Annual report pursuant to Section 13 and 15(d)

Note 13 - Employee and Director Benefits

v3.20.1
Note 13 - Employee and Director Benefits
12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Share-based Payment Arrangement [Text Block]

NOTE 13.

EMPLOYEE AND DIRECTOR BENEFITS

 

The Company has a stock incentive plan, which is described below. The compensation cost that has been charged against income for the plan was approximately $1,100,000, $851,000 and $1,170,000 for the years ended December 31, 2019, 2018 and 2017, respectively.

 

Stock Incentive Plan

 

On March 23, 2009, the Company’s board of directors adopted the 2009 Stock Incentive Plan (the “Plan”), which was effective upon approval by the stockholders at the 2009 Annual Meeting of Stockholders. The 2009 Plan originally permitted the grant of up to 2,550,000 shares of common stock. However, upon stockholder approval during 2014, the Plan was amended in order to allow the Company to grant stock options for up to 5,550,000 shares of common stock. The Plan authorizes the grant of stock appreciation rights, restricted stock, incentive stock options, non-qualified stock options, non-stock share equivalents, performance shares or performance units and other equity-based awards. Option awards are generally granted with an exercise price equal to the estimated fair market value of the Company’s stock at the date of grant.

 

As of December 31, 2019, there are a total of 3,202,060 shares available to be granted under the Plan.

 

Stock-based compensation expense for stock-based compensation awards granted is based on the grant-date fair value. For stock option awards, the fair value is estimated at the date of grant using the Black-Scholes-Merton valuation model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. The fair value of each option granted is estimated on the date of grant using the Black-Scholes-Merton model based on the weighted-average assumptions for expected dividend yield, expected stock price volatility, risk-free interest rate and expected life of options granted.

 

The assumptions used in determining the fair value of 2019, 2018 and 2017 stock option grants were as follows:

 

   

2019

   

2018

   

2017

 

Expected price volatility

    40.00

%

    35.39

%

    29.00

%

Expected dividend yield

    1.76

%

    1.24

%

    0.44

%

Expected term (in years)

    7       6       6  

Risk-free rate

    1.96

%

    2.90

%

    2.08

%

 

The weighted average grant-date fair value of options granted during the years ended December 31, 2019, 2018 and 2017 was $12.40, $12.76 and $11.82, respectively.

 

The following tables summarize stock option activity:

 

   

Shares

   

Weighted

Average

Exercise

Price

   

Weighted

Average

Remaining

Contractual

Term (years)

   

Aggregate

Intrinsic

Value

 
                           

(In Thousands)

 

Year Ended December 31, 2019:

                               

Outstanding at beginning of year

    1,238,748     $ 13.02       5.2     $ 23,355  

Granted

    35,500       34.06       9.6       129  

Exercised

    (288,800 )     7.56       2.5       8,534  

Forfeited

    (20,200 )     24.88       6.2       259  

Outstanding at end of year

    965,248     $ 15.19       4.9     $ 21,911  
                                 

Exercisable at December 31, 2019:

    278,500     $ 8.28       3.0     $ 8,355  
                                 

Year Ended December 31, 2018:

                               

Outstanding at beginning of year

    1,666,834     $ 10.68       5.5     $ 51,377  

Granted

    42,250       37.21       9.6       -  

Exercised

    (414,336 )     5.73       2.8       10,832  

Forfeited

    (56,000 )     15.40       6.2       912  

Outstanding at end of year

    1,238,748     $ 13.02       5.2     $ 23,355  
                                 

Exercisable at December 31, 2018:

    510,100     $ 7.08       3.5     $ 12,645  
                                 

Year Ended December 31, 2017:

                               

Outstanding at beginning of year

    2,026,334     $ 9.00       6.2     $ 57,636  

Granted

    58,000       37.59       9.1       227  

Exercised

    (385,500 )     4.96       4.0       14,087  

Forfeited

    (32,000 )     21.96       8.1       625  

Outstanding at end of year

    1,666,834     $ 10.68       5.5     $ 51,377  
                                 

Exercisable at December 31, 2017:

    808,236     $ 5.22       3.9     $ 29,321  

 

Exercisable options at December 31, 2019 were as follows:

 

Range of

Exercise Price

   

Shares

   

Weighted

Average

Exercise Price

   

Weighted

Average

Remaining

Contractual

Term (years)

   

Aggregate

Intrinsic Value

 
                               

(In Thousands)

 
$ 4.17       5,500     $ 4.17       1.0     $ 199  
  5.00       79,500       5.00       2.1       3,022  
  5.50       80,000       5.50       2.2       2,362  
  6.92       37,500       6.92       4.0       1,154  
  15.25       50,000       15.25       5.0       1,121  
  18.57       26,000       18.57       3.5       497  
          278,500     $ 8.28       3.0     $ 8,355  

 

As of December 31, 2019, there was $1.3 million of total unrecognized compensation cost related to non-vested stock options. As of December 31, 2019, non-vested stock options had a weighted average remaining time to vest of 1.3 years.

 

Restricted Stock

 

The Company periodically grants restricted stock awards that vest upon service conditions. Dividend payments are made during the vesting period.

 

The following table summarizes restricted stock activity:

 

   

Shares

   

Weighted

Average Grant

Date Fair

Value

 

Year Ended December 31, 2019:

               

Non-vested at beginning of year

    42,576     $ 29.96  

Granted

    35,164       33.61  

Vested

    (5,450 )     20.92  

Forfeited

    (2,500 )     38.17  

Non-vested at end of year

    69,790     $ 32.21  
                 

Year Ended December 31, 2018:

               

Non-vested at beginning of year

    120,676     $ 10.29  

Granted

    16,350       39.84  

Vested

    (93,200 )     6.07  

Forfeited

    (1,250 )     41.21  

Non-vested at end of year

    42,576     $ 29.96  
                 

Year Ended December 31, 2017:

               

Non-vested at beginning of year

    118,676     $ 8.88  

Granted

    7,000       38.02  

Vested

    (5,000 )     15.74  

Non-vested at end of year

    120,676     $ 10.29  

 

 

The value of restricted stock is determined to be the current value of the Company’s stock, and this total value will be recognized as compensation expense over the vesting period. As of December 31, 2019, there was $1.4 million of total unrecognized compensation cost related to non-vested restricted stock. As of December 31, 2019, non-vested restricted stock had a weighted average remaining time to vest of 2.5 years.

 

Retirement Plans

 

The Company has a retirement savings 401(k) and profit-sharing plan in which all employees age 21 and older may participate after completion of one year of service. For employees in service with the Company at June 15, 2005, the length of service and age requirements were waived. The Company matches employees’ contributions based on a percentage of salary contributed by participants and may make additional discretionary profit-sharing contributions. The Company’s expense for the plan was $1.7 million, $1.5 million and $1.4 million for 2019, 2018 and 2017, respectively.