Stock and Other Incentive Plans

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Stock Incentive Plan

In May 2015, the Company's stockholders approved the 2015 Stock Incentive Plan which authorizes the Company to issue 3,500,000 shares of common stock to its employees and directors. The 2015 Incentive Plan, which superseded the 2007 Employee Stock Incentive Plan (the "Predecessor Plan"), will continue until terminated by the Company’s Board of Directors. As of December 31, 2019 and 2018, the Company had issued a total of 1,988,079 and 1,711,240 restricted shares, respectively, under the 2015 Incentive Plan for compensation-related awards to employees and directors, with a total of 1,511,921 and 1,788,760, respectively, remaining unissued under the plan. Under the Predecessor Plan for compensation-related awards to employees and directors, the Company had issued, net of forfeitures, a total of 1,878,637 restricted shares for the year ended December 31, 2015. Non-vested shares issued under the 2015 Incentive Plan are generally subject to fixed vesting periods varying from three to eight years beginning on the date of issue. If a recipient voluntarily terminates his or her relationship with the Company or is terminated for cause before the end of the vesting period, the shares are forfeited, at no cost to the Company. The Company recognizes the impact of forfeitures as they occur. Once the shares have been issued, the recipient has the right to receive dividends and the right to vote the shares. Compensation expense, included in general and administrative expense, recognized during the years ended December 31, 2019, 2018 and 2017 from the amortization of the value of shares over the vesting period issued to employees and directors was $12.0 million, $10.4 million and $9.8 million, respectively. The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in $2.9 million of expenses associated with the acceleration of his outstanding nonvested share-based awards. This charge is included in the 2019 compensation expense. In connection with the vesting, 80,490 shares

were withheld to pay employee federal income taxes. The following table represents expected amortization of the Company's non-vested shares issued:



Dollars in millions	FUTURE AMORTIZATION of non-vested shares
2020	$	8.7
2021	7.3
2022	5.9
2023	3.8
2024	2.5
2025 and thereafter	1.9
Total	$	30.1

Executive Incentive Plan

On July 31, 2012, the Company adopted an Executive Incentive Plan, which was amended and restated on February 16, 2016 ("Executive Incentive Plan"), to provide specific award criteria with respect to incentive awards made under the 2015 Incentive Plan subject to the discretion of the Compensation Committee. No new shares of common stock were authorized in connection with the Executive Incentive Plan. Under the terms of the Executive Incentive Plan, the Company's named executive officers, and certain other members of senior management, may earn incentive awards in the form of cash and non-vested stock. Cash incentive awards are based on individual and Company performance. Company performance is measured over a four-quarter period against targeted financial and operational metrics set in advance by the Compensation Committee. Non-vested stock awards are based on the Company's relative total shareholder return ("TSR") performance over one-year and three-year periods, measured against the Company's peer group. For 2019, 2018 and 2017, compensation expense, included in general and administrative expense, resulting from the amortization of non-vested share grants to officers was approximately $5.7 million, $5.7 million, and $5.0 million, respectively. Details of the awards that have been earned from this plan are as follows:

•

On December 12, 2019, the Company granted non-vested stock awards for TSR performance to its four named executive officers, five senior vice presidents, and five first vice presidents with a grant date fair value totaling $6.1 million, which were granted in the form of 187,072 non-vested shares, with a five-year vesting period, which will result in annual compensation expense of $1.2 million for the each of 2020, 2021, 2022, and 2023, and $1.1 million for 2024, respectively.

•

On December 12, 2018, the Company granted non-vested stock awards for TSR performance to its four named executive officers and five senior vice presidents with a grant date fair value totaling $5.0 million, which were granted in the form of 165,261 non-vested shares, with a five-year vesting period, which will result in annual compensation expense of $1.0 million for the each of 2019, 2020, 2021, and 2022, and $0.9 million for 2023, respectively.

•

On December 11, 2017, the Company granted non-vested stock awards for TSR performance to its five named executive officers and four senior vice presidents with a grant date fair value totaling $10.1 million, which were granted in the form of 309,874 non-vested shares, with a five-year vesting period, which will result in annual compensation expense of $2.0 million for the each of 2019, 2020, and 2021, and $1.9 million for 2022, respectively.

