COMMON AND PREFERRED STOCK
|3 Months Ended|
Mar. 31, 2016
|COMMON AND PREFERRED STOCK||
COMMON AND PREFERRED STOCK
The Company’s Articles of Incorporation authorize the issuance of up to 100,000,000 shares. The shares are classified in two classes, consisting of 95,000,000 shares of common stock, par value $.001 per share, and 5,000,000 shares of preferred stock, par value $.001 per share. The board of directors is authorized to establish one or more series of preferred stock, setting forth the designation of each such series, and fixing the relative rights and preferences of each such series. The Company has neither designated nor issued any shares of preferred stock.
The following is a schedule of changes in the number of shares of common stock outstanding during the three months ended March 31, 2016 and the year ended December 31, 2015:
In the three months ended March 31, 2016, 301,679 shares of common stock were surrendered by certain employees of the Company to cover tax obligations in connection with their restricted stock awards. The total value of these shares was approximately $1,159,000, which was based on the market prices on the dates the shares were surrendered.
Stock Repurchase Program
In May 2011, the Company’s board of directors approved a stock repurchase program to acquire up to $150 million of the Company’s outstanding common stock. The stock repurchase program allows the Company to repurchase its shares from time to time in the open market, block transactions and in negotiated transactions.
During the three months ended March 31, 2016 and March 31, 2015, the Company did not repurchase shares of its common stock under the stock repurchase program. The Company’s accounting policy upon the repurchase of shares is to deduct its par value from Common Stock and to reflect any excess of cost over par value as a deduction from Additional Paid-in Capital.
Performance Equity Awards
The Company has granted performance equity awards under its 2015 Long Term Incentive Program to certain officers. The awards are subject to a market condition, which is based on a comparison of the Company versus a defined peer group with respect to year-over-year change in average stock price from 2015 to 2016. Depending on the Company’s stock price performance relative to the defined peer group, the award recipients will earn between 0% and 150% of their 2016 base salaries in the form of awards expected to be settled in restricted shares of the Company’s common stock that will vest over a three-year service-based period beginning in 2017.
The Company used a Monte Carlo simulation model to estimate the fair value of the awards based on the expected outcome of the Company’s stock price performance relative to the defined peer group using key valuation assumptions. The assumptions used for the Monte Carlo model to determine the fair value of the awards and associated compensation expense included actuals for the three months ended March 31, 2016 and a forecast period for the remaining nine months of 2016, a risk-free interest rate of 0.49% and 83.3% for Northern’s stock price volatility.
The maximum value of the awards issuable if all participants earned the maximum award would total $2.8 million. For the three months ended March 31, 2016 and 2015, the Company recorded $0.1 million and zero, respectively, of compensation expense in connection with these performance awards.
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
Reference 1: http://www.xbrl.org/2003/role/presentationRef