Annual report pursuant to Section 13 and 15(d)

Note 12 - Employee and Director Benefits

v3.10.0.1
Note 12 - Employee and Director Benefits
12 Months Ended
Dec. 31, 2018
Notes to Financial Statements  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
NOTE
12.
EMPLOYEE AND DIRECTOR BENEFITS
 
At
December 31, 2018,
the Company has
two
stock incentive plans, which are described below. The compensation cost that has been charged against income for the plans was approximately
$851,000,
$1,170,000
and
$1,198,000
for the years ended
December 31, 2018,
2017
and
2016,
respectively.
 
Stock Incentive Plans
 
The Company’s
2005
Stock Incentive Plan (the
“2005
Plan”), originally permitted the grant of stock options to its officers, employees, directors and organizers of the Company for up to
3,150,000
shares of common stock. However, upon stockholder approval during
2006,
the
2005
Plan was amended in order to allow the Company to grant stock options for up to
6,150,000
shares of common stock. Both incentive stock options and non-qualified stock options
may
be granted under the
2005
Plan. 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; those option awards vest in varying amounts through
2019
and are based on continuous service during that vesting period and have a
ten
-year contractual term. Dividends are
not
paid on unexercised options and dividends are
not
subject to vesting. The
2005
Plan provides for accelerated vesting if there is a change in control (as defined in the
2005
Plan).
 
On
March 23, 2009,
the Company’s board of directors adopted the
2009
Stock Incentive Plan (the
“2009
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
2009
Plan was amended in order to allow the Company to grant stock options for up to
5,550,000
shares of common stock. The
2009
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, 2018,
there are a total of
3,248,774
shares available to be granted under the
2005
and
2009
Plans.
 
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
2018,
2017
and
2016
stock option grants were as follows:
 
    2018   2017   2016
Expected price volatility    
35.39
%    
29.00
%    
29.00
%
Expected dividend yield    
1.24
%    
0.44
%    
0.64
%
Expected term (in years)    
6
     
6
     
6
 
Risk-free rate    
2.90
%    
2.08
%    
1.85
%
 
The weighted average grant-date fair value of options granted during the years ended
December 31, 2018,
2017
and
2016
was
$12.76,
$11.82
and
$6.00,
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, 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
 
                                 
Year Ended December 31, 2016:                                
Outstanding at beginning of year    
2,498,834
    $
6.66
     
6.3
    $
42,746
 
Granted    
241,000
     
20.15
     
9.1
     
4,166
 
Exercised    
(682,500
)    
4.28
     
3.9
     
22,629
 
Forfeited    
(31,000
)    
11.04
     
6.8
     
818
 
Outstanding at end of year    
2,026,334
    $
9.00
     
6.2
    $
57,636
 
                                 
Exercisable at December 31, 2016    
928,536
    $
5.08
     
4.8
    $
30,051
 
 
Exercisable options at
December 31, 2018
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      
27,500
    $
4.17
     
0.8
    $
762
 
  5.00      
244,000
     
5.00
     
2.6
     
6,556
 
  5.50      
120,000
     
5.50
     
4.2
     
3,164
 
  6.92      
45,000
     
6.92
     
5.0
     
1,123
 
  15.74      
21,600
     
15.74
     
6.1
     
348
 
  18.57      
52,000
     
18.57
     
4.5
     
692
 
         
510,100
    $
7.08
     
3.5
    $
12,645
 
 
As of
December 31, 2018,
there was
$1.7
million of total unrecognized compensation cost related to non-vested stock options. As of
December 31, 2018,
non-vested stock options had a weighted average remaining time to vest of
2.0
years.
 
Restricted Stock
 
The Company periodically grants restricted stock awards that vest upon service conditions. Dividend payments are made during the vesting period. 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, 2018,
there was
$1.2
million of total unrecognized compensation cost related to non-vested restricted stock. As of
December 31, 2018,
non-vested restricted stock had a weighted average remaining time to vest of
3.1
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
$1.5
million,
$1.4
million and
$1.3
million for
2018,
2017
and
2016,
respectively.