Annual report pursuant to Section 13 and 15(d)

Share-Based Compensation

v2.4.0.6
Share-Based Compensation
12 Months Ended
Dec. 31, 2011
Share-Based Compensation [Abstract]  
Share-Based Compensation

Note 8. Share-Based Compensation

On May 16, 2005, our Board of Directors approved, and the Company adopted, the Old Dominion Freight Line, Inc. Phantom Stock Plan, as amended effective January 1, 2009, May 18, 2009 and May 17, 2011 (the "Phantom Stock Plan"). Each share of phantom stock awarded to eligible employees under the Phantom Stock Plan represents a contractual right to receive an amount in cash equal to the fair market value of a share of our common stock on the settlement date, which generally is the earlier of the eligible employee's (i) termination from the Company after reaching 55 years of age, (ii) death or (iii) disability. No shares of common stock will be issued pursuant to the Phantom Stock Plan, as the awards are settled in cash after the required vesting period has been satisfied and upon termination of employment. The maximum number of shares of phantom stock available for awards under the Phantom Stock Plan is 562,500, subject to any change in the outstanding shares of our common stock. Our Board of Directors approved the initial grant under this plan at its January 2006 meeting and have approved and awarded grants annually thereafter.

Phantom Stock Plan awards vest upon the earlier to occur of the following: the date of a change of control in our ownership; the fifth anniversary of the grant date of the award, provided the participant is employed by us on that date; the date of the participant's death while employed by us; the date of the participant's total disability; or the date the participant attains the age of 65 while employed by us. Awards that are not vested upon termination of employment are forfeited. If termination occurs prior to attaining the age of 55, all vested and unvested awards are generally forfeited unless the termination results from death or total disability. The Phantom Stock Plan does, however, provide the Board of Directors with discretionary authority to modify and/or accelerate the vesting of awards.

On May 28, 2008, our Board of Directors approved, and the Company adopted, the Old Dominion Freight Line, Inc. Director Phantom Stock Plan, as amended on April 1, 2011 (the "Director Phantom Stock Plan" and together with the Phantom Stock Plan, the "Phantom Plans"). Under the Director Phantom Stock Plan, each non-employee eligible director shall be granted an annual award of phantom shares equal to $50,000 on the grant date. Prior to the 2011 grant, the annual award to each non-employee eligible director was equal to $30,000 on the grant date. For each vested share, participants are entitled to an amount in cash equal to the fair market value of a share of our common stock the on date service as a director terminates for any reason. No shares of common stock will be issued pursuant to the Director Phantom Stock Plan, as the awards are settled in cash. Our Board of Directors approved the initial grant under this plan at its May 2008 meeting and have approved and awarded grants annually thereafter.

Director Phantom Stock Plan awards vest upon the earlier to occur of the following: the one-year anniversary of the grant date; the date of the first annual meeting of shareholders that occurs after the grant date provided the participant is still in service as a director; the date of a change of control in our ownership provided that the participant is still in service as a director; or the date of the participant's death or total disability while still in service as a director. Awards that are not vested upon termination of service as a director are forfeited.

 

A summary of the changes in the number of outstanding phantom stock awards during the year ended December 31, 2011 for the Phantom Plans is provided below. Of these awards, 134,584 and 124,994 phantom shares were vested at December 31, 2011 and 2010.

 

     Phantom
Stock Plan
    Director Phantom
Stock Plan
 

Balance of shares outstanding at December 31, 2010

     253,802        25,239  

Granted

     41,028        8,250  

Settled

     (13,381     0   
  

 

 

   

 

 

 

Balance of shares outstanding at December 31, 2011

     281,449        33,489  
  

 

 

   

 

 

 

Awards granted under the Phantom Plans are accounted for as a liability under The Financial Accounting Standards Board Accounting Standards Codification("FASC") 718, Compensation – Stock Compensation. FASC 718 requires changes in the fair value of our liability for the Phantom Plans to be recognized as compensation cost over the requisite service period for the percentage of requisite service rendered each period. Changes in the fair value of the liability that occur after the requisite service period are recognized as compensation cost during the period in which the changes occur. We remeasure the liability for the outstanding awards at the end of each reporting period based on the closing price of our common stock at that date, and the compensation cost is based on the change in fair value for each reporting period. The liability for these awards totaled $10.9 million and $7.2 million at December 31, 2011 and 2010, respectively. Compensation costs related to the Phantom Plans totaled $4.2 million, $4.4 million and $1.3 million for 2011, 2010 and 2009, respectively. Unrecognized compensation cost related to all unvested shares as of December 31, 2011 was $2.9 million based on the price of our common stock on that date.