Annual report pursuant to Section 13 and 15(d)

Stock-Based Compensation Plans

v3.19.3.a.u2
Stock-Based Compensation Plans
12 Months Ended
Dec. 31, 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 Plan, which became effective upon the Company’s IPO. In February 2017, the board of directors amended 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. At December 31, 2019, there were 5,255,735 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 December 31, 201
9
, there were no issued or outstanding options, SARs, performance units or performance share awards under the 2013 Plan.
During the year ended December 31, 2019, 378,194 shares of RSUs were vested and 73,690 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. During the year ended December 31, 2019, there were no DSUs that
settled
.
Outstanding Awards
Activity under the 2013 Plan consisted of the following (dollars in thousands, except weighted average 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, 2017
(1)
   
30,732
     
500,859
     
450,264
     
981,855
    $
23.90
 
Granted
   
12,852
     
142,760
     
102,466
     
258,078
     
34.94
 
Vested
   
(16,488
)    
(146,122
)    
(171,114
)    
(333,724
)    
22.31
 
Transferred
   
     
(23,755
)    
23,755
     
     
30.69
 
Forfeited/canceled
   
     
(1,960
)    
(12,674
)    
(14,634
)    
30.17
 
                                         
Nonvested shares at December 31, 2018
(1)
   
27,096
     
471,782
     
392,697
     
891,575
    $
 27.59
 
Granted
   
12,806
     
260,274
     
82,050
     
355,130
     
38.51
 
Vested
   
(22,422
)    
(186,311
)    
(191,883
)    
(400,616
)    
24.29
 
Transferred
   
     
(8,136
)    
8,136
     
     
29.68
 
Forfeited/canceled
   
     
(12,494
)    
(33,520
)    
(46,014
)    
30.65
 
                                         
Nonvested shares at December 31, 2019
(1)
   
17,480
     
525,115
     
257,480
     
800,075
    $
 33.91
 
                                         
Unrecognized stock-based compensation expense as of December 31, 2019
(2)
  $
234
    $
13,959
    $
7,821
    $
22,014
     
 
                                         
Weighted average remaining vesting period (years) as of December 31, 2019
   
0.39
     
3.61
     
3.34
     
3.48
     
 
                                         
 
 
 
 
 
 
 
 
 
 
 
(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 3.48 years.
 
 
 
 
 
 
 
 
 
 
The aggregate fair value of RSUs and RSAs that vested were $14.6 million, $11.1 million and $7.8 million for the years ended December 31, 2019, 2018 and 2017, respectively.
The fair value of fully vested DSUs that settled was $0, $8.3 million and $10.2 million for the years ended December 31, 2019, 2018 and 2017, respectively. See “SARs and DSUs” section below and Note 15 – “Earnings per Share” for additional information. The remaining outstanding fully vested DSUs were 341,566 as of December 31, 2019 and 2018, and 578,618 as of December 31, 2017. Future share settlements of DSUs by year consisted of the following:
 
December 31,
 
2019
 
2021
   
60,373
 
2022
   
281,193
 
         
   
341,566
 
         
ESPP
In 2013, the Company adopted the 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 204,473 and 225,894 shares of common stock remain available for issuance for each of the periods at December 31, 2019 and 2018, respectively. 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 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 December 31, 2019, total unrecognized compensation cost related to the ESPP was $69,000 and is expected to be recognized over a weighted average period of 0.37 years.
SARs and 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 will be settled in actual stock at a rate of 20% per year if the participant remains 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.
Summary of Stock-Based Compensation
Components of stock-based compensation are included in selling, general and administrative expense in the consolidated statements of net and comprehensive income and consisted of the following (in thousands):
 
Years Ended December 31,
 
 
2019
 
 
2018
 
 
2017
 
ESPP
  $
139
    $
109
    $
128
 
RSAs –
non-employee
directors
   
643
     
632
     
397
 
RSUs – employees
(1)
   
5,419
     
4,233
     
3,750
 
RSUs – independent contractors
(2)
   
3,077
     
7,009
     
4,870
 
                         
  $
9,278
    $
11,983
    $
9,145
 
                         
(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 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.