Note K - Accounting for Stock-Based Compensation

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE K—ACCOUNTING FOR STOCK-BASED COMPENSATION

Stock Incentive Plans

On June 4, 2010, the Company’s stockholders ratified the ICF International, Inc. 2010 Omnibus Incentive Plan (the “Omnibus Plan”), which was adopted by the Company on March 8, 2010. The Omnibus Plan replaced the 2006 Long-Term Equity Incentive Plan (the “2006 Plan”), which the Company had used for equity and incentive awards since becoming a publicly traded company in 2006. The Omnibus Plan provides for the granting of options, stock appreciation rights, restricted stock, RSUs, performance shares, performance units, cash-based awards, and other stock-based awards to officers, key employees of the Company, and non-employee directors. On June 7, 2013, the Company’s stockholders ratified an amendment (the “Amendment”) to the Omnibus Plan (“the Amended Plan”). The Amendment, upon adoption by the Company on June 7, 2013, allowed for the Company to grant an additional 1.8 million shares under the Omnibus Plan, for a total of approximately 3.55 million shares. Under the Amended Plan, shares awarded that are not stock options or stock appreciation rights are counted as 1.93 shares deducted from the Amended Plan for every one share delivered under those awards. Shares awarded that are stock options or stock appreciation rights are counted as a single share deducted from the Amended Plan for every one share delivered under those awards. As of December 31, 2013, the Company had approximately 2.1 million shares available to grant under the Amended Plan. CSRSUs have no impact on the shares available for grant under the Omnibus Plan, and have no impact on the calculated shares used in earnings per share calculations.

Options and RSUs generally have a vesting term of three to four years. Restricted stock awards generally vest upon issuance. CSRSUs generally vest annually over a four-year vesting term.

Total compensation expense relating to stock-based compensation was approximately $11.9 million, $8.8 million, and $6.7 million for the years ended December 31, 2013, 2012, and 2011, respectively.

As of December 31, 2013, the total unrecognized compensation expense related to non-vested stock awards totaled approximately $14.4 million. These amounts are expected to be recognized over a weighted-average period of 1.8 years.

The assumptions of post-vesting employment termination forfeiture rates used in the determination of fair value of stock awards during calendar year 2013 were based on the Company’s historical average from October 2006 through the 12 months preceding the reporting period. The expected annualized forfeiture rates used varied from 4.67% to 9.77%, and the Company does not expect these termination rates to vary significantly in the future.

Stock Options

Option awards are granted with an exercise price equal to the market value of the Company’s common stock on the date of grant. All options outstanding as of December 31, 2013, have a 10-year contractual term. The Company recorded approximately $1.6 million, $1.4 million, and $1.1 million of compensation expense related to stock options for the years ended December 31, 2013, 2012, and 2011, respectively. The fair value assumptions using the Black-Scholes-Merton pricing model for awards in 2013 were 5.4 years for the expected life, 36.8% for historical volatility, and 0.9% for the risk-free rate of return. The fair value assumptions for awards in 2012 were a range of 5.1 to 5.4 years for the expected life, a range of 41.0% to 42.3% for historical volatility, and a range of 0.7% to 1.1% for the risk-free rate of return. The fair value assumptions for awards in 2011 were 5.6 years for the expected life, 42.3% for historical volatility, and 2.2% for the risk-free rate of return. At December 31, 2013, unrecognized expense related to stock options totaled approximately $2.2 million, and these costs are expected to be recognized over a weighted average period of 2.2 years.

The following table summarizes the changes in outstanding stock options:

	Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2011		392,369		$	19.32
Exercised		(39,487	)	$	12.11
Granted		190,552		$	21.77
Forfeited/Expired		(82,781	)	$	21.85
Outstanding at December 31, 2011		460,653		$	20.50
Exercised		(11,521	)	$	6.73
Granted		203,436		$	25.39
Forfeited/Expired		(13,768	)	$	24.58
Outstanding at December 31, 2012		638,800		$	22.21
Exercised		(159,309	)	$	19.48
Granted		218,707		$	27.03
Forfeited/Expired		(3,646	)	$	24.84
Outstanding at December 31, 2013		694,552		$	24.34	$	7,203
Vested plus expected to vest at December 31, 2013		678,431		$	24.29	$	7,069
Exercisable at December 31, 2013		291,251		$	22.35	$	3,600

The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $34.71 as of December 31, 2013. The total intrinsic value of options exercised was $2.3 million, $0.2 million and $0.5 million for the years ended December 31, 2013, 2012 and 2011, respectively. The weighted average grant date fair value of options granted was $9.37, $9.77 and $9.18 per share for the years ended December 31, 2013, 2012 and 2011, respectively. The fair value of shares vested was $1.6 million, $1.0 million, and $0.7 million, for the years ended December 31, 2013, 2012 and 2011, respectively. As of December 31, 2013, the weighted-average remaining contractual term for options vested and expected to vest was 7.6 years, and 6.3 years for exercisable options.

