EQUITY

6 Months Ended

Jun. 30, 2019

EQUITY

EQUITY

NOTE 15.   EQUITY

Stock Repurchase Program

On June 1, 2016, the Company’s Board of Directors authorized the repurchase of $25.0 million of the Company’s outstanding common stock. Repurchases may be made from time to time in the open market or through privately negotiated transactions. The timing of any repurchases will be based upon prevailing market conditions and other factors. The Company did not repurchase any shares of common stock under the repurchase program during the three or six months ended June 30, 2019. On May 29, 2018 the repurchase program was extended and will remain in effect until June 6, 2020, unless further extended by our Board of Directors.

Omnibus Incentive Plan

On May 27, 2015, our stockholders approved the Omnibus Incentive Plan (“Omnibus Plan”), which was approved by our Board of Directors on April 7, 2015. The Omnibus Plan was developed to provide additional incentives through equity ownership in the Company and, as a result, encourage employees and directors to contribute to our success. The Omnibus Plan provides, among other things, the ability for the Company to grant restricted stock, performance stock, options, stock appreciation rights, restricted stock units (“RSUs”), performance stock units (“PSUs”) and other share-based awards or cash awards to officers, employees, consultants and non-employee directors. Subsequent to the approval of the Omnibus Plan in May 2015, we stopped granting equity awards under our 2008 Stock Option Incentive Plan and our 2006 Restricted Stock Plan (collectively, the “Previous Plans”). The Previous Plans will remain in effect solely for the settlement of awards granted under the Previous Plans. No shares that are reserved but unissued under the Previous Plans or that are outstanding under the Previous Plans and reacquired by the Company for any reason will be available for issuance under the Omnibus Plan. The Omnibus Plan expires on April 7, 2025 and authorizes 1,500,000 shares of common stock for grant over the life of the Omnibus Plan. As of June 30, 2019, 873,117 shares of common stock remain available for grant under the Omnibus Plan.

PSUs, RSUs and Restricted Stock

On March 1, 2019, the Company granted 17,111 PSUs to certain employees. Each PSU represents the right to receive, on the settlement date, one share of the Company’s common stock. The total number of PSUs each participant is eligible to earn ranges from 0% to 300% of the target number of PSUs granted. The actual number of PSUs that will vest and be settled in shares is determined at the end of a three-year performance period beginning January 1, 2019, based on adjusted earnings per share and return on invested capital relative to established targets with an additional adjustment based on total stockholder return relative to a set of peer companies. The fair value of the PSUs estimated on the grant date using a Monte Carlo simulation was $58.20 per unit. Compensation expense is recorded over the awards’ vesting period.

Assumptions used in the Monte Carlo simulation to calculate the fair value of the PSUs granted in 2019 are as follows:

	2019
Stock price on grant date	$	58.40
Expected term		3.0	years
Expected volatility		30	%
Risk-free interest rate		2.5	%
Expected dividend yield		1.1	%

A summary of our PSU, restricted stock and RSU activity for the six months ended June 30, 2019 is as follows:

	PSUs			Restricted Stock			RSUs
		Weighted			Weighted			Weighted
		Average			Average			Average
		Grant Date			Grant Date			Grant Date
	Shares	Fair Value		Shares	Fair Value		Shares	Fair Value
Outstanding as of December 31, 2018	39,200	$	55.48	74,988	$	46.74	66,785	$	53.77
Granted	17,111		58.20	27,800		62.59	33,020		56.21
Vested	(13,600)		41.22	(39,234)		43.77	(26,362)		48.28
Cancelled, expired or forfeited	—		—	—		—	(243)		45.66
Outstanding as of June 30, 2019	42,711	$	61.11	63,554	$	55.50	73,200	$	56.88

During the six months ended June 30, 2019, 13,600 PSUs vested and PSU holders earned 19,414 shares of the Company’s common stock.

Stock Options

A summary of our stock option activity for the six months ended June 30, 2019 is as follows:

		Weighted
		Average
		Exercise
	Shares	Price
Outstanding as of December 31, 2018	236,503	$	44.93
Granted	41,100		63.36
Exercised	(3,246)		42.29
Cancelled, expired or forfeited	(1,540)		43.55
Outstanding as of June 30, 2019	272,817	$	47.74
Exercisable as of June 30, 2019	191,756	$	43.83

During the six months ended June 30, 2019, option holders tendered 2,252 options in connection with options exercised via net share settlement.

Treasury Stock

During the six months ended June 30, 2019, the Company repurchased 14,462 shares of the Company’s common stock in connection with the net share settlement of employee equity awards at an average cost of $63.34 per share. During the six months ended June 30, 2019, the Company issued 7,800 treasury shares related to restricted stock awards at an average cost of $57.77 per share.

Dividends

The Company paid dividends of $0.18 per common share during each of the three months ended June 30, 2019 and 2018 and paid dividends of $0.36 per common share during each of the six months ended June 30, 2019 and 2018.