Annual report pursuant to Section 13 and 15(d)

STOCK BASED AND DEFERRED COMPENSATION

v3.6.0.2
STOCK BASED AND DEFERRED COMPENSATION
 12 Months Ended
Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK BASED AND DEFERRED COMPENSATION
STOCK BASED AND DEFERRED COMPENSATION
We have a stock compensation plan, the Amended and Restated 2006 Stock Incentive Plan (the “Plan”), that was adopted in 2006 and has been amended or restated from time to time. The Plan was approved by our stockholders and is administered by our Board of Directors. The provisions of the Plan allow for the grant of stock appreciation rights, restricted stock awards, restricted stock units, performance share awards and performance-based awards in addition to non-qualified and incentive stock options. The Plan authorizes awards to officers, key employees, non-employee directors and consultants for up to 5,350,000 shares of common stock, of which 1,752,775 shares remain available for grant at December 31, 2016, excluding any shares under prior plans which have since expired. The total shares reserved for existing or future grants at December 31, 2016 was 2,900,046. We believe that such awards provide a means of performance-based compensation to attract and retain qualified employees and better align the interests of our employees with those of our stockholders. Non-vested stock awards are usually granted with a five-year ratable vesting period for employees and with a three-year cliff vesting for both non-vested stock and performance-based awards granted to executive officers and non-employee directors.

We have not granted any stock options since 2009 and have no stock options outstanding as of December 31, 2016. A summary of remaining stock option activity from stock options granted prior to 2010 is provided below.

Summary of Stock Option Activity:
 
 
Year Ended December 31, 2016
 
 
Options
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Life
 
Aggregate
Intrinsic
Value
 
 
 
 
 
 
 
 
(In thousands)
Options outstanding at beginning of year
 
14,400

 
$
16.11

 
 
 
 
Granted
 
—

 
N/A

 
 
 
 
Exercised
 
(14,400
)
 
$
16.11

 
 
 
 
Cancelled
 
—

 
N/A

 
 
 
 
Outstanding at end of year
 
—

 
N/A

 
—

 
$
—

Vested at end of year
 
—

 
N/A

 
—

 
$
—

Exercisable at end of year
 
—

 
N/A

 
—

 
$
—

Price range of options exercised
 
$ 11.48 - $22.11
 
 
 
 
Price range of options outstanding
 
N/A
 
 
 
 
 
 
 
Years Ended December 31,
 
 
2015
 
2014
 
 
Options
 
Weighted
Average
Exercise
Price
 
Options
 
Weighted
Average
Exercise
Price
Options outstanding at beginning of year:
 
181,440

 
$
18.69

 
258,815

 
$
19.63

Granted
 
—

 
N/A

 
—

 
N/A

Exercised
 
(147,040
)
 
$
19.62

 
(60,695
)
 
$
17.16

Cancelled
 
(20,000
)
 
$
13.69

 
(16,680
)
 
$
38.86

Outstanding at end of year
 
14,400

 
$
16.11

 
181,440

 
$
18.69

Exercisable at end of year
 
14,400

 
$
16.11

 
181,440

 
$
18.69

Price range of options exercised
 
$ 11.48 - $22.11

 
 
 
$ 11.48 - $42.82

 
 
Price range of options outstanding
 
$ 11.48 - $22.11

 
 
 
$ 11.48 - $22.11

 
 

 
The total intrinsic value of option exercises for the years ended December 31, 2016, 2015 and 2014 was $0.2 million, $3.5 million and $1.7 million respectively. The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the stock option.
Summary of Nonvested (Restricted) Shares and Units Activity:

In addition to the stock options discussed above, we grant time-based and performance-based restricted shares. Performance-based restricted shares are only granted to executive officers. All performance shares only vest upon the attainment of certain financial and operational criteria as established and approved by our Board of Directors.
 
 
 

Nonvested
Restricted Share
Activity
(time-based)
 

Weighted
Average
Grant Date
Fair Value
 

Nonvested
Restricted
Share Activity
(performance-
Based)
 

Weighted
Average
Grant Date
Fair Value
Outstanding at January 1, 2014
 
883,895

 
$
32.22

 
175,000

 
$
30.10

Granted
 
374,683

 
45.23

 
52,083

 
45.60

Vested (Earned/Released)
 
(256,137
)
 
45.34

 
(56,250
)
 
45.56

Forfeited (1)
 
(99,000
)
 
38.77

 
—

 
N/A

Outstanding as of December 31, 2014
 
903,441

 
37.51

 
170,833

 
35.43

Granted
 
434,387

 
40.48

 
66,187

 
41.17

Vested (Earned/Released)
 
(318,651
)
 
41.14

 
(56,250
)
 
40.34

Forfeited (1)
 
(135,470
)
 
40.53

 
—

 
N/A

Outstanding at December 31, 2015
 
883,707

 
40.75

 
180,770

 
42.93

Granted
 
499,865

 
31.60

 
66,698

 
34.39

Vested (Earned/Released)
 
(305,359
)
 
30.87

 
(41,665
)
 
31.02

Forfeited (1)
 
(115,910
)
 
36.79

 
(20,835
)
 
42.56

Outstanding at December 31, 2016
 
962,303

 
37.00

 
184,968

 
34.84

 
(1)
Forfeitures on time-based nonvested shares are a result of terminations of employment, while forfeitures on performance-based nonvested shares are a result of failing to attain certain goals as outlined in our executive officers' compensation agreements.
    
Compensation cost related to time-based restricted stock awards is measured as of the closing price on the date of grant and is expensed on a straight-line basis over the vesting period of the award. Compensation cost related to performance-based restricted stock awards is also measured as of the closing price on the date of grant but is expensed in accordance with ASC 718, which requires an assessment of probability of attainment of the performance target. As our performance targets are dependent on performance over a specified measurement period, once we determine that the performance target outcome is probable, the cumulative expense is recorded immediately with the remaining expense and recorded on a straight-line basis through the end of the award’s vesting period. Beginning with grants in 2014, a portion of the performance-based restricted stock awards granted contain market conditions as defined by ASC 718. The guidance in ASC 718 requires that compensation expense for stock awards with market conditions be expensed based on a derived grant date fair value and expensed over the service period. We engaged a third party to perform a valuation analysis on the awards containing market conditions and our associated expense with those awards is based on the derived fair value from that analysis and is being expensed straight line over the service period of the awards. Below is a summary of compensation expense and stock award activity (in thousands):
 
 
Years Ended December 31,
 
 
2016
 
2015
 
2014
Stock-based compensation expense
 
$
13,741

 
$
15,781

 
$
12,211

Cash received by Company from exercises
 
$
232

 
$
2,886

 
$
1,042


The following table includes additional information regarding our Plan (dollars in thousands):
 
 
At December 31,
 
 
2016
 
2015
Unrecognized stock-based compensation cost
 
$
18,528

 
$
18,545

Weighted average years expense recognition period
 
2.56

 
2.34

Total equity awards outstanding
 
1,147,271

 
1,078,877



We also offer a non-qualified deferred compensation plan ("deferred compensation plan") to highly compensated employees in order to allow them additional pre-tax income deferrals above and beyond the limits that qualified plans, such as 401k plans, impose on highly compensated employees. We do not currently offer a contribution match on the deferred compensation plan. All contributions to the plan to date have been funded by the employees and, therefore, we have no associated expense related to the deferred compensation plan for the years ended December 31, 2016, 2015 and 2014, other than minor administrative costs.