Stock-Based Compensation and Employee Benefits

12 Months Ended

Dec. 31, 2019

Stock-Based Compensation and Employee Benefits

We have a qualified retirement plan with a salary deferral feature designed to qualify under Section 401 of the Internal Revenue Code (“the 401(k) Plan”). The 401(k) Plan permits our employees to defer a portion of their compensation. Matching contributions may be made in amounts and at times determined by the Company. We contributed approximately $9.5 million, $9.6 million, and $8.4 million for the years ended December 31, 2019, 2018 and 2017, respectively. Employees are eligible to participate in the 401(k) Plan when they meet certain requirements concerning minimum age and period of credited service. All contributions to the 401(k) Plan are invested in accordance with participant elections among certain investment options.

We also offer a non-qualified deferred compensation plan for our executives and key members of management in order to assist us in attracting and retaining these individuals. Participants in the plan may elect to defer up to 75% of their annual salary and/or short-term incentive payout into deferral accounts that mirror the gains or losses of investments selected by the participants. The plan allows us to make discretionary contributions on behalf of a participant as well as matching contributions. We made matching contributions of $1.0 million in both 2019 and 2018 and made discretionary contributions of $260,000 in 2017. All participant contributions to the plan and any related earnings are immediately vested and may be withdrawn upon the participant's separation from service, death or disability or upon a date specified by the participant. Salary deferrals are recorded as salaries and employee benefits expense in the consolidated statements of income with an offsetting payable to participants in other liabilities on the consolidated balance sheets.

We have an Employee Stock Purchase Plan (“ESPP”). Employees are eligible for the ESPP when they meet certain requirements concerning period of credited service and minimum hours worked. Eligible employees may contribute a between 1% and 10% of eligible compensation up to the Section 423 of the Internal Revenue Code limit of $25,000. In 2006, stockholders approved the ESPP, which allocated 400,000 shares for purchase. As of December 31, 2019, 2018 and 2017, 155,933, 143,348 and 132,285 shares had been purchased on behalf of employees under the ESPP.

We have stock-based compensation plans under which equity-based compensation grants are made by the board of directors, or its designated committee. Grants are subject to vesting requirements. Under the plans, we may grant, among other things, non-qualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights (“SARs”), cash-settled performance units or any combination thereof to employees and non-employee directors. A total of 2,550,000 shares are authorized for grant under the plans. Total shares remaining available for grant under the plans at December 31, 2019 were 1,772,070.

A summary of our SAR activity and related information is as follows. Grants of SARs include time-based vesting conditions that generally vest ratably over a period of five years.



	December 31, 2019					December 31, 2018					December 31, 2017
	SARs			Weighted Average Exercise Price		SARs			Weighted Average Exercise Price		SARs			Weighted Average Exercise Price
SARs outstanding at beginning of year	41,350			$	29.13	74,363			$	30.12	125,863			$	31.68
SARs exercised	(20,150		)	24.07		(33,013		)	31.35		(51,500		)	33.94
SARs outstanding at year-end	21,200			$	33.95	41,350			$	29.13	74,363			$	30.12
SARs vested and exercisable at year-end	21,200			$	33.95	39,750			$	27.81	60,463			$	26.02
Weighted average remaining contractual life of SARs vested (in years)				2.14					2.33					2.82
Weighted average remaining contractual life of SARs outstanding (in years)				2.14					2.44					3.35
Compensation expense	$	6,000				$	121,000				$	265,000
Unrecognized compensation expense	$	—				$	6,000				$	127,000
Weighted average period over which unrecognized compensation expense is expected to be recognized (in years)				0.00					0.17					0.75
Fair value of shares vested during the year	$	37,000				$	211,000				$	294,000
Intrinsic value of SARs exercised	$	724,000				$	1,919,000				$	3,802,000

A summary of our RSU activity and related information is as follows. Grants of RSUs include time-based vesting conditions that generally vest ratably over a period of three to five years. Additionally, from time to time, grants of RSUs with both time-based and performance-based vesting conditions are made that generally vest at the end of a three or four year period.



	December 31, 2019					December 31, 2018					December 31, 2017
	RSUs			Weighted Average Grant Date Fair Value		RSUs			Weighted Average Grant Date Fair Value		RSUs			Weighted Average Grant Date Fair Value
RSUs outstanding at beginning of year	349,533			$	69.11	423,732			$	60.01	425,055			$	51.28
RSUs granted	386,913			59.28		95,891			88.07		121,243			80.40
RSUs vested	(140,666		)	59.97		(121,507		)	54.97		(102,057		)	48.93
RSUs forfeited	(37,468		)	62.73		(48,583		)	63.60		(20,509		)	54.75
RSUs outstanding at year-end	558,312			$	64.95	349,533			$	69.11	423,732			$	60.01
Compensation expense	$	11,733,000				$	8,803,000				$	7,790,000
Unrecognized compensation expense	$	25,305,000				$	16,538,000				$	18,730,000
Weighted average period over which unrecognized compensation expense is expected to be recognized (in years)				3.09					2.90					3.15

New non-employee directors receive grants of restricted common stock as to which restrictions lapse ratably over a period of three years. Compensation expense for these grants was $36,000, $62,000 and $61,000 for the years ended December 31, 2019, 2018 and 2017, respectively.

Total compensation cost for all share-based arrangements was $11.8 million, $9.0 million and $8.1 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Cash-settled units totaling 163,856 were outstanding at December 31, 2019, all of which are time-based and vest ratably over a period of four years. We granted 138,773 and 121,260 cash-settled units in 2018 and 2017, respectively. No grants were made in 2019. Since these units have a cash payout feature, they are accounted for under the liability method with related expense based on the stock price at period end. Compensation cost for the cash-settled units was $5.8 million, $8.0 million and $13.9 million for the years ended December 31, 2019, 2018 and 2017, respectively.