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Note 11. Share-based Compensation
 6 Months Ended
Jun. 30, 2015
Notes  
Note 11. Share-based Compensation

Note11.                       Share-Based Compensation

 

IHC and AMIC each have share-based compensation plans. The following is a summary of the activity pertaining to each of these plans.

 

A)  IHC Share-Based Compensation Plans

 

Under the terms of IHC’s stock-based compensation plans, option exercise prices are more than or equal to the quoted market price of the shares at the date of grant; option terms are generally five years; and vesting periods are generally three years. The fair value of an option award is estimated on the date of grant using the Black-Scholes option valuation model. In addition to stock options, the Company has also granted restricted stock units, share appreciation rights (“SARs”) and share-based performance awards under the plans. Restricted share units are valued at the quoted market price of the shares at the date of grant and have a three year vesting period. Compensation costs for options and restricted share units are recognized over the stated vesting periods on a straight-line basis. Exercise prices of SARs are more than or equal to the quoted market price of IHC shares at the date of the grant and have three year vesting periods. The fair value of SARs is calculated using the Black-Scholes valuation model at the grant date and each subsequent reporting period until settlement. Compensation cost is based on the proportionate amount of the requisite service that has been rendered to date. Once fully vested, changes in fair value of the SARs continue to be recognized as compensation expense in the period of the change until settlement.

 

At June 30, 2015, there were 369,861 shares available for future stock-based compensation grants under IHC’s stock incentive plans. The following table summarizes share-based compensation expense, which is included in selling, general and administrative expenses on the Condensed Consolidated Statements of Income, applicable to the IHC plans, by award type for each of the periods indicated (in thousands):

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2015

 

2014

 

 

2015

 

2014

IHC’s Share-based Compensation Plan:

 

 

 

 

 

 

 

 

 

Stock options

$

            - 

$

         471

 

$

          55 

$

      537

Restricted stock units

 

         23 

 

           23

 

 

          44 

 

         42

SARs

 

       (28)

 

         158

 

 

        (57)

 

         77

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense, pre-tax

 

         (5)

 

         652

 

 

          42 

 

      656

Tax benefits

 

         (2)

 

         260

 

 

          17 

 

      262

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense, net

$

         (3)

$

         392

 

$

          25 

$

      394

 

Stock Options

 

The IHC’s stock option activity during 2015 was as follows:

 

 

 

Shares

 

Weighted- Average

 

 

Under Option

 

Exercise Price

 

 

 

 

 

December 31, 2014

 

614,680 

 

$

9.33

Exercised

 

(14,600)

 

 

9.09

June 30, 2015

 

600,080 

 

$

9.34

 

In 2015, IHC received $133,000 in cash from the exercise of stock options with an aggregate intrinsic value of $63,000 and realized $10,000 of tax benefits.

 

The following table summarizes information regarding IHC’s outstanding and exercisable options:

 

 

 

June 30, 2015

 

 

Outstanding

 

Exercisable

 

 

 

 

 

Number of options

 

600,080

 

600,080

Weighted average exercise price per share

$

9.34

$

9.34

Aggregate intrinsic value for all options (in thousands)

$

2,311

$

2,311

Weighted average contractual term remaining

 

1.8 years

 

1.8 years

 

At June 30, 2015, all of IHC’s outstanding stock options are fully vested and all of the related compensation costs have been recognized.

 

Restricted Stock

 

The following table summarizes restricted stock activity for the six months ended June 30, 2015:

 

 

 

No. of

 

Weighted-Average

 

 

Non-vested

 

   Grant-Date

 

 

Shares

 

Fair Value

 

 

 

 

 

December 31, 2014

 

             14,850 

 

$

12.09

 

Granted

 

               7,425 

 

 

11.78

 

Vested

 

             (7,425)

 

 

11.44

 

 

 

 

 

 

 

 

June 30, 2015

 

             14,850 

 

$

12.26

 

 

IHC granted 7,425 shares of restricted stock awards during each of the six months ended June 30, 2015 and 2014 with weighted average grant-date fair values of $11.78 and $13.27, respectively, per share. The total fair value of restricted stock that vested during each of the first six months of 2015 and 2014 was $89,000 and $68,000, respectively.

 

As of June 30, 2015, the total unrecognized compensation expense related to non-vested restricted stock unit awards was $174,000 which is expected to be recognized over the remaining requisite weighted-average service period of 2.2 years.

 

SARs

 

IHC had 129,150 and 136,850 of SAR awards outstanding at June 30, 2015 and December 31, 2014, respectively. In 2015, 7,700 SARs were exercised with an aggregate intrinsic value of $38,000.  Included in Other Liabilities in the Company’s Condensed Consolidated Balance Sheets at June 30, 2015 and December 31, 2014 are liabilities of $696,000 and $791,000, respectively, pertaining to SARs.

 

B)        AMIC Share-Based Compensation Plans

 

Under the terms of the AMIC’s stock-based compensation plan, option exercise prices are equal to the quoted market price of the shares at the date of grant; option terms are ten years; and vesting periods range from three to four years.  The Company may also grant shares of restricted stock, stock appreciation rights and share-based performance awards.

 

 

The following table summarizes share-based compensation expense, which is included in selling, general and administrative expenses on the Condensed Consolidated Statements of Income, applicable to the AMIC share-based compensation plans, by award type for each of the periods indicated (in thousands):

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2015

 

2014

 

2015

 

2014

AMIC’s Share-based Compensation Plans:

 

 

 

 

 

 

 

 

 

Stock options

 

$

           11

$

16

$

       22

$

27

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense, pre-tax

 

 

           11

 

16

 

       22

 

27

Tax benefits

 

 

              4

 

5

 

          8

 

10

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense, net

 

$

              7

$

11

$

       14

$

17

 

Stock Options

 

AMIC’s stock option activity for the six months ended June 30, 2015 is as follows:

 

 

 

Shares

 

Weighted- Average

 

 

Under Option

 

Exercise Price

 

 

 

 

 

 

December 31, 2014

 

                166,616 

 

$

10.50

Expired

 

                 (53,500)

 

 

13.92

June 30, 2015

 

                113,116 

 

$

8.88

 

The following table summarizes information regarding AMIC’s outstanding and exercisable options as of June 30, 2015:

 

 

 

June 30, 2015

 

 

Outstanding

 

Exercisable

 

 

 

 

 

Number of options

 

113,116

 

99,782

Weighted average exercise price per share

$

8.88

$

8.79

Aggregate intrinsic value for all options (in thousands)

$

201

$

188

Weighted average contractual term remaining

 

4.10 years

 

3.50 years

 

As of June 30, 2015, the total unrecognized compensation expense related to AMIC’s non-vested options was $62,000 which will be recognized over the remaining requisite service periods.