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Employee Benefits and Stock Compensation
 12 Months Ended
Dec. 31, 2016
Compensation and Retirement Disclosure [Abstract]  
Employee Benefits and Stock Compensation
Note J
Employee Benefits and Stock Compensation
 
The Company’s profit sharing and retirement plan covers substantially all employees after one year of service and includes a matching benefit feature for employees electing to defer the elective portion of their profit sharing compensation. In addition, amounts of compensation contributed by employees are matched on a percentage basis under the plan. The profit sharing and retirement contributions charged to operations were $1.7 million in 2016, $1.5 million in 2015, and $1.2 million in 2014.
 
The Company, through its Compensation and Governance Committee of the Board of Directors (the “Compensation Committee”), offers equity compensation to employees and non-employee directors of Seacoast and Seacoast Bank in the form of share-based awards. Stock options, restricted stock awards (“RSAs”), and restricted stock units (“RSUs”) vest over time, upon the satisfaction of established performance criteria, or both.
 
Option awards are granted with an exercise price at least equal to the market price of the Company’s stock at the date of grant. Option and other share-based awards vest at such times as are determined by the Compensation Committee at the time of grant. The options have a maximum term of ten years.
 
The fair value of RSAs and RSUs are estimated based on the price of the Company’s common stock on the date of grant. Compensation cost is measured ratably over the vesting period of the awards and reversed for awards which are forfeited due to unfulfilled service or performance criteria. To the extent the Company has treasury shares available, stock options exercised or stock grants awarded may be issued from treasury shares or, if treasury shares are insufficient, the Company can issue new shares.
 
Vesting of share-based awards is immediately accelerated on death or disability. Upon the event of a change-in-control, awards are either immediately accelerated, or can be at the discretion of the Compensation Committee. The Compensation Committee may also accelerate vesting upon retirement (including a voluntary termination of employment at age 55) for those employees with five or more years of service with the Company.
 
Awards are currently granted under the Seacoast 2013 Incentive Plan (“2013 Plan”), which shareholders approved on May 23, 2013 and amended on May 26, 2015 to increase the number of authorized shares for issuance thereunder. The 2013 Plan expires on May 26, 2025. The 2013 Plan replaced the 2000 Incentive Plan and the 2008 Incentive Plan (the “Prior Plans”). Upon adoption of the 2013 Plan, no further awards were granted under the Prior Plans, which remain in effect only so long as awards granted thereunder remain outstanding. Under the terms of the 2013 Plan, approximately 1.2 million shares remain available for issuance as of December 31, 2016.
 
The impact of share-based compensation on the Company’s financial results is presented below:
 
(In thousands)
 
Year Ended December 31,
 
 
 
2016
 
2015
 
2014
 
Share-based compensation expense
 
$
4,154
 
$
2,859
 
 
1,299
 
Income tax benefit
 
 
(1,602)
 
 
(963)
 
 
(501)
 
 
The total unrecognized compensation cost and the weighted-average period over which unrecognized compensation cost is expected to be recognized related to non-vested share-based compensation arrangements at December 31, 2016 is presented below:
 
(In thousands)
 
Unrecognized Compensation Cost
 
Weighted-Average Period Remaining
(Years)
 
Restricted stock
 
$
4,341
 
 
2.2
 
Stock options
 
 
796
 
 
3.2
 
Total
 
$
5,137
 
 
2.4
 
 
Restricted Stock
 
Certain RSUs granted in 2016 allow the grantee to earn 0%-175% of the target award as determined by two criteria, the Company’s adjusted net income and its adjusted return on tangible equity through December 31, 2019. If the Company does not achieve the target performance goal for both criteria, then none of these RSUs will vest and they will be forfeited, subject to a one year catch-up performance period.
 
