Annual report pursuant to Section 13 and 15(d)

Share-based Compensation

v3.8.0.1
Share-based Compensation
 12 Months Ended
Dec. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-based Compensation
Share-based Compensation
At December 31, 2017, we had three incentive plans, the Year 2000 Stock Option Plan (the “2000 Plan”), the 2007 Equity Compensation Plan (the “2007 Plan”) which replaced the 2000 Plan and the 2013 Equity Compensation Plan (the “2013 Plan” and with the 2000 Plan and 2007 Plan, the “Plans”) which replaced the 2007 Plan.
The 2013 Plan provides awards of any options, stock appreciation rights, restricted stock awards, restricted stock unit awards, share granted as a bonus or in lieu of another award, dividend equivalent, other stock-based award or performance award, together with any other right or interest to a participant under the plan. Plan participant includes executives and other employees, officers, directors, consultants and other persons who provide services to the Company or its related entities. Although no future stock options may be granted under the 2007 Plan and 2000 Plan, certain employees, directors and officers of Hanmi Financial and its subsidiaries still hold options to purchase Hanmi Financial common stock under the 2013 Plan. Under the 2013 Plan, we may grant equity incentive awards for up to 1,500,000 shares of common stock. As of December 31, 2017, 533,541 shares were still available for issuance under the 2013 Plan.
The Company adopted Accounting Standards Update ("ASU") 2016-09, Compensation - Stock Compensation, during the three months ended March 31, 2016. Adoption of this ASU did not have a material impact on the Company's financial statements. Excess tax benefits related to the Company's share-based compensation were recognized as income tax expense in the consolidated statement of income in 2017 and 2016.
The table below provides the share-based compensation expense and related tax benefits for the periods indicated:
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
(In thousands)
Share-based compensation expense
$
2,893

 
$
3,008

 
$
2,241

Related tax benefits
$
1,179

 
$
1,191

 
$
755


As of December 31, 2017, unrecognized share-based compensation expense was as follows
 
Unrecognized
Expense
 
Average Expected
Recognition
Period
 
(In thousands)
Stock option awards
$
11

 
0.4 years
Restricted stock awards
4,648

 
1.7 years
Total unrecognized share-based compensation expense
$
4,659

 
1.7 years

2013 and 2007 Equity Compensation Plans and 2000 Stock Option Plan
Stock Options
All stock options granted under the Plans have an exercise price equal to the fair market value of the underlying common stock on the date of grant. Stock options granted under the Plans generally vest based on three to five years of continuous service and expire 10 years from the date of grant. Certain option and share awards provide for accelerated vesting if there is a change in control (as defined in the Plan). New shares of common stock are issued or treasury shares are utilized upon the exercise of stock options.
The weighted-average fair value per share of options granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
 
Year Ended December 31, 2015
Weighted-average assumption
 
Dividend yield
1.80
%
Expected volatility
25.00
%
Expected term
3 years

Risk-free interest rate
1.11
%

There were no options granted during the years ended December 31, 2017 and 2016.
Expected volatility was determined based on the historical weekly volatility of our stock price over a period equal to the expected term of the options granted. The expected term of the options represents the period that options granted are expected to be outstanding based primarily on the historical exercise behavior associated with previous option grants. The risk-free interest rate was based on the U.S. Treasury yield curve at the time of grant for a period equal to the expected term of the options granted.

The following information under the Plans is presented for the periods indicated:
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
(In thousands, except per share data)
Grant date fair value of options granted
$
—

 
$
—

 
$
78

Fair value of options vested
$
820

 
$
2,322

 
$
2,668

Total intrinsic value of options exercised (1)
$
432

 
$
1,862

 
$
488

Cash received from options exercised
$
288

 
$
1,453

 
$
616

Weighted-average estimated fair value per share of options granted
$
—

 
$
—

 
$
3.62

(1)
Intrinsic value represents the difference between the closing stock price on the exercise date and the exercise price, multiplied by the number of options.
The following is a summary of stock option transactions under the Plans for the periods indicated:
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
Number of
Shares
 
Weighted-
Average
Exercise
Price Per
Share
 
Number of
Shares
 
Weighted-
Average
Exercise
Price Per
Share
 
Number of
Shares
 
Weighted-
Average
Exercise
Price Per
Share
Options outstanding at beginning of period
387,901

