Share-based payments

3 Months Ended

Mar. 31, 2020

Share-based payments

Share-based payments

17.    Share-based payments

Share-based payments consist of the following compensation costs:

Three months ended March 31,	2020		2019
Stock option compensation expense:
SG&A expenses	$	1,187	$	1,539
Share unit expense:
Equity-classified share units		1,786		2,368
Liability-classified share units		(1,156)		150
Employee share purchase plan - employer contributions		590		553
	$	2,407	$	4,610

Share unit expense and employer contributions to the employee share purchase plan are recognized in SG&A expenses.

Stock option plans

Stock option activity for the three months ended March 31, 2020 is presented below:

				WA
	Common	WA		remaining		Aggregate
	shares under	exercise		contractual		intrinsic
	option	price		life (in years)		value
Outstanding, December 31, 2019	2,797,189	$	29.05		7.1	$	38,874
Granted	642,380		40.64
Exercised	(247,446)		28.51				3,536
Forfeited	(22,016)		30.11
Expired	(1,201)		21.82
Outstanding, March 31, 2020	3,168,906		31.44		7.6		13,039
Exercisable, March 31, 2020	1,790,002	$	27.68		6.5	$	11,638

The significant assumptions used to estimate the fair value of stock options granted during the three months ended March 31, 2020 and 2019 are presented in the following table on a weighted average basis:

Three months ended March 31,	2020		2019
Risk free interest rate	0.75	%	2.5	%
Expected dividend yield	2.02	%	2.06	%
Expected lives of the stock options	5	years	5	years
Expected volatility	27.3	%	26.8	%

17.    Share-based payments (continued)

Stock option plans (continued)

As at March 31, 2020, the unrecognized stock-based compensation cost related to the non-vested stock options was $7,472,000, which is expected to be recognized over a weighted average period of 2.6 years.

Share unit plans

Share unit activity for the three months ended March 31, 2020 is presented below:

	Equity-classified awards						Liability-classified awards
	PSUs			RSUs			DSUs
		WA grant			WA grant				WA grant
		date fair			date fair				date fair
	Number	value		Number	value			Number	value
Outstanding, December 31, 2019	428,724	$	32.89	237,420	$	29.72	$	118,368	$	29.64
Granted	181,883		41.60	23,163		41.11		5,407		40.43
Vested and settled	(156,238)		31.94	(7,539)		36.29		—		—
Forfeited	(2,644)		33.29	(311)		32.82		—		—
Outstanding, March 31, 2020	451,725	$	36.73	252,733	$	30.57	$	123,775	$	30.11

PSUs

The Company grants PSUs under a senior executive PSU plan and an employee PSU plan (the “PSU Plans”). Under the PSU Plans, the number of PSUs that vest is conditional upon specified market, service, or performance vesting conditions being met. The PSU Plans allow the Company to choose whether to settle the awards in cash or in shares. The Company intends to settle in shares. With respect to settling in shares, the Company has the option to either (i) arrange for the purchase shares on the open market on the employee’s behalf based on the cash value that otherwise would be delivered, or (ii) to issue a number of shares equal to the number of units that vest.

As at March 31, 2020 the unrecognized share unit expense related to equity-classified PSUs was $11,247,000, which is expected to be recognized over a weighted average period of 2.5 years.

RSUs

The Company has RSU plans that are equity-settled and not subject to market vesting conditions.

As at March 31, 2020, the unrecognized share unit expense related to equity-classified RSUs was $2,734,000, which is expected to be recognized over a weighted average period of 1.3 years.

DSUs

The Company has DSU plans that are cash-settled and not subject to market vesting conditions.

Fair values of DSUs are estimated on grant date and at each reporting date. DSUs are granted under the DSU plan to members of the Board of Directors. There is no unrecognized share unit expense related to liability-classified DSUs as they vest immediately and are expensed upon grant.

As at March 31, 2020, the Company had a total share unit liability of $4,176,000 (December 31, 2019: $5,130,000) in respect of share units under the DSU plans.

Employee share purchase plan

The Company has an employee share purchase plan that allows all employees that have completed two months of service to contribute funds to purchase common shares at the current market value at the time of share purchase. Employees may contribute up to 4% of their salary. The Company will match between 50% and 100% of the employee’s contributions, depending on the employee’s length of service with the Company.