Stock-Based Compensation

9 Months Ended

Sep. 30, 2017

Note 13—Stock-Based Compensation

In July 2008, the shareholders approved and the Company adopted the Primoris Services Corporation 2008 Long-term Incentive Equity Plan, which was replaced by the Primoris Services Corporation 2013 Long-term Incentive Equity Plan (“Equity Plan”), after approval by the shareholders and adoption by the Company on May 3, 2013.

The Company’s Board of Directors has granted 259,065 Restricted Stock Units (“Units”) to executives under the Equity Plan. The grants were documented in RSU Award Agreements, which provide for a vesting schedule and require continuing employment of the executive. The Units are subject to earlier acceleration, termination, cancellation or forfeiture as provided in the underlying RSU Award Agreement. During the nine months ended September 30, 2017 and 2016, the Company issued 10,000 Units and 100,553 Units, respectively

At September 30, 2017, a total of 173,650 Units were vested. The vesting schedule for the remaining Units are as follows:


		Number of Units
For the Years Ending December 31,		to Vest
2017 (remaining three months)		—
2018		28,471
2019		51,552
2020		5,392
		85,415

Under guidance of ASC Topic 718 “Compensation — Stock Compensation”, stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the stock-based award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the award).

The fair value of the Units was based on the closing market price of our common stock on the day prior to the date of the grant. Stock compensation expense for the Units is being amortized using the straight-line method over the service period. The Company recognized $0.2 million and $0.5 million in compensation expense for the three months ended September 30, 2017 and 2016, respectively, and $0.9 million and $1.2 million in compensation expense for the nine months ended September 30, 2017 and 2016, respectively. At September 30, 2017, approximately $1.4 million of unrecognized compensation expense remained for the Units, which will be recognized over a weighted average period of 1.8 years.

Vested Units accrue “Dividend Equivalent Units” (as defined in the Equity Plan), which will be accrued as additional Units. At September 30, 2017, a total of 2,707 Dividend Equivalent Units were accrued.