Equity Compensation, Employment Agreements and Other Benefit Plans

(a) Equity Compensation Plan

In accordance with the terms of the Company’s Equity Compensation Plan (the “Equity Plan”), which was adopted by the Company’s stockholders on May 21, 2015 (and which amended and restated the Company’s 2010 Equity Compensation Plan, directors, officers and employees of the Company and any of its subsidiaries and other persons expected to provide significant services for the Company and any of its subsidiaries are eligible to receive grants of stock options (“Options”), restricted stock, RSUs, dividend equivalent rights and other stock-based awards under the Equity Plan.

Subject to certain exceptions, stock-based awards relating to a maximum of 12.0 million shares of common stock may be granted under the Equity Plan; forfeitures and/or awards that expire unexercised do not count towards this limit. At December 31, 2015, approximately 9.4 million shares of common stock remained available for grant in connection with stock-based awards under the Equity Plan. A participant may generally not receive stock-based awards in excess of 1,500,000 shares of common stock in any one year and no award may be granted to any person who, assuming exercise of all Options and payment of all awards held by such person, would own or be deemed to own more than 9.8% of the outstanding shares of the Company’s common stock. Unless previously terminated by the Board, awards may be granted under the Equity Plan until May 20, 2025.

Dividend Equivalents

A dividend equivalent is a right to receive a distribution equal to the dividend distributions that would be paid on a share of the Company’s common stock. Dividend equivalents may be granted as a separate instrument or may be a right associated with the grant of another award (e.g., an RSU) under the Equity Plan, and they are paid in cash or other consideration at such times and in accordance with such rules, as the Compensation Committee of the Board (the “Compensation Committee”) shall determine in its discretion. Payments made on the Company’s outstanding dividend equivalent rights that have been granted as a separate instrument are charged to Stockholders’ Equity when common stock dividends are declared to the extent that such equivalents are expected to vest. The Company made payments in respect of such separate instruments of approximately $16,000, $69,000 and $412,000 during the years ended December 31, 2015, 2014 and 2013, respectively. The dividend equivalent payments made in respect of such separate instruments for the year ended December 31, 2013, reflect special cash dividends paid of $0.78 per share, or approximately $194,000. At December 31, 2015, there were 8,215 dividend equivalent rights outstanding, which had been awarded separately from, but in connection with, grants of RSUs made in prior years. A 0% forfeiture rate was assumed with respect to such dividend equivalent rights outstanding at December 31, 2015. At December 31, 2015, the Company had unrecognized compensation expense of approximately $44,000 related to such dividend equivalent rights, which are scheduled to elapse over a weighted average period of 6 months.

The following table presents information about the Company’s dividend equivalents rights awarded as separate instruments at and for each of the years ended December 31, 2015, 2014 and 2013:



	For the Year Ended December 31,
	2015		2014		2013
	Number of Dividend Equivalent Rights
Outstanding at beginning of year:	24,402		218,225		266,075
Granted	—		—		—
Cancelled, forfeited or expired	(16,187	)	(193,823	)	(47,850	)
Outstanding at end of year	8,215		24,402		218,225

The weighted average grant date fair value of the dividend equivalent rights in the above table is $2.77. The determination of the weighted average grant date fair value of these awards required the Company to estimate certain valuation inputs. In determining the fair value for these awards granted in 2011, the Company applied: (i) a weighted average volatility estimate of approximately 31%, which was determined considering historic volatility in the price of Company’s common stock over the six-year period prior to the grant date and the implied volatility of certain exchange-traded options on the Company’s common stock at the grant date; (ii) a weighted average risk-free rate of 2.23% based on the continuously compounded constant maturity treasury rate corresponding to a maturity commensurate with the expected vesting term of the awards; and (iii) an estimated annual dividend yield of 13%.

Options

Pursuant to Section 422(b) of the Code, in order for Options granted under the Equity Plan and vesting in any one calendar year to qualify as an incentive stock option (“ISO”) for tax purposes, the market value of the common stock to be received upon exercise of such Options as determined on the date of grant shall not exceed $100,000 during such calendar year. The exercise price of an ISO may not be lower than 100% (or 110% in the case of an ISO granted to a 10% stockholder) of the fair market value of the Company’s common stock on the date of grant. The exercise price for any other type of Option issued under the Equity Plan may not be less than the fair market value on the date of grant. Each Option is exercisable after the period or periods specified in the award agreement, which will generally not exceed ten years from the date of grant.

