Note 18—Deferred Compensation Agreements and Stock-Based Compensation

Primoris Long-Term Retention Plan (“LTR Plan”) — We adopted a long-term retention plan for certain senior managers and executives. The voluntary plan provides for the deferral of one half of the participant’s annual earned bonus for one year. Generally, except in the case of death, disability or involuntary separation from service, the deferred compensation is vested to the participant only if actively employed by us on the payment date of bonus amounts the following year. The amount of compensation deferred under this plan is calculated each year. Total deferred compensation liability under this plan as of December 31, 2017 and 2016 was $5.7 million and $4.5 million, respectively.

Participants in the long term retention plan may elect to purchase our common stock at a discounted price. For bonuses earned in 2017 and 2016, the participants could use up to one sixth of their bonus amount to purchase shares of stock. The purchase price was calculated as 75% of the average market closing price for the month of December 2017 and January 2017, respectively. The discount is treated as compensation to the participant.

Stock-based compensation — In May 2013, the shareholders approved and we adopted the Primoris Services Corporation 2013 Long-term Incentive Equity Plan (“Equity Plan”). Our 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. The table below presents the Units activity for 2017:


Nonvested RSUs	Units	Weighted Average Grant Date Fair Value per Unit
Balance at December 31, 2016	149,809	$	24.70
Granted	10,000		22.90
Vested	(74,394)		25.53
Balance at December 31, 2017	85,415		23.76

During 2016, 100,553 Units were granted with a weighted-average grant-date fair value per unit of $23.87. There were no Units granted during 2015. The total fair value of Units that vested during 2017, 2016 and 2015 was $1.7 million, $0.6 million and $0.9 million, respectively

At December 31, 2017, a total of 173,650 Units were vested. The vesting schedule for the remaining Units follows:


		Number of Units
For the Years Ending December 31,		to Vest
2018		28,471
2019		51,552
2020		5,392
		85,415

Under guidance of ASC 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. For the twelve months ended December 31, 2017, 2016, and 2015, we recognized $1.1 million, $1.6 million, and $1.1 million respectively, in compensation expense. At December 31, 2017, approximately $1.2 million of unrecognized compensation expense remains for the Units, which will be recognized over a weighted average period of 1.6 years.

Vested Units accrue “Dividend Equivalents” (as defined in the Equity Plan) which will be accrued as additional Units. At December 31, 2017, a total of 3,097 Dividend Equivalent Units were accrued.