Information regarding restricted stock is summarized below:
 
(In thousands, except share and per share data)
 
Year Ended December 31,
 
 
 
2016
 
2015
 
2014
 
Shares granted
 
 
300,787
 
 
250,934
 
 
27,692
 
Weighted-average grant date fair value
 
$
14.90
 
$
13.42
 
$
10.19
 
Fair value of awards vested(1)
 
$
2,827
 
$
836
 
$
1,455
 
 
(1)
Based on grant date fair value
 
A summary of the status of the Company’s non-vested restricted stock as of December 31, 2016, and changes during the year then ended, is presented below:
 
(In thousands, except share and per share data)
 
Shares
 
Weighted-Average Grant-Date Fair
Value
 
Non-vested at January 1, 2016
 
 
543,177
 
$
11.25
 
Granted
 
 
300,787
 
 
14.90
 
Forfeited/Cancelled
 
 
(10,631)
 
 
14.94
 
Vested
 
 
(303,689)
 
 
9.31
 
Non-vested at December 31, 2016
 
 
529,644
 
$
14.37
 
 
Stock Options
 
The Company estimated the fair value of each option grant on the date of grant using the Black-Scholes options-pricing model with the following weighted-average assumptions:
 
 
 
Year Ended December 31,
 
 
 
2016
 
2015
 
2014
 
Risk-free interest rates
 
 
1.63
%
 
1.65
%
 
2.70
%
Expected dividend yield
 
 
0
%
 
0
%
 
0
%
Expected volatility
 
 
21.9
%
 
15.5
%
 
17.0
%
Expected lives (years)
 
 
5.0
 
 
5.0
 
 
5.0
 
 
Information regarding stock options as of December 31, 2016, and changes during the year then ended, are presented below:
 
 
 
Options
 
Weighted-Average Exercise Price
 
Weighted-Average Remaining
Contractual Term (Years)
 
Aggregate Intrinsic Value (000s)
 
Outstanding at January 1, 2016
 
 
556,647
 
$
18.02
 
 
 
 
 
 
 
Granted
 
 
243,391
 
 
14.94
 
 
 
 
 
 
 
Exercised
 
 
(12,400)
 
 
10.82
 
 
 
 
 
 
 
Forfeited
 
 
(8,860)
 
 
133.60
 
 
 
 
 
 
 
Outstanding at December 31, 2016
 
 
778,778
 
$
15.86
 
 
6.88
 
$
7,369
 
Exercisable at December 31, 2016
 
 
432,660
 
$
17.73
 
 
6.73
 
$
4,412
 
 
The following table summarizes information related to stock options:
 
(In thousands, except share and per share data)
 
Year Ended December 31,
 
 
 
2016
 
2015
 
2014
 
Options granted
 
 
243,391
 
 
63,650
 
 
413,000
 
Weighted-average grant date fair value
 
$
3.41
 
$
2.21
 
$
2.26
 
Intrinsic value of stock options exercised
 
$
80
 
 
0
 
 
0
 
 
The following table summarizes information related to stock options as of December 31, 2016:
 
Range of Exercise Prices
 
Options Outstanding
 
Remaining Contractual Life (Years)
 
Shares Exercisable
 
Weighted Average Exercise Price
 
$10.54 to $10.78
 
 
390,000
 
 
7.2
 
 
312,239
 
$
10.66
 
$10.97 to $15.99
 
 
360,241
 
 
7.0
 
 
91,884
 
 
13.88
 
$110.80 to $111.10
 
 
28,537
 
 
0.3
 
 
28,537
 
 
111.09
 
Total
 
 
778,778
 
 
6.9
 
 
432,660
 
$
17.73
 
 
Employee Stock Purchase Plan
 
The Employee Stock Purchase Plan (“ESPP”), as amended, was approved by shareholders on April 25, 1989, and additional shares were authorized for issuance by shareholders on June 18, 2009 and May 2, 2013. Under the ESPP, the Company is authorized to issue up to 300,000 common shares of the Company’s common stock to eligible employees of the Company.  These shares may be purchased by employees at a price equal to 95% of the fair market value of the shares on the purchase date.  Purchases under the ESPP are made monthly.  Employee contributions to the ESPP are made through payroll deductions.
 
 
 
Year Ended December 31,
 
 
 
2016
 
2015
 
2014
 
ESPP shares purchased
 
 
10,483
 
 
9,083
 
 
13,294
 
Weighted-average employee purchase price
 
$
16.02
 
$
13.99
 
$
10.63