At December 31, 2015, the Company had no Options outstanding. The following table presents information about the Company’s Options at and for each of the years ended December 31, 2014 and 2013:



	For the Year Ended December 31,
	2014				2013
	Number of Options		Weighted Average Exercise Price		Number of Options		Weighted Average Exercise Price
Outstanding at beginning of year:	5,000		$	8.40	427,000		$	10.14
Granted	—		—		—		—
Cancelled, forfeited or expired	(5,000	)	8.40		(402,000	)	10.25
Exercised (1)	—		—		(20,000	)	8.40
Outstanding at end of year	—		$	—	5,000		$	8.40
Options exercisable at end of year	—		$	—	5,000		$	8.40

(1) For the year ended December 31, 2013, the intrinsic value of Options exercised was approximately $19,000.

Restricted Stock

At December 31, 2015 and December 31, 2014, the Company had unrecognized compensation expense of approximately $807,000 and $1.8 million, respectively, related to the unvested shares of restricted common stock. The Company had accrued dividends payable of approximately $193,000 and $312,000 on unvested shares of restricted stock at December 31, 2015 and December 31, 2014, respectively. The total fair value of restricted shares vested during the years ended December 31, 2015, 2014 and 2013 was approximately $4.3 million, $5.7 million and $2.1 million, respectively. The unrecognized compensation expense at December 31, 2015 is expected to be recognized over a weighted average period of 1.5 years.

The following table presents information with respect to the Company’s restricted stock for the years ended December 31, 2015, 2014 and 2013:



	For the Year Ended December 31,
	2015				2014				2013
	Shares of Restricted Stock		Weighted Average Grant Date Fair Value (1)		Shares of Restricted Stock		Weighted Average Grant Date Fair Value (1)		Shares of Restricted Stock		Weighted Average Grant Date Fair Value (1)
Outstanding at beginning of year:	243,948		$	7.48	443,967		$	7.50	483,442		$	7.74
Granted	497,007		6.83		491,797		8.29		231,531		7.33
Vested (2)	(629,212	)	6.98		(690,397	)	8.07		(270,456	)	7.77
Cancelled/forfeited	(823	)	7.74		(1,419	)	7.58		(550	)	7.72
Outstanding at end of year	110,920		$	7.41	243,948		$	7.48	443,967		$	7.50

(1) The grant date fair value of restricted stock awards is based on the closing market price of the Company’s common stock at the grant date.

(2) All restrictions associated with restricted stock are removed on vesting.

Restricted Stock Units

Under the terms of the Equity Plan, RSUs are instruments that provide the holder with the right to receive, subject to the satisfaction of conditions set by the Compensation Committee at the time of grant, a payment of a specified value, which may be a share of the Company’s common stock, the fair market value of a share of the Company’s common stock, or such fair market value to the extent in excess of an established base value, on the applicable settlement date. Although the Equity Plan permits the Company to issue RSUs that can settle in cash, all of the Company’s outstanding RSUs as of December 31, 2015 are designated to be settled in shares of the Company’s common stock. All RSUs outstanding at December 31, 2015 may be entitled to receive dividend equivalent payments depending on the terms and conditions of the award either in cash at the time dividends are paid by the Company, or for certain performance-based RSU awards, as a grant of stock at the time such awards are settled. At December 31, 2015 and December 31, 2014, the Company had unrecognized compensation expense of $4.0 million and $2.7 million, respectively, related to RSUs. The unrecognized compensation expense at December 31, 2015 is expected to be recognized over a weighted average period of 1.7 years. A 0% forfeiture rate was assumed with respect to unvested RSUs at December 31, 2015.

