STOCK-BASED COMPENSATION PLANS

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION PLANS

STOCK-BASED COMPENSATION PLANS

The Company has one stockholder-approved stock-based compensation plan.

Equity Incentive Plan

The Company's equity incentive plan was approved by stockholders on April 27, 2005 and May 20, 2014. The Company is authorized to issue awards up to 2,000,000 shares of common stock.

During 2015 and 2014, the Company granted annual Restricted Stock Awards (RSAs) of 61,862 shares and 60,467 shares, respectively, of common stock to officers and directors of the Company. In 2015, 18,452 RSA shares were canceled and 10,544 RSA shares were canceled in 2014. Employee RSAs granted in 2015 and 2014 vest over 36 months with the first year cliff vesting. Director RSAs generally vest at the end of 12 months. During 2015 and 2014, the shares granted were valued at $24.27 and $23.62 per share, respectively, based upon the fair market value of the Company's common stock on the date of grant.

The Company granted performance-based Restricted Stock Unit Awards (RSUs) of 38,983 shares, 39,232 shares and 50,267 shares of common stock to officers in 2015, 2014 and 2013. Each award reflects a target number of shares that may be issued to the award recipient. The awards may be earned upon the completion of a 3-year performance period ending on December 31, 2015 for the 2013 RSUs, December 31, 2016 for the 2014 RSUs, and December 31, 2017 for the 2015 RSUs . Whether RSUs are earned at the end of the performance period will be determined based on the achievement of certain performance objectives set by the Board of Director Compensation Committee in connection with the issuance of the RSUs. The performance objectives are based on the Company's business plan covering the performance period. The performance objectives include achieving the budgeted return on equity, budgeted investment in utility plant, customer service standards, employee safety standards and water quality standards. Depending on the results achieved during the 3-year performance period, the actual number of shares that a grant recipient receives at the end of the performance period may range from 0% to 200% of the target shares granted, provided that the grantee is continuously employed by the Company through the vesting date. If prior to the vesting date employment is terminated by reason of death, disability or normal retirement, then a pro rata portion of this award will vest. RSUs are not included in diluted shares for financial reporting until earned. The RSUs are recognized as expense ratably over the 3 year performance period using a fair market value of $24.28 per share for the 2015 RSUs, $23.61 per share for the 2014 RSUs, and $20.62 per share for the 2013 RSUs and an estimate of RSUs earned during the performance period.

The Company has recorded compensation costs for the RSAs and RSUs which are included in administrative and general operating expenses in the amount of $2.9 million, $2.2 million, and $1.8 million for 2015, 2014 and 2013, respectively.