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Stock-based Compensation
12 Months Ended
Dec. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-based Compensation
STOCK-BASED COMPENSATION

Heartland may grant, through its Nominating and Compensation Committee (the "Compensation Committee") non-qualified and incentive stock options, stock appreciation rights, stock awards, restricted stock, restricted stock units and other equity-based incentive awards, under its 2012 Long-Term Incentive Plan (the "Plan"). The Plan was originally approved by stockholders in May 2012 and was amended and restated effective March 8, 2016, to increase the number of shares of common stock authorized for issuance and make certain other changes to the Plan. At December 31, 2017, 503,347 shares of common stock were reserved for future issuance under awards that may be granted under the Plan to employees and directors of, and service providers to, Heartland or its subsidiaries.

FASB ASC Topic 718, "Compensation-Stock Compensation" requires the measurement of the cost of employee services received in exchange for an award of equity instruments based upon the fair value of the award on the grant date. The cost of the award is based upon its fair value estimated on the date of grant and recognized in the consolidated statements of income over the vesting period of the award. The fair market value of restricted stock and restricted stock units is based on the fair value of the underlying shares of common stock on the date of grant. The fair value of stock options is estimated on the date of grant using the Black-Scholes model. Forfeitures are accounted for as they occur.

The amount of tax benefit related to the exercise, vesting, and forfeiture of equity-based awards reflected as a tax benefit in Heartland's income tax expense was $1.2 million for the year ended December 31, 2017. Prior to the adoption of ASU 2016-09 on January 1, 2017, $374,000 of tax benefit related to the exercise, vesting and forfeiture of equity-based awards was reflected in additional paid-in-capital for the year ended December 31, 2016.

Options
Although the Plan provides authority to the Compensation Committee to grant stock options, no options were granted during the years ended December 31, 2017, 2016 and 2015. Prior to 2009, options were typically granted annually with an expiration date 10 years after the date of grant. Vesting was generally over a five-year service period with portions of a grant becoming exercisable at three years, four years and five years after the date of grant. The exercise price of stock options granted is established by the Compensation Committee, but the exercise price for the stock options may not be less than the fair market value of the shares on the date that the options are granted or, if greater, the par value of a share of common stock. A summary of the status of Heartland's common stock options as of December 31, 2017, 2016 and 2015, and changes during the years ended December 31, 2017, 2016 and 2015, follows:
 
2017
 
2016
 
2015
 
Shares
 
Weighted-Average Exercise Price
 
Shares
 
Weighted-Average Exercise Price
 
Shares
 
Weighted-Average Exercise Price
Outstanding at January 1
26,400

 
$
18.60

 
125,950

 
$
24.08

 
215,851

 
$
23.85

Granted

 

 

 

 

 

Exercised
(19,400
)
 
18.60

 
(97,800
)
 
25.59

 
(86,651
)
 
23.49

Forfeited
(500
)
 
18.60

 
(1,750
)
 
21.10

 
(3,250
)
 
23.51

Outstanding at December 31
6,500

 
$
18.60

 
26,400

 
$
18.60

 
125,950

 
$
24.08

Options exercisable at December 31
6,500

 
$
18.60

 
26,400

 
$
18.60

 
125,950

 
$
24.08



At December 31, 2017, the vested options have a weighted average remaining contractual life of 0.07 years. The intrinsic value for the vested options as of December 31, 2017, was $228,000. The intrinsic value for the total of all options exercised during the year ended December 31, 2017, was $561,000. No shares under stock options vested during the year ended December 31, 2017. There were no compensation costs recorded for stock options for the years ended December 31, 2017, 2016 and 2015.

Cash received from options exercised for the year ended December 31, 2017, was $361,000. Cash received from options exercised for the year ended December 31, 2016, was $2.5 million.

Restricted Stock Units
The Plan permits the Compensation Committee to grant restricted stock units ("RSUs"). In the first quarter of 2017, the Compensation Committee granted time-based RSUS with respect to 55,665 shares of common stock, and in the first quarter of 2016, the Compensation Committee granted time-based RSUs with respect to 72,644 shares of common stock to selected officers and employees. The time-based RSUs, which represent the right, without payment, to receive shares of Heartland common stock at a specified date in the future. The time-based RSUs granted in 2016 vest over three years in equal installments on the first, second and third anniversaries of the grant date, while the 2017 time-based RSUs vest in equal installments on January 19 of each of the three years following the year of the grant. The time-based RSUs may also vest upon death or disability, upon a change in control or upon a "qualified retirement" (as defined in the RSU agreement). The retiree is required to sign a non-solicitation agreement as a condition to vesting.