The following table presents information with respect to the Company’s RSUs during the years ended December 31, 2015, 2014 and 2013:



	For the Year Ended December 31, 2015
	RSUs With Service Condition		Weighted Average Grant Date Fair Value		RSUs With Market and Service Conditions		Weighted Average Grant Date Fair Value		Total RSUs		Total Weighted Average Grant Date Fair Value
Outstanding at beginning of year:	769,174		$	7.55	449,300		$	5.61	1,218,474		$	6.84
Granted (1)	390,804		7.96		291,250		5.73		682,054		7.01
Settled	(17,298	)	6.60		—		—		(17,298	)	6.60
Cancelled/forfeited	(3,750	)	7.97		(3,750	)	5.73		(7,500	)	6.85
Outstanding at end of year	1,138,930		$	7.71	736,800		$	5.66	1,875,730		$	6.90
RSUs vested but not settled at end of year	554,023		$	7.83	175,500		$	5.21	729,523		$	7.20
RSUs unvested at end of year	584,907		$	7.59	561,300		$	5.80	1,146,207		$	6.71



	For the Year Ended December 31, 2014
	RSUs With Service Condition		Weighted Average Grant Date Fair Value		RSUs With Market and Service Conditions		Weighted Average Grant Date Fair Value		Total RSUs		Total Weighted Average Grant Date Fair Value
Outstanding at beginning of year:	490,099		$	7.75	287,719		$	4.32	777,818		$	6.48
Granted (2)	357,015		7.22		273,800		5.87		630,815		6.64
Settled	(72,873	)	7.28		(14,465	)	4.71		(87,338	)	6.86
Cancelled/forfeited	(5,067	)	7.36		(97,754	)	2.67		(102,821	)	2.90
Outstanding at end of year	769,174		$	7.55	449,300		$	5.61	1,218,474		$	6.84
RSUs vested but not settled at end of year	467,638		$	7.81	175,500		$	5.21	643,138		$	7.10
RSUs unvested at end of year	301,536		$	7.15	273,800		$	5.87	575,336		$	6.54



	For the Year Ended December 31, 2013
	RSUs With Service Condition		Weighted Average Grant Date Fair Value		RSUs With Market and Service Conditions		Weighted Average Grant Date Fair Value		Total RSUs		Total Weighted Average Grant Date Fair Value
Outstanding at beginning of year:	448,141		$	7.61	279,507		$	4.55	727,648		$	6.43
Granted (3)	64,483		8.23		48,341		2.59		112,824		5.82
Settled	(21,025	)	6.20		(32,066	)	2.80		(53,091	)	4.15
Cancelled/forfeited	(1,500	)	7.77		(8,063	)	7.89		(9,563	)	7.88
Outstanding at end of year	490,099		$	7.75	287,719		$	4.32	777,818		$	6.48
RSUs vested but not settled at end of year	84,199		$	8.50	14,625		$	4.69	98,824		$	7.93
RSUs unvested at end of year	405,900		$	7.60	273,094		$	4.30	678,994		$	6.27

(1) The weighted average grant date fair value of these awards require the Company to estimate certain valuation inputs. In determining the fair value for 582,500 of these awards granted in 2015, the Company applied: (i) a weighted average volatility estimate of approximately 18%, which was determined considering historic volatility in the price of Company’s common stock over the three-year period prior to the grant date and the implied volatility of certain exchange-traded options on the Company’s common stock at the grant date; (ii) a weighted average risk-free rate of 0.90% based on the continuously compounded constant maturity treasury rate corresponding to a maturity commensurate with the expected vesting term of the awards; and (iii) an estimated annual dividend yield of 9%. The weighted average grant date fair value for the remaining 99,554 awards with a service condition only was estimated based on the closing price of the Company’s common stock at the grant date ranging from $7.93 to $7.97. There are no post vesting conditions on these awards.

(2) The weighted average grant date fair value of these awards require the Company to estimate certain valuation inputs. In determining the fair value for 547,600 of these awards granted in 2014, the Company applied: (i) a weighted average volatility estimate of approximately 22%, which was determined considering historic volatility in the price of Company’s common stock over the three-year period prior to the grant date and the implied volatility of certain exchange-traded options on the Company’s common stock at the grant date; (ii) a weighted average risk-free rate of 0.73% based on the continuously compounded constant maturity treasury rate corresponding to a maturity commensurate with the expected vesting term of the awards; and (iii) an estimated annual dividend yield of 8%. The weighted average grant date fair value for the remaining 83,215 awards with a service condition only was estimated based on the closing price of the Company’s common stock at the grant date ranging from $7.19 to $8.16. There are no post vesting conditions on these awards.

