Restricted Stock Units and Long Term Incentive Plan | 6 Months Ended |
Jun. 30, 2014 |
Restricted Stock Units and Long Term Incentive Plan | ' |
Restricted Stock Units and Long Term Incentive Plan | ' |
6. Restricted Stock Units and Long Term Incentive Plan |
|
Restricted Stock Units |
|
The Company recorded $78,000 and $6,000 of compensation expense associated with restricted stock units (“RSUs”) during the three months ended June 30, 2013 and 2014, respectively, which has been included in selling, general and administrative expense on the accompanying condensed consolidated statements of operations. The Company recorded $124,000 and $37,000 of compensation expense associated with restricted stock units (“RSUs”) during the six months ended June 30, 2013 and 2014, respectively, which has been included in selling, general and administrative expense on the accompanying condensed consolidated statements of operations. The Company issued cash settlements related to the RSUs of $0 during the six months ended June 30, 2013 and 2014, respectively. |
|
The closing price of a share of the Company’s Common Stock, which is used to calculate the year end RSU liabilities, was $3.53 and $3.63 on December 31, 2013, and June 30, 2014, respectively. As of December 31, 2013 and June 30, 2014, there was unrecognized compensation cost, related to non-vested RSUs granted to the Company’s directors, in the amount of $40,000 and $9,000, respectively, using the aforementioned stock prices. Actual compensation costs recognized in future periods may vary based upon fluctuations in stock price and forfeitures. |
|
Long Term Incentive Plan |
|
Employee |
|
The Company grants incentive awards pursuant to the 2012 Long Term Incentive Plan (the “2012 Plan”). For awards granted in 2012 through 2014 the target amount of an award granted was based on a percentage of each employee’s annual base salary ranging from 18% to 85%. Each award is comprised of a Performance Award and an Employment Award. For awards granted in 2010 through 2012, the Performance Award and the Employment Award each constituted half of the award. For awards granted in 2013 and 2014, the Performance Award constituted 60% of the award and the Employment Award constituted 40% of the award. The Performance Award is based on the Company’s achievement of a predetermined cash flow goal and an adjusted EBITDA goal over a three year performance period. |
|
In the first quarter of 2010, the Company granted incentive compensation ranging from $25,000 to $536,000 per employee. The 50% Employment Awards vested and were settled in cash on August 31, 2012, in the amount of $1.2 million. A portion of the Performance Awards vested on December 31, 2012, and was settled during the first quarter of 2013 in the amount of $640,000; the remainder did not vest. |
|
In the second quarter of 2011, the Company granted incentive compensation ranging from $23,000 to $550,000 per employee. The 50% Employment Awards vested on August 31, 2013, and were settled in cash on September 6, 2013, in the aggregate amount of $1.5 million. The Performance Awards vested on December 31, 2013, and were settled in cash in the amount of $1.6 million on March 14, 2014. |
|
In the first quarter of 2012, the Company granted incentive compensation ranging from $22,000 to $652,000 per employee. Each of the 50% Employment Awards will vest on August 31, 2014, subject to continued employment, and will be settled in cash by September 30, 2014. Each of the 50% Performance Awards will vest on December 31, 2014, subject to the Company’s achievement of financial performance criteria, and will be settled in cash by the later of January 30, 2015, or 15 days after the Company issues its audited financials for 2014, but no later than March 15, 2015. Each award is also subject to earlier pro rata settlement as provided in the 2012 Plan. |
|
In the first quarter of 2013, the Company granted incentive compensation ranging from $20,000 to $680,000 per employee. Each of the 40% Employment Awards, subject to continued employment, and each of the 60% Performance Awards, subject to the Company’s achievement of financial performance criteria, will vest on December 31, 2015, and be settled in cash the later of January 30, 2016, or 15 days after the Company issues its audited financials for 2015, but no later than March 15, 2016. Each award is also subject to earlier pro rata settlement as provided in the 2012 Plan. |
|
In the first quarter of 2014, the Company granted incentive compensation ranging from $27,000 to $707,000 per employee. Each of the 40% Employment Awards, subject to continued employment, and each of the 60% Performance Awards, subject to the Company’s achievement of financial performance criteria, will vest on December 31, 2016, and be settled in cash the later of January 30, 2017, or 15 days after the Company issues its audited financials for 2016, but no later than March 15, 2017. Each award is also subject to earlier pro rata settlement as provided in the 2012 Plan. |
|
Directors |
|
During the third quarter of 2012, the Company entered into LTI Agreements granting $20,000 incentive compensation to each director, who is not an employee of the Company or Hallmark Cards or their respective subsidiaries subject to continued membership on the board. On December 31, 2012, the performance criteria were achieved and on August 16, 2013, the awards vested. On August 23, 2013, the awards were settled in cash in the aggregate amount of $132,000. |
|
Additionally, in August 2012, the Company entered into LTI Agreements granting $50,000 incentive compensation to each director, who is not an employee of the Company or Hallmark Cards or their respective subsidiaries subject to continued membership on the board through December 31, 2014, the vesting date, and achievement of the financial performance criteria. Each of the awards will be settled in cash by the later of January 30, 2015, or 15 days after the Company issues its audited financials for 2014, but no later than March 15, 2015. |
|
In March 2013, the Company entered into LTI agreements granting $50,000 incentive compensation to each director, who is not an employee of the Company or Hallmark Cards or their respective subsidiaries subject to continued membership on the board through December 31, 2015, the vesting date, and achievement of the financial performance criteria. Each award will be settled in cash by the later of January 30, 2016, or 15 days after the Company issues its audited financials for 2015, but no later than March 15, 2016. Each award is also subject to earlier pro rata settlement as provided in each LTI Agreement. |
|
During the third quarter of 2013, the Company entered into LTI Agreements granting $35,000 incentive compensation to each director, who is not an employee of the Company or Hallmark Cards or their respective subsidiaries subject to continued membership on the board through August 15, 2014. The related financial performance criteria for 2013 were achieved. As each independent director must continue to perform service through August 15, 2014, the vesting date, the Company has recognized, and will continue to recognize, expense over the service period. Each award is also subject to earlier pro rata settlement as provided in each LTI Agreement. The Performance Awards of $262,000 will be settled in cash in August 2014. |
|
In March 2014, the Company entered into LTI agreements granting $50,000 incentive compensation to each director, who is not an employee of the Company or Hallmark Cards or their respective subsidiaries subject to continued membership on the board through December 31, 2016, the vesting date, and achievement of the financial performance criteria. Each award will be settled in cash by the later of January 30, 2017, or 15 days after the Company issues its audited financials for 2016, but no later than March 15, 2017. Each award is also subject to earlier pro rata settlement as provided in each LTI Agreement. |
|
Vesting |
|
Vesting of the 2012, 2013 and 2014 LTI Performance Awards will be determined in accordance with the Company performance criteria concerning adjusted EBITDA and cash flow and subject to earlier pro rata settlement as provided in the 2012 Plan. |
|
In recognition of these LTI Agreements, the accompanying condensed consolidated statements of operations include $1.0 million among selling, general and administrative expense for both the three months ended June 30, 2013 and 2014. In recognition of these LTI Agreements, the accompanying condensed consolidated statements of operations include $1.7 million and $1.9 million in selling, general and administrative expense for the six months ended June 30, 2013 and 2014, respectively. Additionally, the $5.1 million and $5.4 million liabilities for these agreements were included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets at December 31, 2013, and June 30, 2014, respectively. |