Aarons 2015 Annual Report Download - page 82

The Company has 1,000,000 shares of preferred stock authorized. The shares are issuable in series with terms for each series fixed by, and such issuance
subject to approval by, the Board of Directors. As of December 31, 2015, no preferred shares have been issued.
On October 4, 2013, the Company amended its Amended and Restated Articles of Incorporation to confirm that shares of common stock the Company
repurchases from time to time become treasury shares. As permitted by Georgia corporate law, the amendment was adopted by the Board of Directors of the
Company without shareholder action.
Accelerated Share Repurchase Program
In December 2013, the Company entered into an accelerated share repurchase program with a third-party financial institution to purchase $125.0 million of
the Company’s common stock, as part of its previously announced share repurchase program. The Company paid $125.0 million at the beginning of the
program and received an initial delivery of 3,502,627 shares, estimated to be approximately 80% of the total number of shares to be repurchased under the
agreement, which reduced the Company's shares outstanding at December 31, 2013. The value of the initial shares received on the date of purchase was
$100.0 million, reflecting a $28.55 price per share, which was recorded as treasury shares. The Company recorded the remaining $25.0 million as a forward
contract indexed to its own common stock in additional paid-in capital for the year ended December 31, 2013.
In February 2014, the accelerated share repurchase program was completed and the Company received 1,000,952 additional shares determined using a
volume weighted average price of the Company's stock (inclusive of a discount) during the trading period, which resulted in an effective average price per
share of $27.76. All amounts initially classified as additional paid-in capital were reclassified to treasury shares during the first quarter of 2014 upon
settlement.
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The Company grants stock options, RSUs, RSAs and PSUs to certain employees and directors of the Company under the 2001 Stock Option and Incentive
Award Plan and the 2015 Equity and Incentive Award Plan (the "2001 Plan" and "2015 Plan"). The 2001 Plan was originally approved by the Company’s
shareholders in May 2001 and was amended and restated with shareholder approval in May 2009 and discontinued with the approval of the 2015 Plan on
May 6, 2015. The 2015 Plan was approved by the Company's shareholders on May 6, 2015 and replaces the 2001 Plan. Differences between the 2015 Plan
and the 2001 Plan, include the following:
• the 2015 Plan does not include liberal share counting methodologies, such as allowing shares tendered or withheld for taxes to be added back to the
shares available under the 2015 Plan;
• the 2015 Plan does not permit the grant of stock options at a discounted exercise price, unless required to maintain intrinsic or economic value in
certain corporate transactions (e.g., spin-offs, etc.);
• the 2015 Plan prohibits the re-pricing of awards without shareholder approval; and
• awards granted under the 2015 Plan will be subject to any clawback policy adopted by the Company.
As of December 31, 2015, the aggregate number of shares of common stock that may be issued or transferred under the 2015 Plan is 4,802,248.
Total stock-based compensation expense was $14.2 million, $10.9 million and $2.3 million in 2015, 2014 and 2013, respectively. Stock-based
compensation expense for the year ended December 31, 2014 included $5.1 million related to the accelerated vesting of restricted stock and stock options
upon the retirement of the Company’s Chief Executive Officer in 2014, as provided for in his employment agreement. These costs were included in the line
item "Retirement and Vacation Charges" in the consolidated statements of earnings. All other stock-based compensation expense was included as a
component of operating expenses in the consolidated statements of earnings.
The total income tax benefit recognized in the consolidated statements of earnings for stock-based compensation arrangements was $5.4 million, $3.8
million and $889,000 in 2015, 2014 and 2013, respectively. Benefits of tax deductions in excess of recognized compensation cost, which are included in
financing cash flows, were $348,000, $1.4 million and $1.4 million for the years ended 2015, 2014 and 2013, respectively.
As of December 31, 2015, there was $23.9 million of total unrecognized compensation expense related to non-vested stock-based compensation which is
expected to be recognized over a period of 1.6 years.
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