XML 79 R55.htm IDEA: XBRL DOCUMENT v3.10.0.1
Stock-based Compensation (Tables)
 12 Months Ended
Dec. 31, 2018
Summary of the stock-based compensation expense by instrument awarded

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 

 

 

2018

    

2017

    

2016

 

 

(in thousands)

Performance-based RSUs

 

$

12,425

 

$

11,020

 

$

9,475

Time-based RSUs

 

 

6,608

 

 

4,768

 

 

2,494

Stock options

 

 

6,218

 

 

4,909

 

 

4,464

Exchangeable PNMAC units

 

 

 —

 

 

 —

 

 

72

 

 

$

25,251

 

$

20,697

 

$

16,505

 

Summary of valuation assumptions, stock options

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

    

2018

    

2017

    

2016

 

Expected volatility (1)

 

30%

 

31%

 

28%

 

Expected dividends

 

0%

 

0%

 

0%

 

Risk-free interest rate

 

1.7% - 3.0%

 

0.8% - 2.7%

 

0.3% - 2.1%

 

Expected grantee forfeiture rate

 

0.0% - 23.2%

 

0.0% - 21.1%

 

0.0% - 20.2%

 

(1)

Based on historical volatilities of the Company’s common stock.

 

Summary of Stock Option award activity

Note 21—Stock‑based Compensation

 

The Company’s 2013 Equity Incentive Plan provides for grants of stock options, time-based and performance-based restricted stock units (“RSUs”), stock appreciation rights, performance units and stock grants. As of December 31, 2018, the Company has 3.9 million units available for future awards.

 

Following is a summary of the stock-based compensation expense by instrument awarded:

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 

 

 

2018

    

2017

    

2016

 

 

(in thousands)

Performance-based RSUs

 

$

12,425

 

$

11,020

 

$

9,475

Time-based RSUs

 

 

6,608

 

 

4,768

 

 

2,494

Stock options

 

 

6,218

 

 

4,909

 

 

4,464

Exchangeable PNMAC units

 

 

 —

 

 

 —

 

 

72

 

 

$

25,251

 

$

20,697

 

$

16,505

 

Performance‑Based RSUs

 

The performance‑based RSUs provide for the issuance of shares of the Company’s common stock based on the attainment of earnings per share and/or return on equity and are generally adjusted for grantee job performance ratings. The satisfaction of the performance goals and issuance of shares will be approved by a committee of the Company’s board of directors. Approximately 649,000 shares vested under the grants with a performance period ended December 31, 2018 will be issued to the grantees in March 2019.

 

The fair value of the performance‑based RSUs is measured based on the fair value of the Company’s common stock at the grant date, taking into consideration management’s estimate of the expected outcome of the performance goal, and the number of shares to be forfeited during the vesting period. The Company assumes forfeiture rates of 0 ‑ 23.2% per year based on the grantees’ employee classification. The actual number of shares that vest could vary from zero, if the performance goals are not met, to as much as 130% of the units granted, if the performance goals are meaningfully exceeded. 

 

The table below summarizes performance‑based RSU activity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

 

2018

 

2017

 

2016

 

 

 

(in thousands, except per unit amounts)

 

Number of units:

    

 

 

    

 

 

    

 

 

 

Outstanding at beginning of year

 

 

2,389

 

 

2,475

 

 

2,350

 

Granted

 

 

524

 

 

694

 

 

813

 

Vested (1)

 

 

(730)

 

 

(446)

 

 

 —

 

Forfeited or cancelled

 

 

(291)

 

 

(334)

 

 

(688)

 

Outstanding at end of year

 

 

1,892

 

 

2,389

    

 

2,475

 

Weighted average grant date fair value per unit:

 

 

 

 

 

 

 

 

 

 

Outstanding at beginning of year

 

$

15.57

 

$

14.24

 

$

16.30

 

Granted

 

$

24.40

 

$

18.04

 

$

11.28

 

Vested

 

$

12.86

 

$

13.65

 

$

 —

 

Forfeited

 

$

16.17

 

$

14.45

 

$

16.87

 

Outstanding at end of year

 

$

14.48

 

$

15.57

 

$

14.24

 

Compensation expense recorded during the year

 

$

12,425

 

$

11,020

 

$

9,475

 

(1)

The actual number of performance-based RSUs vested during the year ended December 31, 2018 was 774,000 shares, which is approximately 106% of the 730,000 originally granted units due to the performance goals exceeding the established target.

