FOSTER L B CO Stock Compensation Disclosure

Note 15.

 

Share-based Compensation

 

The Company applies the provisions of FASB ASC 718, Compensation – Stock Compensation, to account for the Company’s share-based compensation.  Share-based compensation cost is measured at the grant date based on the calculated fair value of the award and is recognized over the employees’ requisite service period.  The Company recorded share-based compensation expense of $1,471,  $3,007 and $2,156 for the years ended December 31, 2015, 2014, and 2013, respectively, related to fully-vested stock awards, restricted stock awards, and performance unit awards. At December 31, 2015, unrecognized compensation expense for awards the Company expects to vest approximated $2,611. The Company will recognize this expense over the upcoming 3.5 year period through June 2019.

 

Shares issued as a result of vested stock-based compensation generally will be from previously issued shares which have been reacquired by the Company and held as Treasury stock or authorized but previously unissued common stock.

 

The excess tax benefit realized for the tax deduction from share-based compensation approximated $253,  $336, and $203 for the years ended December 31, 2015, 2014, and 2013, respectively.  This excess tax benefit is included in cash flows from financing activities in the Consolidated Statements of Cash Flows.

 

At December 31, 2015, the Company had stock awards issued pursuant to the 2006 Omnibus Incentive Plan as amended and restated in October 2013 (“Omnibus Plan”).  The Omnibus Plan allows for the issuance of 900,000 shares of common stock through the granting of stock options or stock awards (including performance units convertible into stock) to key employees and directors at no less than 100% of fair market value on the date of the grant.  The Omnibus Plan provides for the granting of “nonqualified options” with a duration of not more than ten years from the date of grant.    The Omnibus Plan also provides that, unless otherwise set forth in the option agreement, stock options are exercisable in installments of up to 25% annually beginning one year from the date of grant.    No stock options have been granted under the Omnibus Plan and, as such, there was no share-based compensation expense related to stock options recorded in 2015,  2014, or 2013

 

The Company also had 7,500 outstanding stock option awards that were granted under the former 1998 Long-Term Incentive Plan for Officers and Directors, amended and restated in May 2006 (“1998 Plan”).  During 2015, all 7,500 outstanding stock option awards were exercised prior to their expiration. No future grants are permitted under the expired 1998 Plan and the Company currently makes equity awards under the Omnibus Plan.

 

Stock Option Awards

 

Certain information for the three years ended December 31, 2015 relative to employee stock options is summarized as follows:

 

 

The weighted average exercise price per share of the stock options exercised in 2015, 2014, and 2013 were $9.08, $11.67, and $9.30, respectively.  The total intrinsic value of stock options exercised during the years ended December 31, 2015, 2014, and 2013 was $253, $426, and $124, respectively.

 

Fully-Vested Stock Awards

 

Non-employee directors are automatically awarded fully vested shares of the Company’s common stock on each date the non-employee directors are elected at the annual shareholders’ meeting to serve as directors.

 

The non-employee directors were granted a total of 14,000,  10,182, and 9,960 fully-vested shares for the years ended December 31, 2015, 2014, and 2013, respectively.  Compensation expense recorded by the Company related to fully-vested stock awards to non-employee directors was approximately $534, $488, and $450 for the years ended December 31, 2015, 2014, and 2013, respectively. 

 

The weighted average fair value of all the fully-vested stock grants awarded was $38.15, $47.94, and $45.16 per share for 2015, 2014, and 2013, respectively.

 

Restricted Stock Awards and Performance Unit Awards

 

Under the amended and restated 2006 Omnibus Plan, the Company grants eligible employees restricted stock and performance unit awards. The forfeitable restricted stock awards granted prior to March 2015 generally time-vest after a four year holding period, and those granted in March 2015 generally time-vest ratably over a three-year period, unless indicated otherwise by the underlying restricted stock agreement. Performance unit awards are offered annually under separate three-year long-term incentive programs. Performance units are subject to forfeiture and will be converted into common stock of the Company based upon the Company’s performance relative to performance measures and conversion multiples as defined in the underlying program. If the Company’s estimate of the number of performance stock awards expected to vest changes in a subsequent accounting period, cumulative compensation expense could increase or decrease. The change will be recognized in the current period for the vested shares and would change future expense over the remaining vesting period.

 

The following table summarizes the restricted stock award and performance unit award activity for the three-year periods ended December 31, 2015, 2014, and 2013:

 

 

Performance units are subject to forfeiture and will be converted into common stock of the Company based upon the Company’s performance relative to performance measures and conversion multiples as defined in the underlying plan.  The aggregate fair value in the above table is based upon achieving 100% of the performance targets as defined in the underlying plan.  During 2014, the Company reversed $702 of incentive compensation costs under its separate three-year long-term incentive plans caused by the impact of the product warranty charges on Company performance, as it related to the awards’ underlying performance conditions.  More information on the product warranty charge can be found in Note 19, “Commitments and Contingent Liabilities”.

 

Excluding the fully-vested stock awards granted to non-employee directors, the Company recorded compensation expense of $937, $2,519, and $1,706, respectively, for the periods ended December 31, 2015, 2014, and 2013 related to restricted stock and performance unit awards. 

 

 

The Company issued, pursuant to the Omnibus Plan, approximately 14,000 fully-vested shares during 2014 which were earned under the 2011 – 2013 three -year long-term incentive plan.  This non-cash transaction of $454 was reflected as a decrease to Treasury stock in the Consolidated Balance Sheet at December 31, 2014.