Share-Based Compensation

12 Months Ended

Dec. 31, 2019

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

The Company accounts for its share-based compensation by recognizing the grant date fair value of share-based awards, net of estimated forfeitures, as share-based compensation expense over the underlying requisite service periods of the related awards. The grant date fair value is based upon the Company’s share price on the date of grant.

The following table reflects the total share-based compensation expense amounts reported in the accompanying Consolidated Statements of Operations:



	Year Ended December 31,
	2019		2018		2017
	(In thousands)
Cost of ATM operating revenues	$	1,488	$	788	$	543
Selling, general, and administrative expenses	19,474		14,872		13,852
Total share-based compensation expense	$	20,962	$	15,660	$	14,395

Total share-based compensation expense increased by $5.3 million during the year ended December 31, 2019 compared to the prior year due to the amount, timing and terms of share-based payment awards granted during the periods and also the recognition of comparatively higher estimated payouts for the performance-based awards granted in 2018. Total share-based compensation

expense in 2017 was somewhat lower due to a higher level of forfeitures during that period as a result of the Company’s Restructuring Plan and the associated employee terminations. The employee terminations resulted in the net reversal of $1.5 million in share-based compensation expense during 2017.

Share-based compensation plans. The Company currently has two long-term incentive plans - the Fourth Amended and Restated 2007 Stock Incentive Plan (as amended, the “2007 Plan”) and the 2001 Stock Incentive Plan (“2001 Plan”). The purpose of each of these plans is to provide members of the Board and employees of the Company additional incentive and reward opportunities designed to enhance the profitable growth of the Company. Equity grants awarded under these plans generally vest in various increments up to four years based on continued employment. The Company handles stock option exercises and other share grants through the issuance of new common shares. All grants during the periods above were made under the 2007 Plan.

2007 Plan. The 2007 Plan provides for the granting of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code, options that do not constitute incentive stock options, Restricted Stock Awards (“RSAs”), phantom share awards, Restricted Stock Units (“RSUs”), bonus share awards, performance awards, and annual incentive awards. The number of common shares that may be issued under the 2007 Plan may not exceed 9,679,393 shares. The shares issued under the 2007 Plan are subject to further adjustment to reflect share dividends, share splits, recapitalizations, and similar changes in the Company’s capital structure. As of December 31, 2019, 796,680 options and 7,423,974 shares of RSAs and RSUs, net of cancellations, had been granted under the 2007 Plan and options to purchase 301,875 common shares have been exercised.

2001 Plan. No awards were granted in 2019, 2018, and 2017 under the Company’s 2001 Plan. As of December 31, 2019, options to purchase an aggregate of 6,438,172 common shares, net of cancellations, had been granted pursuant to the 2001 Plan, all of which the Company considered as non-qualified stock options, and 6,306,821 of these options had been exercised.

Restricted Stock Units. The Company grants RSUs under its Long-Term Incentive Plan (“LTIP”), which is an annual equity award program under the 2007 Plan. The ultimate number of RSUs that are available to be earned under the LTIP are approved by the Compensation Committee of the Company’s Board of Directors on an annual basis based on the Company’s achievement of certain performance levels during the associated performance period. The majority of these grants have both a service-based and a performance-based vesting schedule, dependent on Company financial results (“Performance-RSUs”), and for these the Company recognizes the related compensation expense based on the estimated performance levels that management believes will ultimately be met over the related vesting schedule. In addition, a portion of the awards have only a service-based vesting schedule (“Time-RSUs”) and the associated expense is recognized ratably over the related vesting schedule, which can be up to four years. Finally, a portion of the awards have both a service-based and a market-based vesting schedule (“Market-Based-RSUs”). For these grants, the Company recognizes the estimated grant date fair value over the performance period (typically a 36-month period). Performance-RSUs, Time-RSUs, and Market-Based RSUs are convertible into the Company’s common shares after the passage of the vesting periods. Performance-RSUs and Market-Based RSUs will be earned to the extent the Company achieves the associated performance-based or market-based vesting conditions. Although these RSUs are not considered to be earned and outstanding until the vesting conditions are met, the Company recognizes the related compensation expense over the requisite service period (or to an employee’s qualified retirement date, if earlier) using a graded vesting methodology. RSUs are also granted outside of LTIPs, with or without performance-based or market-based vesting conditions.

