Annual report pursuant to Section 13 and 15(d)

RETIREMENT AND LONG-TERM INCENTIVE PLANS

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RETIREMENT AND LONG-TERM INCENTIVE PLANS
 12 Months Ended
Dec. 31, 2017
Share-based Payments and Retirement Disclosure [Abstract]  
RETIREMENT AND LONG-TERM INCENTIVE PLANS
RETIREMENT AND LONG-TERM INCENTIVE PLANS
401(k) Plan
The Company has a defined contribution plan for all employees that is qualified under Section 401(k) of the Internal Revenue Code. Contributions to the retirement plan by the Company are based on the participants’ contributions, with an additional year-end discretionary contribution determined by the Board of Directors. Effective April 1, 2016, the Company temporarily suspended its matching contribution in response to the downturn in the oil and gas industry. For the years ended December 31, 2017, 2016 and 2015, the Company contributed a total of $0, $670,000, and $2.3 million, respectively.
Long-Term Incentive Plans
Under our long-term incentive plans, the compensation committee of our Board of Directors may grant equity awards related to the Company's common stock, including awards of restricted stock, restricted stock units, other stock-based awards and options to eligible participants as the compensation committee determines. A summary of our long-term incentive plans is as follows:
Long-Term Incentive Plan (approved by our shareholders on February 13, 1997):
•
authorizes the grant of options to purchase an aggregate of 1,000,000 (split adjusted) shares of the Company’s common stock to certain officers, key employees, directors and consultants of the Company chosen by the compensation committee.
•
no individual employee may be granted awards with respect to more than 400,000 shares of common stock in a calendar year.

2002 Long-Term Incentive Plan (approved by our shareholders on April 24, 2002, and amended on April 26, 2006):
•
authorizes the grant of awards, including options, to purchase an aggregate of 500,000 shares of the Company’s common stock to certain officers, key employees, directors and consultants of the Company chosen by the compensation committee.
•
no individual employee may be granted awards with respect to more than 200,000 shares of common stock in a calendar year.

2011 Stock Incentive Plan (approved by our shareholders on April 28, 2011):
•
authorizes the grant of awards, including options, to purchase an aggregate of 500,000 shares of the Company’s common stock to certain officers, key employees, directors and consultants of the Company chosen by the compensation committee.
•
no individual employee may be granted awards with respect to more than 200,000 shares of common stock in a calendar year.

2015 Stock Incentive Plan (approved by our shareholders on April 23,2015):

•
authorizes the grant of awards, including options, to purchase an aggregate of 1,000,000 shares of the Company’s common stock to certain officers, key employees, directors and consultants of the Company chosen by the compensation committee.
•
no individual employee may be granted awards with respect to more than 200,000 shares of common stock and no outside director may receive awards that relate to more than 25,000 shares in any fiscal year.

At December 31, 2017, there were approximately 833,443 shares in the aggregate remaining available for future issuance under the Long-Term Incentive Plan, the 2002 Long-Term Incentive Plan, the 2011 Stock Incentive Plan and the 2015 Stock Incentive Plan (together, the “Incentive Plans”). The Company issues new shares through its transfer agent in connection with issuances under the Incentive Plans.

Restricted Stock Awards
Restricted stock awards which include shares of restricted stock and restricted stock units are subject to transfer restrictions, forfeit provisions and other terms and conditions of the Incentive Plans. At the time restricted stock awards are made, the compensation committee will establish a period of time during which the transfer of the shares of restricted stock shall be restricted and after which the shares of restricted stock shall be vested. Except for the restricted stock awards that vest based on the attainment of performance goals, the restricted period shall be a minimum of three years, with incremental vesting of portions of the award over the three-year period permitted.
Our Incentive Plans do not have any limitations on the number of shares that can be specifically awarded as restricted stock. Restricted stock granted to our non-employee directors have six-month vesting periods. The fair value of restricted stock is determined based on the closing price of the Company’s common stock on the date of the grant.
A summary of our restricted stock awards activity for the years ended December 31, 2017, 2016 and 2015 is presented in the table below.
 
2017
 
2016
 
2015
 
Number
of Shares
 
Weighted-
Average
Grant-Date
Fair Value
Per  Share
 
Number
of Shares
 
Weighted-
Average
Grant-Date
Fair Value
Per  Share
 
Number
of Shares
 
Weighted-
Average
Grant-Date
Fair Value
Per  Share
Restricted shares at the beginning of period
370,565

 
$
12.99

 
262,964

 
$
18.33

 
107,840

 
$
24.27

Granted
383,121

 
13.02

 
259,699

 
8.55

 
215,034

 
16.33

Vested
(215,478
)
 
12.52

 
(114,804
)
 
14.37

 
(41,112
)
 
22.04

Forfeited
(93,082
)
 
12.53

 
(37,294
)
 
15.48

 
(18,798
)
 
21.39

Restricted shares at the end of period
445,126

 
$
12.83

 
370,565

 
$
12.99

 
262,964

 
$
18.33


As of December 31, 2017, there was $2.7 million of total unrecognized compensation cost related to restricted share-based compensation arrangements granted under the Incentive Plans. This cost is expected to be recognized over a weighted-average period of 1.6 years. The total fair value of shares vested during the year ended December 31, 2017 was $2.1 million.
Share-based compensation cost that has been charged against income for the Incentive Plans was $2.7 million, $2.1 million and $2.7 million for 2017, 2016 and 2015, respectively. The total income tax benefit (expense) recognized in the statement of operations for share-based compensation arrangements was 253,000 for the year ended December 31, 2017, and $0 for each of the years ending December 31, 2016 and 2015, respectively.
Performance awards

We issue performance awards to our executives and certain members of management. Performance targets are communicated to employees at the beginning of a performance period and are based upon our total shareholder return compared to an industry peer group as determined by our Board of Directors. Awards granted during 2015 were based upon a two-year performance period ending December 31, 2016, and paid in shares. The shares vest at the completion of the performance period with compensation expense recognized on a straight line basis. Awards granted during 2016 and 2017 are based upon a three-year performance period ending on December 31, 2018, and December 31, 2019, respectively, and are payable in cash. The fair value of the 2017 and 2016 awards is calculated each reporting period and compensation expense (including fair value adjustments) is recognized on a straight line basis.

For the years ended December 31, 2017, 2016 and 2015, expense recognized for performance based award compensation was $1.5 million, $1.3 million and $1.1 million, respectively. The fair value of the performance based awards granted for the years ended December 31, 2017 and 2016 was $4.7 million and $1.6 million, respectively, as determined using a Monte Carlo simulation model. These awards are payable in cash.