Annual report pursuant to Section 13 and 15(d)

Stock-Based Compensation Plans

v3.20.4
Stock-Based Compensation Plans
 12 Months Ended
Dec. 31, 2020
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 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. At December 31, 2020, there were 4,915,494 shares available for future grants under the 2013 Plan.
Awards Granted and Settled
Under the 2013 Plan, the Company has issued RSAs to
non-employee
directors and RSUs to employees and independent contractors. RSAs generally vest over a
one-year
period from the date of grant
 subject to service requirements
. RSUs generally 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. As of December 31, 2020, there were no issued or outstanding options, SARs, performance units or performance share awards under the 2013 Plan.
During the year ended December 31, 2020, 264,235 shares of RSUs vested and 62,566 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, 2020, 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  
  
 
 
    
 
 
    
 
 
    
 
 
    
Granted
      19,516       322,910       92,279       434,705       32.80  
Vested
      (20,268 )      (170,291 )      (93,944 )      (284,503 )      32.74  
Transferred
      —         (18,294 )      18,294       —         33.67  
Forfeited/canceled
      —         (21,790 )      (10,108 )      (31,898 )      34.49  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Nonvested shares at December 31, 2020
(1)
      16,728       637,650       264,001       918,379       33.73  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Unrecognized stock-based compensation expense as of December 31, 2020
(2)
    $ 153     $ 17,718     $ 7,555     $ 25,426          
    
 
 
    
 
 
    
 
 
    
 
 
          
Weighted average remaining vesting period (years) as of December 31, 2020
      0.34       3.58       3.13       3.42          
    
 
 
    
 
 
    
 
 
    
 
 
          
 
(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 3.42
 
years.
The aggregate fair value of RSUs and RSAs that vested were $8.9 million, $14.6 million and $11.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.
The fair value of fully vested DSUs that settled was $0
 million
, $0 million and $8.3 million for the years ended December 31, 2020, 2019 and 2018, 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, 2020, 2019 and 2018. Future share settlements of DSUs by year consisted of the following:
 
    
December 31, 2020
  
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 176,877 and 204,473 shares of common stock remain available for issuance as of  December 31, 2020 and 2019, 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, 2020, total unrecognized compensation cost related to the ESPP was $74,000 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,
  
    
2020
     
2019
     
2018
  
ESPP
    $ 168      $ 139      $ 109  
RSAs –
non-employee
directors
      606        643        632  
RSUs – employees
(1)
      6,003        5,419        4,233  
RSUs – independent contractors
(2)
      3,128        3,077        7,009  
    
 
 
     
 
 
     
 
 
  
     $ 9,905      $ 9,278      $ 11,983  
    
 
 
     
 
 
     
 
 
  
 
(1)
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.