Compensation and Employee Benefit Plans [Text Block]

3 Months Ended

Mar. 31, 2017

Notes

Compensation and Employee Benefit Plans

Note 12.    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 share-based compensation plans: (i) the exercise price of an option may not be less than the fair market value of an IHC share on the grant date and the terms of an option may not exceed 10 years from the grant date; and (ii) the exercise price of a SAR may not be less than the fair market value of an IHC share on the grant date and SAR terms may not exceed 10 years from the date of grant.

The fair value of an option award is estimated on the date of grant using the Black-Scholes option valuation model. In general, the vesting period for an option grant is 3years. Restricted share units are valued at the quoted market price of the shares at the date of grant and generally vest over 3years. Compensation costs for options and restricted share units are recognized over the stated vesting periods on a straight-line basis. The fair value of a SAR 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 the fair value of a SAR continue to be recognized as compensation expense in the period of the change until settlement. The

Company accounts for forfeitures of share-based compensation awards in the period that they occur.

At March 31, 2017, there were 1,133,100 shares available for future stock-based compensation grants under IHC’s stock incentive plan. 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
		March 31,
		2017		2016
IHC’s Share-based Compensation Plan:
Stock options	$	35	$	170
Restricted stock units		31		23
SARs		(65)		258
Share-based compensation expense, pre-tax		1		451
Tax benefits		-		180
Share-based compensation expense, net	$	1	$	271

Stock Options

The IHC’s stock option activity during 2017 was as follows:

	Shares	Weighted- Average
	Under Option	Exercise Price
December 31, 2016	697,180	$	11.75
Exercised	-		-
March 31, 2017	697,180	$	11.75

In the first quarter of 2016, option agreements affecting 13 employees were modified to extend the expirations of their terms from 2017 to 2019 and as a result, the Company recorded incremental compensation costs of $170,000.

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

		March 31, 2017
		Outstanding		Exercisable
Number of options		697,180		540,180
Weighted average exercise price per share	$	11.75	$	9.37
Aggregate intrinsic value for all options (in thousands)	$	4,988	$	4,988
Weighted average contractual term remaining		2.2 years		1.5 years

At March 31, 2017, the total unrecognized compensation cost related to IHC’s non-vested stock options was $370,000 and it is expected to be recognized as compensation expense over a weighted average period of 2.7 years.

AMIC received $145,000 in cash from the exercise of stock options