Shareholders' Equity and Common Stock Equivalents

12 Months Ended

Dec. 31, 2017

Shareholders Equity And Stock Options [Abstract]

Shareholders' Equity and Common Stock Equivalents

NOTE 9 - Shareholders' Equity and Common Stock Equivalents

Share Repurchase Programs and Treasury Shares Held (Common Stock)

In December 2011, the Board authorized a share repurchase program allowing repurchases of up to $50,000 thousand (the 2011 Plan). In September 2015, the Board authorized an additional share repurchase program allowing repurchases of up to $50,000 thousand (the 2015 Plan) to begin following the completion of the 2011 Plan. Both share repurchase programs authorize the repurchase of HMEC's common shares in open market or privately negotiated transactions, from time to time, depending on market conditions. The share repurchase programs do not have expiration dates and may be limited or terminated at any time without notice.

During 2015, the Company repurchased 663,092 shares of its common stock, or 1.6% of the outstanding shares on December 31, 2014, at an aggregate cost of $21,950 thousand, or an average price of $33.08 per share, under the 2011 Plan. During 2016, the Company repurchased 701,410 shares of its common stock, or 1.7% of the outstanding shares on December 31, 2015, at an aggregate cost of $21,513 thousand, or an average price of $30.65 per share, under the 2011 and the 2015 Plans. Utilization of the remaining authorization under the 2011 program was completed in January 2016. During 2017, the Company repurchased 48,440 shares of its common stock, or 0.1% of the outstanding shares on December 31, 2016, at an aggregate cost of $1,660 thousand, or an average price of $34.26 per share, under the 2015 Plan. In

total and through December 31, 2017, 2,848,050 shares were repurchased under the 2011 and 2015 Plans at an average price of $25.33 per share. The repurchase of shares was financed through use of cash. As of December 31, 2017, $27,852 thousand remained authorized for future share repurchases under the 2015 Plan authorization.

At December 31, 2017, the Company held 24,721 thousand shares in treasury.

Authorization of Preferred Stock

In 1996, the shareholders of HMEC approved authorization of 1,000,000 shares of $0.001 par value preferred stock. The Board is authorized to (1) direct the issuance of the preferred stock in one or more series, (2) fix the dividend rate, conversion or exchange rights, redemption price and liquidation preference, of any series of the preferred stock, (3) fix the number of shares for any series and (4) increase or decrease the number of shares of any series. No shares of preferred stock were outstanding at December 31, 2017 and 2016.

2010 Comprehensive Executive Compensation Plan

In 2010, the shareholders of HMEC approved the 2010 Comprehensive Executive Compensation Plan (the Comprehensive Plan). The purpose of the Comprehensive Plan is to aid the Company in attracting, retaining, motivating and rewarding employees and non-employee Directors; to provide for equitable and competitive compensation opportunities, including deferral opportunities; to encourage long-term service; to recognize individual contributions and reward achievement of Company goals; and to promote the creation of long-term value for the Company's shareholders by closely aligning the interests of plan participants with those of shareholders. The Comprehensive Plan authorizes share-based and cash-based incentives for plan participants. In 2012, the shareholders of HMEC approved the implementation of a fungible share pool under which grants of full value shares will count against the share limit as two and one half shares for every share subject to a full value award. In 2015, the shareholders of HMEC approved an amendment and restatement of the Comprehensive Plan which included an increase of 3.25 million in the number of shares of common stock reserved for issuance under the Comprehensive Plan. As of December 31, 2017, approximately 2,391 thousand shares were available for grant under the Comprehensive Plan. Shares of common stock issued under the Comprehensive Plan may be either authorized and unissued shares of HMEC or shares that have been reacquired by HMEC; however, new shares have been issued historically.

