Stock-Based Compensation

3 Months Ended

Mar. 31, 2020

Stock-Based Compensation

Stock-Based Compensation

Note 11—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 607,361 Restricted Stock Units (“Units”), net of forfeitures, to employees under the Equity Plan. The grants were documented in RSU Award Agreements, which provide for a vesting schedule and require continuing employment of the employee. The Units are subject to earlier acceleration, termination, cancellation or forfeiture as provided in the underlying RSU Award Agreement.

At March 31, 2020, a total of 260,630 Units were vested. The vesting schedule for the remaining Units are as follows:

	Number of Units
For the Years Ending December 31,	to Vest
2020 (remaining nine months)	23,896
2021	179,364
2022	84,415
2023	59,056
	346,731

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. We recognized $0.5 million in compensation expense for each of the three months ended March 31, 2020 and 2019, respectively. At March 31, 2020, approximately $5.4 million of unrecognized compensation expense remained for the Units, which will be recognized over a weighted average period of 2.4 years.

Vested Units accrue “Dividend Equivalent Units” (as defined in the Equity Plan), which will be accrued as additional Units until the Units are converted to Common Stock.  At March 31, 2020, a total of 2,401 Dividend Equivalent Units were accrued.