Stock-Based Compensation

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

9. Stock-Based Compensation

The Company grants stock-based compensation under its 2007 Long-Term Incentive Plan, as amended (the “LTIP”). The LTIP provides for grants of (a) incentive stock options qualified as such under U.S. federal income tax laws, (b) stock options that do not qualify as incentive stock options, (c) stock appreciation rights, (d) restricted stock awards, (e) performance awards, (f) phantom stock, (g) stock bonuses, (h) dividend equivalents, and (i) any combination of such awards.

During the three months ended March 31, 2017, the Company granted 43,972 shares of restricted stock, which vest ratably over three years, at a weighted average grant date fair value of $39.52. Additionally, 76,831 shares of restricted stock vested during the three months ended March 31, 2017, at a weighted average grant date fair value of $24.80.

During the three months ended March 31, 2017, the Company granted 47,454 performance share awards, at target, which cliff vest on December 31, 2019, at a weighted average grant date fair value of $47.12. The number of shares actually earned under a performance award may vary from zero to 200% of the target shares awarded, based upon the Company’s performance compared to certain metrics. The metrics used were determined at grant by the Compensation Committee of the Board of Directors and were either based on internal measures such as the Company’s financial performance compared to target or on a market-based metric such as the Company’s stock performance compared to a peer group. Performance awards cliff vest upon attainment of the stated performance targets and minimum service requirements and are paid in common shares of the Company’s stock.

The Company recognizes stock-based compensation expense related to restricted stock awards based on the grant date fair value, which was the closing price of the Company’s stock on the date of grant. The fair value is expensed over the service period of 3.0 years. The Company recognizes stock-based compensation expense related to market-based performance awards based on the grant date fair value, which is computed using a Monte Carlo simulation. The fair value is expensed over the service period, which is approximately 2.8 years. The Company recognizes stock-based compensation expense related to internal measure-based performance awards based on the grant date fair value, which was the closing price of the Company’s stock on the date of grant. The fair value is expensed over the service period of approximately 2.8 years, and the Company adjusts the stock-based compensation expense related to internal metric-based performance awards according to its determination of the potential achievement of the performance target at each reporting date.

During the three months ended March 31, 2017, plan participants exercised 55,995 stock options with a weighted average exercise price of $16.27.

The Company adopted ASU No. 2016-09, Compensation—Stock Compensation (Topic 718) on January 1, 2017. The adoption is required to be implemented prospectively and resulted in income tax benefits of $0.8 million for the three months ended March 31, 2017. Additionally, the Company has elected to account for forfeitures as they occur, rather than estimate expected forfeitures. The net cumulative effect of this change was recognized as a $0.2 million reduction to retained earnings as of January 1, 2017 with a corresponding increase in additional paid in capital. See Note 1 to the Financial Statements for further information regarding ASU No. 2016-09, Compensation—Stock Compensation (Topic 718).