| Stock-Based Compensation | Note 8 – Stock-based Compensation
Under the Company’s 2009 Omnibus Equity Compensation Plan , as amended as of February 27, 2014 (the “2009 Plan”), as approved by the Company’s shareholders to replace the 2004 Equity Compensation Plan (the “2004 Plan”), stock options, stock units, stock awards, stock appreciation rights, dividend equivalents, and other stock-based awards may be granted to employees, non-employee directors, and consultants and advisors. The 2009 Plan authorizes 6,250,000 shares for issuance under the plan. A maximum of 3,125,000 shares under the 2009 Plan may be issued pursuant to stock awards, stock units and other stock-based awards , subject to adjustment as provided in the 2009 Plan . During any calendar year, no individual may be granted (i) stock options and stock appreciation rights under the 2009 Plan for more than 500,000 shares of Company stock in the aggregate or (ii) stock awards, stock units or other stock-based awards under the 2009 Plan for more than 500,000 shares of Company stock in the aggregate, subject to adjustment as provided in the 2009 Plan. Awards to employees and consultants under the 2009 Plan are made by a committee of the Board of Directors of the Company, except that with respect to awards to the Chief Executive Officer, the committee recommends those awards for approval by the non-employee directors of the Board of Directors. In the case of awards to non-employee directors, the Board of Directors of makes such awards . At March 31, 2016 , 3,989,744 shares underlying stock-based compensation awards were still available for grants under the 2009 Plan. No further grants may be made under the 2004 Plan.
Performance Share Units – A performance share unit (“PSU”) represents the right to receive a share of the Company’s common stock if specified performance goals are met over the three - year performance period specified in the grant, subject to exceptions through the respective vesting period, generally three years. Each grantee is granted a target award of PSUs, and may earn between 0 % and 200 % of the target amount depending on the Company’s performance against the performance goals. The following table provides compensation costs for stock-based compensation related to PSUs :
Three Months Ended
March 31,
2016
2015
Stock-based compensation within operations and maintenance expenses
$ 525
$ 1,078
Income tax benefit
209
439
The following table summarizes nonvested PSU transactions for the three months ended March 31, 2016 :
Number
Weighted
of
Average
Share Units
Fair Value
Nonvested share units at December 31, 2015
424,858
$ 25.78
Granted
151,156
28.89
Performance criteria adjustment
26,047
25.62
Forfeited
(5,900)
25.89
Share units vested
44,625
26.88
Share units issued
(189,885)
23.25
Nonvested share units at March 31, 2016
450,901
$ 27.98
A portion of the fair value of PSUs was estimated at the grant date based on the probability of satisfying the market-based conditions using the Monte Carlo valuation method , which assesses probabilities of various outcomes of market conditions . The other portion of the fair value of the PSUs is based on the fair market value of the Company’s stock at the grant date, regardless of whether the market-based condition is satisfied. The per unit weighted-average fair value at the date of grant for PSUs granted during the three months ended March 31, 2016 and 2015 was $28.89 and $ 26.54 , respectively. The fair value of each PSU grant is amortized monthly into compensation expense on a straight-line basis over their respective vesting periods, generally 36 months. The accrual of compensation costs is based on our estimate of the final expected value of the award, and is adjusted as required for the portion based on the performance-based condition. The Company assumes that forfeitures will be minimal, and recognizes forfeitures as they occur, which results in a reduction in compensation expense. As the payout of the PSUs includes dividend equivalents, no separate dividend yield assumption is required in calculating the fair value of the PSUs. The recording of compensation expense for PSUs has no impact on net cash flows.
Restricted Stock Units – A restricted stock unit (“RSU”) represents the right to receive a share of the Company’s common stock. RSUs are eligible to be earned at the end of a specified restricted period, generally three years, beginning on the date of grant. The Company assumes that forfeitures will be minimal, and recognizes forfeitures as they occur, which results in a reduction in compensation expense. As the payout of the RSUs includes dividend equivalents, no separate dividend yield assumption is required in calculating the fair value of the RSUs. The following table provides compensation costs for stock-based compensation related to RSUs :
Three Months Ended
March 31,
2016
2015
Stock-based compensation within operations and maintenance expenses
$ 168
$ 263
Income tax benefit
69
109
The following table summarizes nonvested RSU transactions for the three months ended March 31, 2016 :
Number
Weighted
of
Average
Stock Units
Fair Value
Nonvested stock units at December 31, 2015
88,353
$ 24.94
Granted
49,636
32.04
Stock units vested and issued
(24,318)
23.37
Forfeited
(1,500)
25.53
Nonvested stock units at March 31, 2016
112,171
$ 28.41
The per unit weighted-average fair value at the date of grant for RSUs granted during the three months ended March 31, 2016 and 2015 was $ 32.04 and $ 26.26 , respectively.
Stock Options – The following table provides the income tax benefit for stock-based compensation related to stock options granted in prior periods:
Three Months Ended
March 31,
2016
2015
Income tax benefit
$ 216
$ 104
For the three months ended March 31, 2016 and 2015, there were no compensation costs for stock-based compensation related to stock options, as stock options were fully amortized in 2013. Additionally, t here were no stock options granted during the three months ended March 31, 2016 or 2015 .
The following table summarizes stock option transactions for the three months ended March 31, 2016 :
Weighted
Weighted
Average
Average
Aggregate
Exercise
Remaining
Intrinsic
Shares
Price
Life (years)
Value
Outstanding at December 31, 2015
659,533
$ 16.62
Forfeited
-
-
Expired / Cancelled
(3,436)
16.15
Exercised
(143,372)
19.64
Outstanding and exercisable at March 31, 2016
512,725
$ 15.78
2.5
$ 8,224
Stock Awards – On March 31, 2016, the Company granted 3 ,522 shares of common stock to the non-employee members of the Board of Directors. The fair market value of the shares is $3 1.94 per share. The shares granted are not subject to any restrictions. In the first quarter of 2016 , the Company recognized $ 112 of compensation expense and an income tax benefit of $ 47 associated with these grants. There were no stock awards granted to the non-employee members of the Board of Directors during the quarter ended March 31, 2015. |