(3) The determination of the weighted average grant date fair value of these awards require the Company to estimate certain valuation inputs. In determining the fair value for awards granted in 2013, the Company applied: (i) a weighted average volatility estimate of approximately 23%, which was determined considering historic volatility in the price of Company’s common stock over the three-year period prior to the grant date and the implied volatility of certain exchange-traded options on the Company’s common stock at the grant date; (ii) a weighted average risk-free rate of 0.65% based on the continuously compounded constant maturity treasury rate corresponding to a maturity commensurate with the expected vesting term of the awards; and (iii) an estimated annual dividend yield of 13%. There are no post vesting conditions on these awards.

Expense Recognized for Equity-Based Compensation Instruments

The following table presents the Company’s expenses related to its equity-based compensation instruments for the years ended December 31, 2015, 2014 and 2013:



	For the Year Ended December 31,
(In Thousands)	2015		2014		2013
Restricted shares of common stock	$	4,373	$	5,553	$	2,150
RSUs (1)	3,377		2,886		1,813
Dividend equivalent rights	82		146		195
Total	$	7,832	$	8,585	$	4,158

(1) RSU expense for the year ended December 31, 2014 includes approximately $500,000 for a one-time grant to the Company’s chief executive officer.

(b) Employment Agreements

At December 31, 2015, the Company had employment agreements with four of its officers, with varying terms that provide for, among other things, base salary, bonus and change-in-control payments upon the occurrence of certain triggering events.

The Company administers deferred compensation plans for its senior officers and non-employee directors (collectively, the “Deferred Plans”), pursuant to which participants may elect to defer up to 100% of certain cash compensation. The Deferred Plans are designed to align participants’ interests with those of the Company’s stockholders.

Amounts deferred under the Deferred Plans are considered to be converted into “stock units” of the Company. Stock units do not represent stock of the Company, but rather are a liability of the Company that changes in value as would equivalent shares of the Company’s common stock. Deferred compensation liabilities are settled in cash at the termination of the deferral period, based on the value of the stock units at that time. The Deferred Plans are non-qualified plans under the Employee Retirement Income Security Act of 1974 and, as such, are not funded. Prior to the time that the deferred accounts are settled, participants are unsecured creditors of the Company.

The Company’s liability for stock units in the Deferred Plans is based on the market price of the Company’s common stock at the measurement date. The following table presents the Company’s expenses related to its Deferred Plans for its non-employee directors and senior officers for the years ended December 31, 2015, 2014 and 2013:



	For the Year Ended December 31,
(In Thousands)	2015			2014		2013
Non-employee directors	$	(59	)	$	69	$	17
Total	$	(59	)	$	69	$	17

The Company distributed cash of $109,000, $119,000 and $12,000 to the participants of the Deferred Plans during the years ended December 31, 2015, 2014 and 2013, respectively. The following table presents the aggregate amount of income deferred by participants of the Deferred Plans through December 31, 2015 and 2014 that had not been distributed and the Company’s associated liability for such deferrals at December 31, 2015 and 2014:



	December 31, 2015				December 31, 2014
(In Thousands)	Undistributed Income Deferred (1)		Liability Under Deferred Plans		Undistributed Income Deferred (1)		Liability Under Deferred Plans
Non-employee directors	$	601	$	614	$	324	$	446
Total	$	601	$	614	$	324	$	446

(1) Represents the cumulative amounts that were deferred by participants through December 31, 2015 and 2014, which had not been distributed through such respective date.

(d) Savings Plan

The Company sponsors a tax-qualified employee savings plan (the “Savings Plan”) in accordance with Section 401(k) of the Code. Subject to certain restrictions, all of the Company’s employees are eligible to make tax deferred contributions to the Savings Plan subject to limitations under applicable law. Participant’s accounts are self-directed and the Company bears the costs of administering the Savings Plan. The Company matches 100% of the first 3% of eligible compensation deferred by employees and 50% of the next 2%, subject to a maximum as provided by the Code. The Company has elected to operate the Savings Plan under the applicable safe harbor provisions of the Code, whereby among other things, the Company must make contributions for all participating employees and all matches contributed by the Company immediately vest 100%. For the years ended December 31, 2015, 2014 and 2013, the Company recognized expenses for matching contributions of $309,000, $237,000 and $250,000, respectively.