In addition to the time-based RSUs referenced in the preceding paragraph, the Compensation Committee granted one-year performance-based RSUs with respect to 27,570 shares of common stock in the first quarter of 2017, and 35,516 shares of common stock in the first quarter of 2016. These performance-based RSUs are earned based on satisfaction of performance targets for the fiscal years ended December 31, 2017 and December 31, 2016, respectively, and then fully vest on January 19 of the third calendar year following the year of the grant.

The Compensation Committee also granted performance-based RSUs with respect to 9,032 shares and 11,408 shares of common stock in the first quarter of 2017 and 2016, respectively. These performance-based RSUs will be earned based upon satisfaction of performance targets for the three-year performance period ended December 31, 2019, and December 31, 2018. These performance-based RSUs will vest in 2020 and 2019, respectively, after measurement of performance in relation to the performance targets.

The one-year and three-year performance-based RSUs vest to the extent that they are earned upon death or disability or upon a "qualified retirement." Upon a change in control, performance-based RSUs shall become vested at 100% of target if the RSU obligations are not assumed by the successor company. If the successor company does assume the RSU obligations, the 2016 performance-based RSUs will fully vest upon an "Involuntary Termination" within two years after the change in control and the 2017 performance-based RSUs will vest at 100% of target upon a "Termination of Service" within the period beginning six months prior to a change in control and ending 24 months after a change in control.

All of Heartland's RSUs will be settled in common stock upon vesting and will not be entitled to dividends until vested.

The Compensation Committee may grant RSUs under the Plan to directors as part of their compensation, to new management level employees at the commencement of employment, and to other employees and service providers as incentives. During the years ended December 31, 2017, 2016 and 2015, 17,106, 24,153 and 22,648 RSUs, respectively, were granted to directors and new employees. The related compensation expense recorded for these grants was $741,000, $652,000, and $665,000 for the respective years.

A summary of the status of RSUs as of December 31, 2017, 2016 and 2015, and changes during the years ended December 31, 2017, 2016, and 2015, follows:
 
2017
 
2016
 
2015
 
Shares
 
Weighted-Average Grant Date Fair Value
 
Shares
 
Weighted-Average Grant Date Fair Value
 
Shares
 
Weighted-Average Grant Date Fair Value
Outstanding at January 1
346,817

 
$
27.61

 
353,195

 
$
25.53

 
396,555

 
$
21.48

Granted
109,373

 
47.22

 
143,721

 
29.75

 
139,943

 
28.90

Vested
(137,394
)
 
26.66

 
(126,614
)
 
23.83

 
(152,981
)
 
18.54

Forfeited
(17,218
)
 
34.02

 
(23,485
)
 
29.80

 
(30,322
)
 
23.38

Outstanding at December 31
301,578

 
$
34.74

 
346,817

 
$
27.61

 
353,195

 
$
25.53



The total fair value of shares under RSUs that vested during the year ended December 31, 2017, was $6.4 million. Total compensation costs recorded for RSUs were $3.2 million, $2.6 million and $2.6 million, for 2017, 2016 and 2015, respectively. As of December 31, 2017, there were $3.2 million of total unrecognized compensation costs related to the Plan for RSUs which are expected to be recognized through 2020.

Employee Stock Purchase Plan
Heartland maintains an employee stock purchase plan (the "ESPP"), which was adopted in May 2016 and replaced the 2006 ESPP, that permits all eligible employees to purchase shares of Heartland common stock at a price of not less than 95% of the fair market value (as determined by the Compensation Committee) on the determination date. Under ASC Topic 718, compensation expense related to the ESPP of $153,000 was recorded in 2017, $183,000 was recorded in 2016, and $58,000 was recorded in 2015 because the price of the shares purchased was set at the beginning of the year for the purchases at the end of the year.

A maximum of 500,000 shares is available for purchase under the ESPP, and as of December 31, 2017, 467,755 shares remain available for purchase. Beginning in 2017, Heartland began making ESPP purchases as soon as practicable after the last day of the plan year. On January 2, 2018, 22,903 shares were purchased under the ESPP plan for employee deferrals made during the plan year ended December 31, 2017. For the year ended December 31, 2016, 32,245 shares were purchased under the ESPP. For the year ended December 31, 2015, 28,788 shares were purchased under the ESPP.