

 

 

 

 

As of September 30, 2018

 

 

Unrecognized Compensation Expense
on Unvested Awards

 

Weighted Average
Remaining
Vesting Period

Unrecognized compensation expense related to unvested awards:

 

 

 

 

 

 

RSAs

 

$

10,777

 

 

1.1 years

Options

 

 

3,719

 

 

1.1 years

Total unrecognized compensation expense related to unvested awards

 

$

14,496

 

 

 

 

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 22, 2016

 

$

1,944

 

$

 —

 

$

486

 

$

1,944

 

$

3,888

February 21, 2017

 

$

2,012

 

$

 —

 

$

503

 

$

2,012

 

$

4,024

February 19, 2018

 

$

2,303

 

$

 —

 

$

576

 

$

2,303

 

$

4,606

 

The fair value of our RSAs with a market-based condition granted under the 2015 LTIP was determined using a Monte Carlo simulation.  The following are key inputs in the Monte Carlo analysis for awards granted in 2018 and 2017:

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

2017

 

Measurement period (years)

 

 

2.87

 

 

 

2.86

 

Risk free interest rate

 

 

2.36

%

 

 

1.46

%

Dividend yield

 

 

0.00

%

 

 

0.00

%

Estimated fair value of market-based RSAs granted

 

$

103.31

 

 

$

50.06

 

 

The fair values of stock options granted under the 2015 LTIP were calculated using the Black-Scholes Options Pricing Model.  The following table presents the assumptions used to estimate the fair values of options granted in 2018 and 2017:

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

2017

 

Risk free interest rate

 

 

2.78

%

 

 

2.18

%

Expected volatility, using historical return volatility and implied volatility

 

 

32.50

%

 

 

35.00

%

Expected life (in years)

 

 

6.0

 

 

 

6.0

 

Dividend yield

 

 

0.00

%

 

 

0.00

%

Estimated fair value of options granted

 

$

27.44

 

 

$

14.44