Stock-Based Compensation

9 Months Ended

Sep. 30, 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 583,484 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 September 30, 2020, a total of 290,729 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 three months)	2,053
2021	154,613
2022	80,724
2023	55,365
	292,755

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 an 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 and $0.3 million in compensation expense for the three months ended September 30, 2020 and 2019, respectively, and $1.7 million and $1.2 million for the nine months ended September 30, 2020 and 2019, respectively. At September 30, 2020, approximately $3.6 million of unrecognized compensation expense remained for the Units, which will be recognized over a weighted average period of 2.1 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 September 30, 2020, a total of 2,652 Dividend Equivalent Units were accrued.