 

Following is a summary of performance-based RSUs as of December 31, 2018:

 

 

 

 

 

 

 

Unamortized compensation cost (in thousands)

 

 

 

 

$

5,805

Number of shares expected to vest (in thousands)

 

 

 

 

 

1,784

Weighted average remaining vesting period (in months)

 

 

 

 

 

11

 

 

Time‑Based RSUs

 

The RSU grant agreements provide for the award of time‑based RSUs, entitling the award recipient to one share of the Company’s common stock for each RSU. One‑third of the time‑based RSUs vest on each of the first, second, and third anniversaries of the grant date, subject to the recipient’s continued service through each anniversary.

 

Compensation cost relating to time‑based RSUs is based on the grant date fair value of the Company’s common stock and the number of shares expected to vest. For purposes of estimating the cost of the time‑based RSUs granted, the Company assumes forfeiture rates of 0 ‑ 23.2% per year based on the grantees’ employee classification.

 

The table below summarizes time‑based RSU activity:

 

 

 

 

 

 

 

 

 

 

 

 

    

Year ended December 31,

 

 

2018

 

2017

 

2016

 

 

(in thousands, except per unit amounts)

Number of units:

    

 

 

    

 

 

    

 

 

Outstanding at beginning of year

 

 

600

 

 

382

 

 

271

Granted

 

 

328

 

 

408

 

 

261

Vested

 

 

(254)

 

 

(173)

 

 

(127)

Forfeited

 

 

(47)

 

 

(17)

 

 

(23)

Outstanding at end of year

 

 

627

 

 

600

 

 

382

Weighted average grant date fair value per unit:

 

 

 

 

 

 

 

 

 

Outstanding at beginning of year

 

$

16.37

 

$

13.71

 

$

17.81

Granted

 

$

24.25

 

$

18.02

 

$

11.77

Vested

 

$

16.08

 

$

14.66

 

$

17.99

Forfeited

 

$

19.40

 

$

14.87

 

$

15.55

Outstanding at end of year

 

$

20.39

 

$

16.37

 

$

13.71

Compensation expense recorded during the year

 

$

6,608

 

$

4,768

 

$

2,494

 

Following is a summary of RSUs as of December 31, 2018:

 

 

 

 

 

 

 

 

Unamortized compensation cost (in thousands)

 

 

 

 

$

4,158

Number of units expected to vest (in thousands)

 

 

 

 

 

579

Weighted average remaining vesting period (in months)

 

 

 

 

 

11

 

Stock Options

 

The stock option award agreements provide for the award of stock options to purchase the optioned common stock. In general, and except as otherwise provided by the agreement, one‑third of the stock option awards vests on each of the first, second, and third anniversaries of the grant date, subject to the recipient’s continued service through each anniversary. Each stock option has a term of ten years from the date of grant but expires (1) immediately upon termination of the holder’s employment or other association with the Company for cause, (2) one year after the holder’s employment or other association is terminated due to death or disability and (3) three months after the holder’s employment or other association is terminated for any other reason.

 

The fair value of each stock option award is estimated on the date of grant using a variant of the Black Scholes model based on the following inputs:

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

    

2018

    

2017

    

2016

 

Expected volatility (1)

 

30%

 

31%

 

28%

 

Expected dividends

 

0%

 

0%

 

0%

 

Risk-free interest rate

 

1.7% - 3.0%

 

0.8% - 2.7%

 

0.3% - 2.1%

 

Expected grantee forfeiture rate

 

0.0% - 23.2%

 

0.0% - 21.1%

 

0.0% - 20.2%

 

(1)

Based on historical volatilities of the Company’s common stock.

 

The Company uses its historical employee departure behavior to estimate the grantee forfeiture rates used in its option‑pricing model.  The expected term of common stock options granted is derived from the Company’s option pricing model and represents the period that common stock options granted are expected to be outstanding. The risk‑free interest rate for periods within the contractual term of the common stock option is based on the U.S. Treasury yield curve in effect at the time of grant.

 

The table below summarizes stock option award activity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

    

2018

 

2017

 

2016

 

 

(in thousands, except per option amounts)

Number of stock options:

 

 

 

 

 

 

    

 

 

Outstanding at beginning of year

 

 

3,457

 

 

2,738

 

 

1,845

Granted

 

 

674

 

 

861

 

 

962

Exercised

 

 

(322)

 

 

(90)

 

 

(9)

Forfeited

 

 

(116)

 

 

(52)

 

 

(60)

Outstanding at end of year

 

 

3,693

 

 

3,457

 

 

2,738

Weighted average exercise price per option:

 

 

 

 

 

 

 

 

 

Outstanding at beginning of year

 

$

16.40

 

$

15.81

 