Long-Term Incentive Program

In the first quarter of 2019 and 2018, the Company granted a performance-based award to officers, excluding the four named executive officers and five senior vice presidents, under the Long-term Incentive Program adopted under the 2015 Incentive Plan (the "LTIP") totaling approximately $1.0 million and $1.2 million, which was granted in the form of 31,262 non-vested shares and 43,414 non-vested shares, respectively. The shares have vesting periods ranging from three to eight years with a weighted average vesting period of approximately six years.

For 2019, 2018 and 2017, compensation expense resulting from the amortization of non-vested share grants to officers was approximately $1.1 million, $1.2 million, and $1.1 million, respectively.

Salary Deferral Plan

The Company's salary deferral plan allows certain of its officers to elect to defer up to 50% of their base salary in the form of non-vested shares issued under the 2015 Incentive Plan subject to long-term vesting. The number of shares will be increased through a Company match depending on the length of the vesting period selected by the officer. The officer's vesting period choices are: three years for a 30% match; five years for a 50% match; and eight years for a 100% match. During 2019, 2018 and 2017, the Company issued 33,509 shares, 33,348 shares and 39,016 shares, respectively, to its officers through the salary deferral plan. For 2019, 2018 and 2017, compensation expense resulting from the amortization of non-vested share grants to officers was approximately $0.9 million, $1.0 million, and $1.2 million, respectively.

Non-employee Directors Incentive Plan

The Company issues non-vested shares to its non-employee directors under the 2015 Incentive Plan. The directors’ shares issued have a one-year vesting period beginning with the May 2015 grant (previously a three-year vesting period) and are subject to forfeiture prior to such date upon termination of the director’s service, at no cost to the Company. During 2019, 2018 and 2017, the Company issued 24,996 shares, 30,989 shares, and 23,231 shares, respectively, to its non-employee directors through the 2015 Incentive Plan. For each of the years 2019, 2018 and 2017, compensation expense resulting from the amortization of non-vested share grants to directors was approximately $0.8 million, respectively.

Other Grants

The Company issued three one-time non-vested share grants related to executive management transition in 2016. For 2019, 2018 and 2017 compensation expense resulting from the amortization of these non-vested share grants to officers was approximately $3.5 million, $1.7 million, and $1.7 million, respectively. The following information provides information about each grant:


•	On March 1, 2016, the Company issued 50,000 shares to the Chief Financial Officer with a 10-year vesting period, resulting in compensation expense of $0.2 million per year.


•	On December 30, 2016, the Company issued 200,000 shares to the President and Chief Executive Officer with a 10-year vesting period, resulting in compensation expense of $0.6 million per year.


•	On December 30, 2016, the Company issued 150,000 shares to the Executive Chairman with a 5-year vesting period, resulting in compensation expense of $0.9 million per year. The Company's former Executive Chairman, David R. Emery, died on September 30, 2019 resulting in the acceleration of this outstanding grant totaling $2.0 million.

A summary of the activity under the 2015 Incentive Plan and related information for the three years in the period ended December 31, 2019 follows:



	YEAR ENDED DECEMBER 31,
Dollars in thousands, except per share data	2019			2018			2017
Share-based awards, beginning of year	1,769,863			1,907,645			1,786,497
Granted	276,839			273,012			413,489
Vested	(292,636		)	(410,794		)	(292,341		)
Share-based awards, end of year	1,754,066			1,769,863			1,907,645

Weighted-average grant date fair value of
Share-based awards, beginning of year	$	29.36		$	28.44		$	27.18
Share-based awards granted during the year	$	31.75		$	29.72		$	32.05
Share-based awards vested during the year	$	28.84		$	25.32		$	25.88
Share-based awards, end of year	$	29.82		$	29.36		$	28.44

Grant date fair value of shares granted during the year	$	8,791		$	8,114		$	13,254

The vesting periods for the non-vested shares granted during 2019 ranged from one to eight years with a weighted-average amortization period remaining as of December 31, 2019 of approximately 5 years.

During 2019, 2018 and 2017, the Company withheld 101,580 shares, 151,353 shares and 94,403 shares, respectively, of common stock from its officers to pay estimated withholding taxes related to the vesting of shares.