Information regarding stock options outstanding as of the dates indicated is summarized below:

			OPTIONS OUTSTANDING						OPTIONS EXERCISABLE
Range of Exercise Prices			Number Outstanding As of 12/31/13		Weighted Average Remaining Contractual Term		Weighted Average Exercise Price		Number Exercisable As of 12/31/13		Weighted Average Exercise Price
$ 9.05	–	$25.00		306,472		6.20	$	21.70		241,765	$	21.67
$25.01	–	$27.00		169,373		8.21	$	25.66		49,486	$	25.66
$27.01	–	$28.00		218,707		9.21	$	27.03		—	$	—
$ 9.05	to	$28.00		694,552		7.64	$	24.34		291,251	$	22.35

Restricted Stock Awards

Pursuant to the Omnibus Plan, the Company issued 5,133 shares of restricted stock awards to its directors in the year ended December 31, 2013. The average grant date fair value of these restricted stock awards was $35.06 per share.

Compensation expense related to restricted stock awards computed under the fair value method for the years ended December 31, 2013, 2012, and 2011, was approximately $0.4 million, $0.8 million, and $0.8 million, respectively. There was no unrecognized expense related to restricted stock awards as of December 31, 2013.

A summary of the Company’s restricted stock awards is presented below.

	Number of Shares			Weighted- Average Grant Date Fair Value
Non-vested restricted stock awards at January 1, 2011		3,396		$	21.19
Granted		48,356		$	24.32
Vested		(17,088	)	$	23.87
Non-vested restricted stock awards at December 31, 2011		34,664		$	24.23
Granted		36,139		$	22.41
Vested		(34,664	)	$	24.23
Non-vested restricted stock awards at December 31, 2012		36,139		$	22.41
Granted		5,133		$	35.06
Vested		(35,958	)	$	24.19
Forfeited		(5,314	)	$	22.58
Non-vested restricted stock awards at December 31, 2013		—		$	—

The fair value of shares vested was $0.9 million, $0.8 million, and $0.4 million, for the years ended December 31, 2013, 2012 and 2011, respectively.

Restricted Stock Units

During the year ended December 31, 2013, the Company awarded 229,574 RSUs to employees that vest over 4 years. Upon vesting, the employee is issued one share of stock for each restricted stock unit he or she holds. The weighted-average grant date fair value of restricted stock units granted during the year ended December 31, 2013, was $27.02 per share.

Compensation expense related to RSUs computed under the fair value method for the years ended December 31, 2013, 2012, and 2011, was approximately $8.7 million, $6.6 million, and $4.8 million, respectively.

At December 31, 2013, unrecognized expense related to RSUs totaled approximately $12.2 million. These costs are expected to be recognized over a weighted-average period of 2.0 years. The aggregate intrinsic value of RSUs at December 31, 2013 that are expected to vest was approximately $25.0 million. The fair value of shares vested was $7.0 million, $5.7 million, and $4.0 million, for the years ended December 31, 2013, 2012 and 2011, respectively.

A summary of the Company’s RSUs is presented below. 

	Number of Shares			Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Non-vested RSUs at January 1, 2011		653,324		$	25.05
Granted		350,375		$	21.69
Vested		(176,251	)	$	22.56
Cancelled		(58,429	)	$	24.01
Non-vested RSUs at December 31, 2011		769,019		$	23.67
Granted		374,868		$	25.42
Vested		(230,632	)	$	24.66
Cancelled		(64,664	)	$	24.24
Non-vested RSUs at December 31, 2012		848,591		$	24.32
Granted		229,574		$	27.02
Vested		(288,258	)	$	24.28
Cancelled		(33,719	)	$	24.86
Non-vested RSUs at December 31, 2013		756,188		$	25.13	$	26,247
Restricted stock units expected to vest in the future		718,858		$	25.13	$	24,952

The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $34.71 per share as of December 31, 2013.

 Cash-Settled Restricted Stock Units

Compensation expense related to CSRSUs computed under the fair value method for the year ended December 31, 2013, was $1.2 million. The unrecognized expense related to CSRSUs totaled approximately $5.3 million at December 31, 2013. These costs are expected to be recognized over a weighted-average period of 3.3 years. The aggregate intrinsic value of CSRSUs at December 31, 2013 that are expected to vest was approximately $6.5 million.

A summary of the Company’s CSRSUs is presented below.

	Shares			Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Non-vested CSRSUs at December 31, 2012		—		$	—
Granted		203,115		$	27.84
Cancelled		(2,816	)	$	27.03
Non-vested CSRSUs at December 31, 2013		200,299		$	28.23	$	6,952
CSRSUs expected to vest in the future		187,760		$	28.30	$	6,517

The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $34.71 per share as of December 31, 2013.