Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation Plans

v3.19.3
Stock-Based Compensation Plans
 9 Months Ended
Sep. 30, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation Plans
12.
Stock-Based Compensation Plans
2013 Omnibus Equity Incentive Plan
The Company’s board of directors adopted the 2013 Omnibus Equity Incentive Plan (the “2013 Plan”), which became effective upon the Company’s IPO. In February 2017, the board of directors amended and restated the 2013 Plan, which was approved by the Company’s stockholders in May 2017. Grants are made from time to time by the compensation committee of the Company’s board of directors at its discretion subject to certain restrictions as to the number and value of shares that may be granted to any individual. In addition,
non-employee
directors receive annual grants under a director compensation policy. As of September 30, 2019, there were 5,272,786 shares available for future grants under the 2013 Plan.
Awards Granted and Settled
Under the 2013 Plan, the Company has issued restricted stock awards (“RSAs”) to
non-employee
directors and restricted stock units (“RSUs”) to employees and independent contractors. RSAs vest in equal annual installments over a
one-year
or three-year period from the date of grant. All RSUs vest in equal annual installments over a five-year period from the date of grant or earlier as approved by the compensation committee of the Company’s board of directors. Any unvested awards are canceled upon termination as a service provider. Awards accelerate upon death subject to approval by the compensation committee. As of September 30, 2019, there were no issued or outstanding options, SARs, performance units or performance share awards under the 2013 Plan.
During the nine months ended September 30, 2019, 366,476 shares of RSUs were vested and delivered. Additionally, 72,532 shares of common stock were withheld to pay applicable required employee statutory withholding taxes based on the market value of the shares on the vesting date. The shares withheld for taxes were returned to the share reserve and are available for future issuance in accordance with provisions of the 2013 Plan.
Outstanding Awards
Activity under the 2013 Plan consisted of the following (dollars in thousands, except per share data):
 
RSA Grants to
Non-employee

Directors
    
RSU Grants to
Employees
   
RSU Grants to
Independent
Contractors
   
Total
   
Weighted-
Average Grant
Date Fair Value
Per Share
 
Nonvested shares at December 31, 2018
   
27,096
     
471,782
     
392,697
     
891,575
    $
 
 
27.59
 
Granted
   
12,806
     
241,932
     
76,642
     
331,380
     
38.62
 
Vested
   
(22,422
 )    
(182,714
 )    
(183,762
 )    
(388,898
 )    
24.11
 
Transferred
   
—
     
(8,136
 )    
8,136
     
—
     
29.68
 
Forfeited/canceled
   
—
     
(8,119
 )    
(32,354
 )    
(40,473
 )    
30.99
 
                                         
Nonvested shares at September 30, 2019 
(1)
    
17,480
     
514,745
     
261,359
     
793,584
    $
  33.73
 
                                         
Unrecognized stock-based compensation expense as of
September 30, 2019 
(2)
   $
397
    $
14,629
    $
8,473
    $
23,499
     
 
  
                                         
Weighted average remaining vesting period (years) as of September 30, 2019
   
0.63
     
3.70
     
3.45
     
3.56
      
 
  
                                         
(1)
Nonvested RSUs will be settled through the issuance of new shares of common stock.
(2)
The total unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately ​​​​​​​3.56 years.
Employee Stock Purchase Plan
In 2013, the Company adopted the 2013 Employee Stock Purchase Plan (“ESPP”). The ESPP
is intended to qualify
under Section 423 of the Internal Revenue Code and provides for consecutive,
non-overlapping
6-month
offering periods. The offering periods generally start on the first trading day on or after May 15 and November 15 of each year. Qualifying employees may purchase shares of the Company stock at a 10% discount based on the lower of the market price at the beginning or end of the offering period, subject to IRS limitations. The Company determined that the ESPP was a compensatory plan and is required to expense the fair value of the awards over each
6-month
offering period.
The ESPP initially had 366,667 shares of common stock reserved
,
and 214,872 shares of common stock remain available for issuance at September 30, 2019. The ESPP provides for annual increases in the number of shares available for issuance under the ESPP, equal to the least of (i) 366,667 shares, (ii) 1% of the outstanding shares on such date, or (iii) an amount determined by the compensation committee of the Company’s board of directors. Pursuant to the provisions of the ESPP, the board of directors has determined to not provide for any annual increases to date. At September 30, 2019, total unrecognized compensation cost related to the ESPP was $20,000 and is expected to be recognized over a weighted average period of 0.12 years.
SARs and Deferred Stock Units (“DSUs”)
Prior to the IPO, certain employees were granted SARs. As of March 31, 2013, the outstanding SARs were frozen at the liability amount, and will be paid out to each participant in installments upon retirement or departure under the terms of the revised SARs agreements. To replace beneficial ownership in the SARs, the difference between the book value liability and the fair value of the awards was granted to plan participants in the form of DSUs, which were fully vested upon receipt and were settled in actual stock at a rate of 20% per year if the participant remained employed by the Company during that period (otherwise all unsettled shares of stock upon termination from service will be settled five years from the termination date, unless otherwise agreed to by the Company). In the event of death or termination of service after reaching the age of 67, 100% of the DSUs will be settled.
Future share settlements of fully vested DSUs by year consisted of the following:
 
September 30,
2019
 
2021
   
60,373
 
2022
   
281,193
 
         
   
341,566
 
         
Summary of Stock-Based Compensation
Components of stock-based compensation are included in selling, general and administrative expense in the condensed consolidated statements of net and comprehensive income
and
 
consisted of the following (in thousands):
 
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
 
2019
   
2018
   
2019
   
2018
 
ESPP
  $
40
    $
37
    $
108
    $
100
 
RSAs –
non-employee
directors
    
157
     
182
     
481
     
458
 
RSUs – employees 
(1)
    
1,230
     
1,112
     
4,197
     
3,161
 
RSUs – independent contractors
(2)
    
687
     
1,816
     
2,254
     
5,200
 
                                 
  $
 
 
2,114
    $
 
 
3,147
    $
 
 
7,040
    $
 
 
8,919
 
                                 
(1)
 2019 includes expense related to the acceleration of vesting of certain RSUs.
(2)
The Company grants RSUs to independent contractors (i.e. investment sales and financing professionals), who are considered
non-employees​​​​​​​.
Prior to the adoption of ASU No.
 2018-07
on July 1, 2018, such awards were required to be measured at fair value at the end of each reporting period until settlement. Stock-based compensation expense was therefore impacted by the changes in the Company’s common stock price during each reporting period prior to the date of adoption. New awards after the date of adoption are measured based on the grant date closing price of the Company’s common stock consistent with awards made to the Company’s employees and
non-employee
directors.