401(k) Plan

The Company maintains a 401(k) plan that allows eligible employees to defer salary, subject to certain limitations imposed by the Internal Revenue Code. The Company provides a matching contribution of up to 3% of each eligible employee’s salary, subject to certain limitations. The Company’s matching contributions were approximately $0.5 million for the year ended December 31, 2019 and $0.4 million for each year during 2018 and 2017.

Dividend Reinvestment Plan

The Company is authorized to issue 1,000,000 shares of common stock to stockholders under the Dividend Reinvestment Plan. As of December 31, 2019, the Company had issued 599,104 shares under the plan of which 7,990 shares were issued in 2019, 9,487 shares were issued in 2018 and 26,031 shares were issued in 2017.

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan, pursuant to which the Company is authorized to issue shares of common stock. Under the Employee Stock Purchase Plan, each eligible employee in January of each year is able to purchase up to $25,000 of common stock at the lesser of 85% of the market price on the date of grant or 85% of the market price on the date of exercise of such option. The number of shares subject to each year’s option becomes fixed on the date of grant. Options granted under the Employee Stock Purchase Plan expire if not exercised 27 months after each such option’s date of grant. The Company accounts for these awards based on fair value, using the Black-Scholes model, and generally recognizes expense over the award’s vesting period, net of forfeitures. Since the options granted under the Employee Stock Purchase Plan immediately vest, the Company records compensation expense for those options when they are granted in the first quarter of each year and then may record additional compensation expense in subsequent quarters as warranted.

During the years ended December 31, 2019, 2018 and 2017, the Company recognized in general and administrative expenses approximately $0.2 million, $0.3 million, and $0.2 million, respectively, of compensation expense related to the annual grant of options to its employees to purchase shares under the Employee Stock Purchase Plan.

Cash received from employees upon exercising options under the Employee Stock Purchase Plan was approximately $1.0 million for the year ended December 31, 2019, $0.4 million for the year ended December 31, 2018, and $0.8 million for the year ended December 31, 2017.

A summary of the Employee Stock Purchase Plan activity and related information for the three years in the period ended December 31, 2019 is as follows:



	YEAR ENDED DECEMBER 31,
Dollars in thousands, except per share data	2019			2018			2017
Options outstanding, beginning of year	328,533			318,100			316,321
Granted	235,572			203,836			206,824
Exercised	(35,277		)	(16,716		)	(32,076		)
Forfeited	(54,095		)	(40,897		)	(40,659		)
Expired	(142,074		)	(135,790		)	(132,310		)
Options outstanding and exercisable, end of year	332,659			328,533			318,100

Weighted-average exercise price of
Options outstanding, beginning of year	$	24.17		$	25.00		$	23.69
Options granted during the year	$	24.17		$	27.30		$	25.77
Options exercised during the year	$	25.01		$	24.01		$	24.31
Options forfeited during the year	$	25.26		$	24.06		$	25.01
Options expired during the year	$	25.77		$	23.55		$	23.22
Options outstanding, end of year	$	25.59		$	24.17		$	25.00

Weighted-average fair value of options granted during the year (calculated as of the grant date)	$	7.02		$	7.81		$	6.31
Intrinsic value of options exercised during the year	$	269		$	71		$	271
Intrinsic value of options outstanding and exercisable (calculated as of December 31)	$	2,589		$	1,402		$	2,683
Exercise prices of options outstanding (calculated as of December 31)	$	25.59		$	24.17		$	25.00
Weighted-average contractual life of outstanding options (calculated as of December 31, in years)	0.8			0.8			0.8

The fair values for these options were estimated at the date of grant using a Black-Scholes options pricing model with the weighted-average assumptions for the options granted during the period noted in the following table. The risk-free interest rate was based on the U.S. Treasury constant maturity-nominal two-year rate whose maturity is nearest to the date of the expiration of the latest option outstanding and exercisable; the expected dividend yield was based on the expected dividends of the current year as a percentage of the average stock price of the prior year; the expected life of each option was estimated using the historical exercise behavior of employees; expected volatility was based on historical volatility of the Company’s common stock; and expected forfeitures were based on historical forfeiture rates within the look-back period.



	2019		2018		2017
Risk-free interest rates	2.48	%	1.89	%	1.20	%
Expected dividend yields	4.19	%	3.66	%	3.70	%
Expected life (in years)	1.45		1.45		1.45
Expected volatility	29.8	%	28.4	%	20.4	%
Expected forfeiture rates	85	%	85	%	85	%