STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2017

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

NOTE 2. STOCK-BASED COMPENSATION

On January 1, 2017, the Company adopted accounting standard update (“ASU”) No. 2016-09, which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Subsequent to the adoption, the Company records any excess tax benefits or deficiencies from its equity awards in its Consolidated Statements of Income in the reporting periods in which vesting occurs. As a result, the Company’s income tax expense and associated effective tax rate are impacted by fluctuations in stock price between the grant dates and vesting dates of equity awards. This guidance of requiring recognition of excess tax benefits and deficits in the income statement was applied prospectively with the adoption of ASU No. 2016-09.

For the three months ended June 30, 2017, the effect of the adoption of ASU No. 2016-09 was a decrease of tax expense by $277 thousand, an increase of net income by $180 thousand and a decrease of basic and diluted earnings per share by approximately $0.01. For the six months ended June 30, 2017, the effect of the adoption of ASU No.2016-09 was a decrease of tax expense by $341 thousand, an increase of net income by $222 thousand and a decrease of basic and diluted earnings per share by approximately $0.01.

The Company has elected to keep the accounting policy of estimated forfeitures, rather than account for forfeitures as they occur. The amendments in the guidance that require application using a modified retrospective transition method did not impact the Company. Therefore, there was no cumulative-effect adjustment to retained earnings recognized as of January 1, 2017.

ASU No. 2016-09 also changes the classification and presentation of the excess tax benefit from stock-based compensation in the statement of cash flows. The Company applied the amendments in this guidance relating to classification on its consolidated statement of cash flows prospectively.

Reported stock-based compensation expense was classified as follows (in thousands):

	Three months ended				Six months ended
	June 30,				June 30,
	2017		2016		2017		2016
Casino	$	35	$	30	$	68	$	51
Food and beverage		30		26		63		51
Hotel		8		11		16		22
Selling, general and administrative		420		356		811		426
Total stock-based compensation, before taxes		493		423		958		550
Tax benefit		(173)		(148)		(335)		(193)
Total stock-based compensation, net of tax	$	320	$	275	$	623	$	357