Annual report pursuant to Section 13 and 15(d)

Share-Based Compensation

v3.3.1.900
Share-Based Compensation
12 Months Ended
Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-Based Compensation
Note 7. Share-Based Compensation

On October 30, 2012, our Board of Directors approved and we adopted the Old Dominion Freight Line, Inc. 2012 Phantom Stock Plan, as amended on January 29, 2015 (the "2012 Phantom Stock Plan"). Under the 2012 Phantom Stock Plan, 1,000,000 shares of phantom stock may be awarded, each of which 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 is the earliest of the date of the participant's (i) termination of employment for any reason other than for cause, (ii) death or (iii) total disability. Each award vests in 20% increments on the anniversary of the grant date provided that the participant (i) has been continuously employed by us since the grant date, (ii) has been continuously employed by us for ten years and (iii) has reached the age of 65. Vesting also occurs on the earliest of (i) a change in control, (ii) death or (iii) total disability. No shares of common stock will be issued pursuant to the 2012 Phantom Stock Plan, as the awards are settled in cash after the required vesting period has been satisfied and upon termination of employment. Unvested shares are forfeited upon termination of employment, although our Board of Directors has authority to modify and/or accelerate the vesting of awards.
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, May 17, 2011 and January 29, 2015 (the “2005 Phantom Stock Plan” and together with the 2012 Phantom Stock Plan, the “Employee Phantom Plans”). The 2005 Phantom Stock Plan expired in May 2012; however, grants under the 2005 Phantom Stock Plan remain outstanding. Each share of phantom stock awarded to eligible employees under the 2005 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) total disability. No shares of common stock will be issued pursuant to the 2005 Phantom Stock Plan, as the awards are settled in cash after the required vesting period has been satisfied and upon termination of employment.

Awards under the 2005 Phantom Stock Plan vest upon the earlier to occur of the following: (i) the date of a change of control in our ownership; (ii) the fifth anniversary of the grant date of the award, provided the participant is employed by us on that date; (iii) the date of the participant’s death while employed by us; (iv) the date of the participant’s total disability; or (v) 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 2005 Phantom Stock Plan does, however, provide the Board of Directors with discretionary authority to modify and/or accelerate the vesting of awards.

A summary of cash payments for settled shares and compensation costs recognized in “Salaries, wages and benefits” on our Statements of Operations for the Employee Phantom Plans is provided below:
 
 
Year Ended December 31,
(In thousands)
 
2015
 
2014
 
2013
Cash payments for settled shares
 
$
1,682

 
$
2,401

 
$
1,404

Compensation (benefit) expense
 
(1,612
)
 
11,249

 
7,639



Unrecognized compensation cost for all unvested shares under the Employee Phantom Plans as of December 31, 2015 was $10.1 million based on the price of our common stock on that date.

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, February 20, 2014, August 7, 2014 and February 25, 2016 (the “Director Phantom Stock Plan” and together with the Employee Phantom Plans, the “Phantom Plans”). Under the Director Phantom Stock Plan, each eligible non-employee director shall be granted an annual award of phantom shares. Each eligible non-employee director received shares equal to $80,000 on each of the 2015 and 2014 grant dates and shares equal to $50,000 on the 2013 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 on the date that 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 authorized grants to be made annually thereafter.

Director Phantom Stock Plan awards vest upon the earlier to occur of the following: (i) the one-year anniversary of the grant date; (ii) 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; (iii) the date of a change of control in our ownership provided that the participant is still in service as a director; or (iv) 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 cash payments for settled shares and compensation costs recognized in “Miscellaneous expenses, net” on our Statements of Operations for the Director Phantom Stock Plan is provided below:
 
 
Year Ended December 31,
(In thousands)
 
2015
 
2014
 
2013
Cash payments for settled shares
 
$

 
$

 
$

Compensation (benefit) expense
 
(916
)
 
2,193

 
1,214



Unrecognized compensation cost for all unvested shares under the Director Phantom Stock Plan as of December 31, 2015 was $0.2 million based on the price of our common stock on that date.

A summary of the changes in the number of outstanding phantom stock awards during the year ended December 31, 2015 for the Phantom Plans is provided below. Of these awards, 294,184 and 325,921 phantom shares were vested at December 31, 2015 and 2014, respectively.
 
 
Employee Phantom Plans
 
Director 
Phantom
Stock Plan
 
Total
Balance of shares outstanding at December 31, 2014
 
551,396

 
75,737

 
627,133

Granted
 
54,924

 
6,516

 
61,440

Settled
 
(86,969
)
 

 
(86,969
)
Forfeited
 

 

 

Balance of shares outstanding at December 31, 2015
 
519,351

 
82,253

 
601,604



The liability for unsettled phantom stock awards under the Phantom Plans consists of the following:
 
 
December 31,
(In thousands)
 
2015
 
2014
Employee Phantom Plans
 
$
20,566

 
$
29,058

Director Phantom Stock Plan
 
4,698

 
5,614

Total
 
$
25,264

 
$
34,672