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Share-based payments
6 Months Ended
Jun. 30, 2020
Share-based payments  
Share-based payments

17.    Share-based payments

Share-based payments consist of the following compensation costs:

Three months ended

 

Six months ended

June 30, 

June 30, 

    

2020

    

2019

    

2020

    

2019

Stock option compensation expense:

 

  

 

  

 

  

 

  

SG&A expenses

$

1,543

$

1,660

$

2,730

$

3,199

Share unit expense (recovery):

 

 

  

 

  

 

  

Equity-classified share units

 

3,231

 

3,535

 

5,017

 

5,903

Liability-classified share units

 

971

 

90

 

(185)

 

240

Employee share purchase plan - employer contributions

 

610

 

572

 

1,199

 

1,125

$

6,355

$

5,857

$

8,761

$

10,467

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 six months ended June 30, 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

 

772,074

 

40.84

 

  

 

  

Exercised

 

(679,277)

 

28.60

9,600

Forfeited

 

(28,651)

 

30.55

 

  

 

  

Expired

 

(1,201)

 

21.82

 

  

 

  

Outstanding, June 30, 2020

 

2,860,134

32.33

 

7.6

24,496

Exercisable, June 30, 2020

 

1,397,769

$

27.41

 

6.1

$

18,785

The significant assumptions used to estimate the fair value of stock options granted during the six months ended June 30, 2020 and 2019 are presented in the following table on a weighted average basis:

Six months ended June 30, 

    

2020

    

2019

    

Risk free interest rate

 

0.70

%  

2.5

%

Expected dividend yield

 

1.98

%  

2.06

%

Expected lives of the stock options

 

5

years

5

years

Expected volatility

 

27.8

%  

26.8

%

17.    Share-based payments (continued)

Stock option plans (continued)

As at June 30, 2020, the unrecognized stock-based compensation cost related to the non-vested stock options was $7,109,000, which is expected to be recognized over a weighted average period of 2.5 years.

Share unit plans

Share unit activity for the six months ended June 30, 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

 

286,773

 

41.79

 

25,832

 

40.80

 

10,772

 

40.78

Vested and settled

 

(156,238)

 

31.94

 

(7,724)

 

36.23

 

 

Forfeited

 

(9,129)

 

33.79

 

(42,817)

 

27.20

 

 

Outstanding, June 30, 2020

 

550,130

$

37.78

 

212,711

$

31.34

 

$

129,140

$

30.57

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 June 30, 2020 the unrecognized share unit expense related to equity-classified PSUs was $14,139,000, which is expected to be recognized over a weighted average period of 2.3 years.

RSUs

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

As at June 30, 2020, the unrecognized share unit expense related to equity-classified RSUs was $1,921,000, 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 June 30, 2020, the Company had a total share unit liability of $5,349,000 (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.