As further described in the paragraphs below, outstanding stock units and stock options under the Comprehensive Plan were as follows:

	December 31,
	2017	2016	2015
CSUs related to deferred compensation for Directors	61,677	74,058	85,200
CSUs related to deferred compensation for employees	24,903	51,502	55,443
Stock options	719,015	747,032	669,693
RSUs related to incentive compensation	1,149,679	1,419,268	1,442,325
Total	1,955,274	2,291,860	2,252,661

Director Common Stock Units

Deferred compensation of Directors is in the form of CSUs, which represent an equal number of common shares to be issued in the future. The outstanding units of Directors serving on the Board accrue dividends at the same rate as dividends paid to HMEC's shareholders; outstanding units of retired Directors do not accrue dividends. These dividends are reinvested into additional CSUs.

Employee Common Stock Units

Deferred compensation of employees is in the form of CSUs, which represent an equal number of common shares to be issued in the future. Distributions of employee deferred compensation are allowed to be either in common shares or cash. Through December 31, 2017, all distributions have been in cash. The outstanding units accrue dividends at the same rate as dividends paid to HMEC's shareholders. These dividends are reinvested into additional CSUs.

Stock Options

Options to purchase shares of HMEC common stock may be granted to executive officers, other employees and Directors. The options become exercisable in installments based on service generally beginning in the first year from the date of grant and generally become fully vested 4 years from the date of grant. The options generally expire 7 to 10 years from the date of grant. The exercise price of the option is equal to the market price of HMEC's common stock on the date of grant resulting in a grant date intrinsic value of $0.

Changes in outstanding options were as follows:

	Weighted Average Option Price per Share	Range of Option Prices per Share	Options
			Outstanding		Vested and Exercisable
December 31, 2016	$27.67	$13.83-$36.04	747,032		273,117
Granted	$41.83	$38.05-$41.95	222,828		—
Vested	$27.12	$17.01-$36.04	—		193,510
Exercised	$23.63	$13.83-$32.35	(208,306	)	(208,306	)
Forfeited	$34.97	$28.88-$41.95	(42,539	)	—
Expired	—	—	—		—
December 31, 2017	$32.80	$17.01-$41.95	719,015		258,321

Option information segregated by ranges of exercise prices was as follows:

	December 31, 2017
		Total Outstanding Options			Vested and Exercisable Options
	Range of Option Prices per Share	Options	Weighted Average Option Price per Share	Weighted Average Remaining Term	Options	Weighted Average Option Price per Share	Weighted Average Remaining Term
	$17.01-$22.69	78,774	$19.30	1.55 years	78,774	$19.30	1.55 years
	$22.88-$33.41	424,057	$30.81	7.53 years	177,686	$30.49	7.12 years
	$36.04-$41.95	216,184	$41.62	9.17 years	1,861	$36.04	8.73 years
Total	$17.01-$41.95	719,015	$32.80	7.37 years	258,321	$27.12	5.43 years

The weighted average exercise prices of vested and exercisable options as of December 31, 2016 and 2015 were $22.73 and $19.32, respectively.

As of December 31, 2017, based on a closing stock price of $44.10 per share, the aggregate intrinsic (in-the-money) values of vested options and all options outstanding were $4,387 thousand and $8,126 thousand, respectively.

Restricted Common Stock Units

RSUs may be granted to executive officers, other employees and Directors and represent an equal number of common shares to be issued in the future. The RSUs vest in installments based on service or attainment of performance criteria generally beginning in the first year from the date of grant and generally become fully vested 1 to 5 years from the date of grant. The outstanding units accrue dividends at the same rate as dividends paid to HMEC's shareholders. These dividends are reinvested into additional RSUs.

Changes in outstanding RSUs were as follows:

	Total Outstanding Units			Vested Units
	Units		Weighted Average Grant Date Fair Value per Unit	Units		Weighted Average Grant Date Fair Value per Unit
December 31, 2016	1,419,268		$27.63	768,064		$16.80
Granted (1)	193,044		$40.77	—		—
Vested	—		—	179,755		$29.15
Forfeited	(72,953	)	$32.58	—		—
Distributed (2)	(389,680	)	$20.16	(389,680	)	$20.16
December 31, 2017	1,149,679		$32.05	558,139		$19.80

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(1) Includes dividends reinvested into additional RSUs.

(2)

Includes distributed units which were utilized to satisfy withholding taxes due on the distribution.