 
$
17.49

 
510,148

 
$
24.38

 
603,872

 
$
23.78

Options granted
—

 
$
—

 
—

 
$
—

 
28,000

 
$
23.47

Options exercised
(23,813
)
 
$
12.21

 
(94,997
)
 
$
15.29

 
(46,516
)
 
$
13.24

Options forfeited
—

 
$
—

 
(125
)
 
$
144.00

 
(71,608
)
 
$
20.59

Options expired
—

 
$
—

 
(27,125
)
 
$
154.09

 
(3,600
)
 
$
136.79

Options outstanding at end of period
364,088

 
$
17.86

 
387,901

 
$
17.49

 
510,148

 
$
24.38

Options exercisable at end of period
354,753

 
$
17.71

 
341,561

 
$
16.85

 
333,460

 
$
27.16



The following is a summary of transactions for non-vested stock options under the Plans for the periods indicated:
 
Year Ended December 31,
 
2017
 
2016
 
2015
 
Number of
Shares
 
Weighted-
Average
Exercise
Price Per
Share
 
Number of
Shares
 
Weighted-
Average
Exercise
Price Per
Share
 
Number of
Shares
 
Weighted-
Average
Exercise
Price Per
Share
Non-vested options outstanding at beginning of period
46,340

 
$
22.42

 
176,688

 
$
19.13

 
379,106

 
$
18.11

Options granted
—

 
$
—

 
—

 
$
—

 
28,000

 
$
23.47

Options vested
(37,005
)
 
$
22.16

 
(130,223
)
 
$
17.83

 
(158,810
)
 
$
16.80

Options forfeited
—

 
$
—

 
(125
)
 
$
144.00

 
(71,608
)
 
$
20.59

Non-vested options outstanding at end of period
9,335

 
$
23.47

 
46,340

 
$
22.42

 
176,688

 
$
19.13


As of December 31, 2017, stock options outstanding under the Plans were as follows:
 
 
Options Outstanding
 
Options Exercisable
Range of Exercise Prices
 
Number of
Shares
 
Intrinsic
Value
(1)
 
Weighted-
Average
Exercise
Price Per
Share
 
Weighted-
Average
Remaining
Contractual
Life
 
Number of
Shares
 
Intrinsic
Value
(1)
 
Weighted-
Average
Exercise
Price Per
Share
 
Weighted-
Average
Remaining
Contractual
Life
 
 
 
 
 
 
(In thousands except share and per share data)
 
 
$10.80 to $14.99
 
13,088

 
$
235

 
$
12.37

 
4.6 years
 
13,088

 
$
235

 
$
12.37

 
4.6 years
$15.00 to $19.99
 
255,000

 
3,550

 
16.43

 
5.7 years
 
255,000

 
3,550

 
16.43

 
5.7 years
$20.00 to $24.83
 
96,000

 
763

 
22.41

 
6.7 years
 
86,665

 
698

 
22.29

 
6.6 years
 
 
364,088

 
$
4,548

 
$
17.86

 

 
354,753

 
$
4,483

 
$
17.71

 

 
(1)
Intrinsic value represents the difference between the closing stock price on the last trading day of the period, which was $30.35 as of December 31, 2017, and the exercise price, multiplied by the number of options.
Restricted Stock Awards
Restricted stock awards under the Plans become fully vested after a certain number of years or after certain performance criteria are met. Hanmi Financial becomes entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted shares when the restrictions are released and the shares are issued. Restricted shares are forfeited if officers and employees terminate prior to the lapsing of restrictions. Forfeitures of restricted stock are treated as cancelled shares.
The table below provides information for restricted stock awards under the 2013 Plan for the periods indicated:
 
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 stock at beginning of period
343,958

 
$
16.60

 
137,114

 
$
20.74

 
173,222

 
$
19.58

Restricted stock granted
127,239

 
$
31.06

 
287,179

 
$
15.52

 
58,092

 
22.53

Restricted stock vested
(139,298
)
 
$
18.73

 
(77,515
)
 
$
19.75

 
(68,017
)
 
$
19.16

Restricted stock forfeited
(14,116
)
 
$
24.73

 
(2,820
)
 
$
21.58

 
(26,183
)
 
$
21.16

Restricted stock at end of period
317,783

 
$
21.09

 
343,958

 
$
16.60

 
137,114

 
$
20.74