Stock-Based Compensation

3 Months Ended

Mar. 31, 2020

Deferred Compensation Arrangements [Abstract]

STOCK -BASED COMPENSATION

We recognize stock-based compensation for all stock options granted over the requisite service period using the fair value of these grants as estimated at the date of grant using the Black-Scholes pricing model. All restricted stock granted (if any) is recognized over the requisite service period using the market value of our publicly traded common stock on the date of grant.

Stock-Based Compensation Plans

The Compensation Committee of the Board of Directors (“the Committee”) has the authority to select the participants to be granted options; to designate whether the option granted is an incentive stock option (“ISO”), a non-qualified option, or a stock appreciation right; to establish the number of shares of common stock that may be issued upon exercise of the option; to establish the vesting provision for any award; and to establish the term any award may be outstanding. The exercise price of any ISO’s

granted will not be less than 100% of the fair market value of the shares of common stock on the date granted, and the term of an ISO may not be more than ten years. The exercise price of any non-qualified options granted will not be less than 100% of the fair market value of the shares of common stock on the date granted unless so determined by the Committee.

In May 2012, our stockholders approved the 2012 Stock Incentive Plan (“the 2012 Plan”) pursuant to which 3,500,000 shares of our common stock, as amended from time to time, were made available to grant as stock-based payments to employees, officers, directors or consultants. The individual option grant awards may vest over periods up to five years. The term of the options under the 2012 Plan is up to ten years from the date of grant. During the first quarter of 2020, we granted the remaining 319,669 awards available under the 2012 Plan.

On May 3, 2019, our stockholders approved the 2019 Stock Incentive Plan (“the 2019 Plan”) pursuant to which 3,000,000 shares of our common stock were made available to grant as stock-based payments to employees, officers, directors or consultants. The individual option grant awards may vest over periods up to five years. The term of the options under the 2019 Plan is up to ten years from the date of grant. As of March 31, 2020, there were 2,735,169 shares available for future grants under the 2019 Plan.

Compensation expense is only recognized for the awards that ultimately vest. Accordingly, pre-vesting forfeitures that were not expected will result in the reversal of previously recorded compensation expense. Non-cash compensation expense reported for the three months ended March 31, 2020 and 2019 was $1,845,000 and $2,001,000, respectively and is included in general and administrative expense in the Condensed Consolidated Statements of Income.

At March 31, 2020, we had, net of expected forfeitures, $2,124,000 of unrecognized compensation cost related to unvested stock options which is expected to be expensed over the following periods: 2020 - $1,353,000, 2021 - $693,000 and 2022 - $78,000.

The weighted average fair value per share of options granted during the three months ended March 31, 2020 and 2019 was $5.54 and $6.17, respectively. The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:


	2020	2019
Dividend yield	5.1%	5.5%
Expected volatility	16.8%	18.6%
Expected lives	2.9 years	2.9 years
Risk-free interest rate	1.31%	2.50%

The following table summarizes our outstanding stock options:


	Three Months Ended
	March 31,
	2020	2019
Options outstanding January 1,	1,004,014	920,346
Options granted under 2012 Plan	319,669	602,000
Options exercised under 2012 Plan	(512,509)	(352,830)
Options forfeited under 2012 Plan	(4,169)	—
Options granted under 2019 Plan	264,831	—
Options forfeited under 2019 Plan	(3,831)	—
Options outstanding, March 31,	1,068,005	1,169,516

Exercisable at March 31,	600,327	678,997