The number of the Company’s non-vested RSUs as of December 31 2019, 2018, and 2017 and the changes during these years are presented below:



	Number of Shares		Weighted Average Grant Date Fair Value
Non-vested RSUs as of January 1, 2017	971,751		$	37.08
Granted	723,654		37.80
Vested	(532,815	)	36.57
Forfeited	(156,581	)	37.01
Non-vested RSUs as of December 31, 2017	1,006,009		37.88
Granted	723,045		26.96
Vested	(657,814	)	38.67
Forfeited	(160,075	)	37.34
Non-vested RSUs as of December 31, 2018	911,165		28.74
Granted	268,360		32.29
Vested	(397,451	)	29.60
Forfeited	(39,722	)	31.13
Non-vested RSUs as of December 31, 2019	742,352		$	29.44

The above table only includes earned RSUs; therefore, the Performance-RSUs and Market-Based RSUs granted in 2018 and 2019 but not yet earned are not included. The number of Performance-RSUs granted at target in 2019, net of actual forfeitures, was 118,367 units with a grant date fair value of $33.75 per unit. The number of Market-Based RSUs granted in 2019, net of actual forfeitures, was 118,285 units with a grant date fair value of $49.21 per unit. The number of Performance-RSUs granted at target in 2018, net of actual forfeitures, was 304,114 units with a grant date fair value of $22.84 per unit. The number of Market-Based RSUs granted in 2018, net of actual forfeitures, was 134,989 units with a grant date fair value of $24.13 per unit. Time-RSUs are included as granted. The weighted average grant date fair value of the RSUs granted was $32.29, $26.96, and $37.80 for the years ended December 31, 2019, 2018, and 2017, respectively. The total fair value of RSUs that vested during the years ended December 31, 2019, 2018, and 2017 was $12.7 million, $16.7 million, and $26.0 million, respectively. Compensation expense associated with RSUs totaled $19.5 million, $15.1 million, and $14.5 million for the years ended December 31, 2019, 2018, and 2017, respectively. As of December 31, 2019, the unrecognized compensation expense associated with earned RSUs was $9.3 million, which will be recognized using a graded vesting schedule for Performance-RSUs and a straight-line vesting schedule for Time-RSUs, over a remaining weighted average vesting period of approximately 1.7 years.

Options. The number of the Company’s outstanding stock options as of December 31, 2019, 2018 and 2017 and the changes during these years are presented below:



	Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term
					(in thousands)
Options outstanding as of January 1, 2018	1,250		$	9.69
Granted	234,959		22.31
Exercised	(1,250	)	9.69
Options outstanding as of December 31, 2018	234,959		$	22.31	$	867	9.25	years
Granted	145,221		31.99
Exercised	—		—
Options outstanding as of December 31, 2019	380,180		$	26.01	$	7,087	8.60	years

Options vested and exercisable as of December 31, 2019	78,326		$	22.31	$	—	—	years

During the year ended December 31, 2019, no options were exercised. During the years ended December 31, 2017, the total intrinsic value of options exercised, estimated tax benefits to the Company of the options exercised, and the cash received by the Company as a result of the option exercised were all immaterial.

Fair value assumptions. The Company utilizes the Black-Scholes option-pricing model to value options, which requires the input of certain subjective assumptions, including the expected life of the options, expected volatility of the Company's common equity, expected dividend rate, a risk-free interest rate, and an estimated forfeiture rate. These assumptions are based on management’s best estimate at the time of grant. No options were granted in 2017. The value assumptions for the option awards granted in the years ended December 31, 2019 and 2018 are presented below:



Valuation assumptions:	Options Granted in 2019		Options Granted in 2018
Expected option term (in years)	6.0		6.0
Expected stock price volatility	39.87	%	33.02	%
Expected dividend yield	—	%	—	%
Risk-free interest rate	2.46	%	2.62	%