CLB 2018 Annual Report

F-24 14. STOCK-BASED COMPENSATION We have granted restricted stock awards under two stock incentive plans: the 2014 Long-Term Incentive Plan and the 2014 Nonemployee Director Stock Incentive Plan. Awards under the following three compensation programs have been granted pursuant to both plans: (1) the Performance Share Award Program ("PSAP"); (2) the Restricted Share Award Program ("RSAP") and (3) the Restricted Share Award Program for Nonemployee Directors (the "Program"). We issue shares from either treasury stock or authorized shares upon the lapsing of vesting restrictions on restricted stock. In 2018, we issued 218,625 shares out of treasury stock relating to the vesting of restricted stock. We do not use cash to settle equity instruments issued under stock-based compensation awards. 2014 Long-Term Incentive Plan In 2014, the 2007 Long-Term Incentive Plan was amended, restated and renamed as the 2014 Long-Term Incentive Plan (the "Plan"). The primary changes effected by the 2014 amendment and restatement were to (a) extend the period during which awards may be granted under the Plan to May 12, 2024, and (b) increase the number of common shares subject to the Plan by 1,100,000 shares. The Plan, as amended, provides for a maximum of 11,900,000 common shares to be granted to eligible employees. At December 31, 2018, approximately 954,552 shares remained available for the grant of new awards under the Plan. Specifically, we encourage share ownership by awarding various long-term equity incentive awards under the Plan, consisting of the PSAP and RSAP. We believe that widespread common share ownership by key employees is an important means of encouraging superior performance and employee retention. Additionally, our equity-based compensation programs encourage performance and retention by providing additional incentives for executives to further our growth, development and financial success over a longer time horizon by personally benefiting through the ownership of our common shares and/or rights. Performance Share Award Program The PSAP allows us to compensate our executive and senior management teams as we meet or exceed our business objectives. The PSAP shares are unvested and may not be sold, assigned, pledged, hedged, margined or otherwise transferred by an award recipient until such time as, and then only to the extent that, the restricted performance shares have vested. In the event of a change in control (as defined in the Plan) prior to the last day of the Performance Period, all of the award recipient's restricted performance shares will vest as of the effective date of such change in control. Subject to continued employment with us, or upon death or disability, PSAP shares vest if we meet or exceed our business objectives. The company recorded $9.9million of additional non-cash stock compensation expense in the fourth quarter of 2018 associated with the 2018 and 2017 PSAP awards for certain members of our executive management team. The additional stock compensation expense has been recorded in accordance with FASB ASC Topic 718, "Compensation - Stock Compensation" , which states that the period over which stock compensation expense is recognized should not extend beyond the eligible retirement age as defined in each executive's PSAP award agreement. The PSAP awards continue to remain unvested until such time as the performance criteria have been achieved for the designated performance period; however, the executive will not forfeit the right to vest in the awarded shares if they voluntarily retire from the Company after attaining the retirement age as defined in each agreement. Of this additional charge recognized in 2018, $7.9 million should have been recognized in 2017 when the executives reached the defined retirement age. We have concluded this amount is not material to our financial position or results of operations for either 2018 or 2017, and it does not impact our cash flows from operations. On February 16, 2016, certain executives were awarded rights to receive an aggregate of up to 122,515 common shares if our calculated return on investment capital ("ROIC"), as defined in the PSAP, achieved certain performance criteria as compared to the Bloomberg Comp Group at the end of the performance period, which ended on December 31, 2018 as the last trading day of 2018. This arrangement was recorded as an equity award that required us to recognize compensation expense totaling $11.7 million over the performance period that began on January 1, 2016, of which $3.9 million was recognized annually in 2018, 2017, and 2016. At December 31, 2018, the Company had the highest ROIC compared to the Bloomberg Comp Group. The Compensation Committee of our Board of Supervisory Directors verified that the performance target criteria had been met at the end of the performance period and 122,515 shares vested. We issued these common shares on December 31, 2018 and, simultaneously, the participants surrendered 38,351 common shares to settle any personal tax liabilities which may result from the award, as permitted by the agreement. We recorded these surrendered shares as treasury stock with an aggregate cost of $2.3 million at $59.66 per share. On February 14, 2017, certain executives were awarded rights to receive an aggregate of up to 128,112 common shares if our calculated ROIC, as defined in the PSAP, achieves certain performance criteria as compared to the Bloomberg Comp Group at