Equity-Based Compensation

3 Months Ended

Mar. 31, 2017

Share Based Compensation [Abstract]

Equity-Based Compensation

NOTE 8. EQUITY-BASED COMPENSATION

As of March 31, 2017, we had two stock incentive plans under which performance shares, restricted stock units (RSUs) and deferred compensation stock equivalent units were outstanding. These plans have received shareholder approval. We were originally authorized to issue up to 1.6 million shares and 1.0 million shares under our 2005 Stock Incentive Plan and 2014 Stock Incentive Plan, respectively. At March 31, 2017, approximately 1.0 million shares were authorized for future use. We issue new shares of common stock to settle performance shares, restricted stock units and deferred compensation stock equivalent units.

The following table details equity-based compensation expense and the related income tax benefit:

	Three Months Ended March 31,
(Dollars in thousands)	2017		2016
Employee equity-based compensation expense:
Performance shares	$	868	$	754
Restricted stock units		289		200
Total employee equity-based compensation expense	$	1,157	$	954
Deferred compensation stock equivalent units expense	$	161	$	200
Total tax benefit recognized for share-based expense	$	93	$	66

PERFORMANCE SHARES

The following table presents the key inputs used in the Monte Carlo simulation to calculate the fair value of performance share awards in 2017 and 2016:

	Three Months Ended March 31,
	2017			2016
Stock price as of valuation date	$	43.60		$	25.92
Risk-free rate		1.61	%		0.88	%
Expected volatility		24.22	%		23.82	%
Expected dividends		3.44	%		5.79	%
Expected term (years)		3.00			3.00
Fair value	$	53.85		$	30.02

The following table summarizes outstanding performance share awards as of March 31, 2017, and changes during the three months ended March 31, 2017:

(Dollars in thousands, except grant date fair value)	Shares		Weighted-Avg. Grant Date Fair Value		Aggregate Intrinsic Value
Unvested shares outstanding at January 1		203,788	$	32.59
Granted		78,033	$	53.85
Unvested shares outstanding at March 31		281,821	$	38.48	$	10,844

As of March 31, 2017, there was $6.7 million of unrecognized compensation cost related to unvested performance share awards, which is expected to be recognized over a weighted-average period of 1.8 years.

RESTRICTED STOCK UNITS

The following table summarizes outstanding RSU awards as of March 31, 2017, and changes during the three months ended March 31, 2017:

(Dollars in thousands, except grant date fair value)	Shares			Weighted-Avg. Grant Date Fair Value		Aggregate Intrinsic Value
Unvested shares outstanding at January 1		71,420		$	31.61
Granted		26,007		$	43.60
Vested		(500	)	$	25.92
Unvested shares outstanding at March 31		96,927		$	34.86	$	4,430

The fair value of each RSU equaled our common share price on the date of grant. The total fair value of RSU awards that vested during the three months ended March 31, 2017 was de minimis. As of March 31, 2017, there was $2.1 million of total unrecognized compensation cost related to unvested RSU awards, which is expected to be recognized over a weighted-average period of 1.9 years.

DEFERRED COMPENSATION STOCK EQUIVALENT UNITS

A long-term incentive award is granted annually to our directors and is payable upon a director's separation from service. Directors may also elect to defer their quarterly retainers, which may be payable in the form of stock. All stock unit equivalent accounts are credited with dividend equivalents. As of March 31, 2017, there were 134,832 shares outstanding that will be distributed in the future to directors as common stock.  

Issuance of restricted stock units awarded to certain officers and select employees may also be deferred.  All stock unit equivalent accounts are credited with dividend equivalents.  As of March 31, 2017, 72,718 RSUs have vested, but issuance of the related stock has been deferred.