$

18.17

Granted

 

$

24.40

 

$

18.05

 

$

11.29

Exercised

 

$

16.24

 

$

15.04

 

$

17.33

Forfeited

 

$

18.46

 

$

15.58

 

$

15.66

Outstanding at end of year

 

$

17.81

 

$

16.40

 

$

15.81

Compensation expense recorded during the year

 

$

6,218

 

$

4,909

 

$

4,464

 

Following is a summary of stock options as of December 31, 2018:

 

 

 

 

 

 

 

 

Number of options exercisable at end of year (in thousands)

 

 

 

 

 

2,235

Weighted average exercise price per exercisable option

 

 

 

 

$

16.69

Weighted average remaining contractual term (in years):

 

 

 

 

 

 

Outstanding

 

 

 

 

 

7.0

Exercisable

 

 

 

 

 

6.0

Aggregate intrinsic value:

 

 

 

 

 

 

Outstanding (in thousands)

 

 

 

 

$

14,764

Exercisable (in thousands)

 

 

 

 

$

10,207

Expected vesting amounts:

 

 

 

 

 

 

Number of options expected to vest (in thousands)

 

 

 

 

 

1,368

Weighted average vesting period (in months)

 

 

 

 

 

10

 

Performance-based RSUs  
Summary of RSU activity and compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

 

2018

 

2017

 

2016

 

 

 

(in thousands, except per unit amounts)

 

Number of units:

    

 

 

    

 

 

    

 

 

 

Outstanding at beginning of year

 

 

2,389

 

 

2,475

 

 

2,350

 

Granted

 

 

524

 

 

694

 

 

813

 

Vested (1)

 

 

(730)

 

 

(446)

 

 

 —

 

Forfeited or cancelled

 

 

(291)

 

 

(334)

 

 

(688)

 

Outstanding at end of year

 

 

1,892

 

 

2,389

    

 

2,475

 

Weighted average grant date fair value per unit:

 

 

 

 

 

 

 

 

 

 

Outstanding at beginning of year

 

$

15.57

 

$

14.24

 

$

16.30

 

Granted

 

$

24.40

 

$

18.04

 

$

11.28

 

Vested

 

$

12.86

 

$

13.65

 

$

 —

 

Forfeited

 

$

16.17

 

$

14.45

 

$

16.87

 

Outstanding at end of year

 

$

14.48

 

$

15.57

 

$

14.24

 

Compensation expense recorded during the year

 

$

12,425

 

$

11,020

 

$

9,475

 

(1)

The actual number of performance-based RSUs vested during the year ended December 31, 2018 was 774,000 shares, which is approximately 106% of the 730,000 originally granted units due to the performance goals exceeding the established target.

 

Following is a summary of performance-based RSUs as of December 31, 2018:

 

 

 

 

 

 

 

Unamortized compensation cost (in thousands)

 

 

 

 

$

5,805

Number of shares expected to vest (in thousands)

 

 

 

 

 

1,784

Weighted average remaining vesting period (in months)

 

 

 

 

 

11

 

Time-based RSUs  
Summary of RSU activity and compensation expense

 

 

 

 

 

 

 

 

 

 

 

    

Year ended December 31,

 

 

2018

 

2017

 

2016

 

 

(in thousands, except per unit amounts)

Number of units:

    

 

 

    

 

 

    

 

 

Outstanding at beginning of year

 

 

600

 

 

382

 

 

271

Granted

 

 

328

 

 

408

 

 

261

Vested

 

 

(254)

 

 

(173)

 

 

(127)

Forfeited

 

 

(47)

 

 

(17)

 

 

(23)

Outstanding at end of year

 

 

627

 

 

600

 

 

382

Weighted average grant date fair value per unit:

 

 

 

 

 

 

 

 

 

Outstanding at beginning of year

 

$

16.37

 

$

13.71

 

$

17.81

Granted

 

$

24.25

 

$

18.02

 

$

11.77

Vested

 

$

16.08

 

$

14.66

 

$

17.99

Forfeited

 

$

19.40

 

$

14.87

 

$

15.55

Outstanding at end of year

 

$

20.39

 

$

16.37

 

$

13.71

Compensation expense recorded during the year

 

$

6,608

 

$

4,768

 

$

2,494

 

Following is a summary of RSUs as of December 31, 2018:

 

 

 

 

 

 

 

 

Unamortized compensation cost (in thousands)

 

 

 

 

$

4,158

Number of units expected to vest (in thousands)

 

 

 

 

 

579

Weighted average remaining vesting period (in months)

 

 

 

 

 

11