Note K - Accounting for Stock-based Compensation

12 Months Ended

Dec. 31, 2014

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 provides for the granting of options, stock appreciation rights, restricted stock, RSUs, performance shares, performance units, CSRSUs, 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 allowed for the Company to grant an additional 1.75 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, 2014, the Company had approximately 1.6 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.

Starting in the third quarter of 2013, the Company started granting awards of unregistered shares to its non-employee directors on a quarterly basis under its Annual Equity Election program to replace the previous restricted stock awards program. The awards are issued from the Company’s treasury stock and have no impact on the shares available for grant under the Omnibus Plan.

Options and RSUs generally have a vesting term of three or four years. Restricted stock awards generally have a vesting term of one year. CSRSUs generally have a vesting term of four years.

Total compensation expense relating to stock-based compensation was approximately $13.4 million, $11.9 million, and $8.8 million for the years ended December 31, 2014, 2013, and 2012, respectively. As of December 31, 2014, the total unrecognized compensation expense related to non-vested stock awards totaled approximately $16.4 million. These amounts are expected to be recognized over a weighted-average period of 2.3 years. The unrecognized expense related to CSRSUs totaled approximately $18.8 million at December 31, 2014. These costs are expected to be recognized over a weighted-average period of 3.3 years.

 The assumptions of post-vesting employment termination forfeiture rates used in the determination of fair value of stock awards during calendar year 2014 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 4.51% to 8.68%, 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, 2014 have a 10-year contractual term. The Company recorded approximately $1.9 million, $1.6 million, and $1.4 million of compensation expense related to stock options for the years ended December 31, 2014, 2013, and 2012, respectively. The fair value assumptions using the Black-Scholes-Merton pricing model for awards in 2014 were 5.1 years for the expected life, 33.0% for historical volatility, and 1.5% for the risk-free rate of return. 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. At December 31, 2014, unrecognized expense related to stock options totaled approximately $2.4 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:

						Aggregate
				Weighted		Intrinsic
				Average		Value
				Exercise		(in
	Shares			Price		thousands)
Outstanding at January 1, 2012		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
Exercised		(85,063	)	$	21.53
Granted		166,861		$	40.68
Forfeited/Expired		(9,426	)	$	25.53
Outstanding at December 31, 2014		766,924		$	28.20	$	9,804
Vested plus expected to vest at December 31, 2014		749,645		$	28.05	$	9,691
Exercisable at December 31, 2014		393,800		$	23.78	$	6,771

The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $40.98 as of December 31, 2014. The total intrinsic value of options exercised was $1.5 million, $2.3 million and $0.2 million for the years ended December 31, 2014, 2013 and 2012, respectively. The weighted average grant date fair value of options granted was $13.00, $9.37 and $9.77 per share for the years ended December 31, 2014, 2013 and 2012, respectively. The fair value of shares vested was $1.8 million, $1.6 million, and $1.0 million, for the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014, the weighted-average remaining contractual term for options vested and expected to vest was 7.3 years, and for exercisable options was 6.2 years.

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

			OPTIONS OUTSTANDING						OPTIONS EXERCISABLE
					Weighted
			Number		Average		Weighted		Number		Weighted
			Outstanding		Remaining		Average		Exercisable		Average
Range of			As of		Contractual		Exercise		As of		Exercise
Exercise Prices			12/31/14		Term		Price		12/31/14		Price
$ 9.05	–	$25.00		237,276		5.35	$	22.10		232,242	$	22.10
$25.01	–	$27.00		155,141		7.04	$	25.66		96,885	$	25.66
$27.01	–	$28.00		207,646		8.21	$	27.03		64,673	$	27.03
$28.01	–	$41.00		166,861		9.21	$	40.68		—	$	—
$9.05	to	$41.00		766,924		7.30	$	28.20		393,800	$	23.78

Restricted Stock Awards

Compensation expense related to restricted stock awards computed under the fair value method for the years ended December 31, 2013 and 2012, was approximately $0.2 million and $0.8 million, respectively. The Company did not grant restricted stock awards in 2014 and 2013. There was no unrecognized expense related to restricted stock awards as of December 31, 2014. The fair value of shares vested was $0.7 million and $0.8 million, for the years ended December 31, 2013 and 2012, respectively.

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

				Weighted-
				Average
				Grant
	Number of			Date Fair
	Shares			Value
Non-vested restricted stock awards at January 1, 2012		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		—		$	—
Vested		(30,825	)	$	22.38
Forfeited		(5,314	)	$	22.58
Non-vested restricted stock awards at December 31, 2013		—		$	—

Restricted Stock Units

During the year ended December 31, 2014, the Company awarded 265,811 RSUs to employees that vest over 4 years. Upon vesting, the employee is issued one share of stock for each RSU he or she holds. The weighted-average grant date fair value of RSUs granted during the year ended December 31, 2014, was $39.48 per share.

Compensation expense related to RSUs computed under the fair value method for the years ended December 31, 2014, 2013, and 2012, was approximately $7.8 million, $8.7 million, and $6.6 million, respectively.

At December 31, 2014, unrecognized expense related to RSUs totaled approximately $14.0 million. These costs are expected to be recognized over a weighted-average period of 2.2 years. The aggregate intrinsic value of RSUs at December 31, 2014 that are expected to vest was approximately $24.8 million. The fair value of shares vested was $8.2 million, $7.0 million, and $5.7 million, for the years ended December 31, 2014, 2013 and 2012, respectively.

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

				Weighted-
				Average		Aggregate
				Grant		Intrinsic
	Number of			Date Fair		Value
	Shares			Value		(in thousands)
Non-vested RSUs at January 1, 2012		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
Granted		265,811		$	39.48
Vested		(333,321	)	$	24.73
Cancelled		(44,791	)	$	27.33
Non-vested RSUs at December 31, 2014		643,887		$	31.10	$	26,386
Restricted stock units expected to vest in the future		604,341		$	31.10	$	24,766

The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $40.98 per share as of December 31, 2014.

 Cash-Settled Restricted Stock Units

Compensation expense related to CSRSUs computed under the fair value method for the years ended December 31, 2014 and 2013, was $3.2 million and $1.2 million, respectively. The unrecognized expense related to CSRSUs totaled approximately $18.8 million at December 31, 2014. 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, 2014 that are expected to vest was approximately $20.4 million. CSRSUs have no impact on the shares available for grant under the Omnibus Plan.

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

				Weighted-
				Average		Aggregate
				Grant		Intrinsic
				Date Fair		Value
	Shares			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
Granted		416,432		$	39.12
Vested		(47,742	)	$	27.55
Cancelled		(31,870	)	$	32.12
Non-vested CSRSUs at December 31, 2014		537,119		$	36.36	$	22,011
CSRSUs expected to vest in the future		497,997		$	36.32	$	20,408

The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $40.98 per share as of December 31, 2014.

Non-Employee Director Awards

During the year ended December 31, 2014, the Company granted 15,872 shares related to non-employee director awards at a weighted-average grant date fair value of $36.08. During the year ended December 31, 2013, the Company granted 5,133 shares related to non-employee director awards at a weighted-average grant date fair value of $35.06. Non-employee director awards are comprised of unregistered shares and have no impact on the shares available for grant under the Omnibus Plan. Compensation expense related to non-employee director awards computed under the fair value method for the years ended December 31, 2014 and 2013 was $0.5 million and $0.2 million, respectively. There was no unrecognized expense related to these awards as of December 31, 2014.