Annual report pursuant to Section 13 and 15(d)

Stock-Based Compensation Plans

Stock-Based Compensation Plans
12 Months Ended
Dec. 31, 2020
Share-based Payment Arrangement, Noncash Expense [Abstract]  
Stock-Based Compensation Plans Stock-Based Compensation Plans
In 2006, our stockholders approved the VSE Corporation 2006 Restricted Stock Plan for VSE's directors, officers and other employees (the "2006 Plan"). In May 2020, the stockholders approved amendments to the 2006 Plan extending its term until May 6, 2027 and authorizing an additional 500,000 shares of our common stock for issuance under the 2006 Plan. Under the 2006 Plan, we are authorized to issue up to 1,500,000 shares of our common stock and, as of December 31, 2020, 725,945 shares remained available for issuance under the 2006 Plan. The Compensation Committee is responsible for the administration of the 2006 Plan and determines each recipient of an award under the 2006 Plan, the number of restricted shares of common stock subject to such award and the period of continued employment required for the vesting of such award. These terms are included in award agreements between VSE and the recipients of the award.

The total stock-based compensation expense related to restricted stock awards for the years ended December 31, are as follows (in thousands):
  2020 2019 2018
Employees $ 2,223  $ 2,667  $ 2,332 
Non-employee Directors 635  597  553 
Total $ 2,858  $ 3,264  $ 2,885 

Employees are permitted to use a certain number of shares of restricted stock to cover their personal tax liability for restricted stock awards. We paid approximately $690 thousand, $688 thousand and $641 thousand, to cover this liability in the years
ended December 31, 2020, 2019 and 2018, respectively. These payments are classified as financing cash flows on the consolidated statements of cash flows. The total compensation cost related to non-vested awards not yet recognized was approximately $873 thousand with a weighted average amortization period of 1.6 years as of December 31, 2020.

Stock-based compensation consisting of restricted stock awards was included in costs and operating expenses and provision for income taxes on the accompanying statements of income for the years ended December 31, 2020, 2019 and 2018 (in thousands):
  2020 2019 2018
Stock-based compensation included in costs and operating expenses $ 2,858  $ 3,264  $ 3,027 
Income tax benefit recognized for stock-based compensation (713) (663) (755)
Stock-based compensation expense, net of income tax benefit $ 2,145  $ 2,601  $ 2,272 

Non-Employee Restricted Stock Awards

During 2020, 2019 and 2018, non-employee directors were awarded 16,100, 18,900 and 11,200 shares of restricted stock, respectively, under the 2006 Plan. The weighted average grant-date fair value of these restricted stock grants was $37.55 per share, $31.58 per share, and $49.38 per share for the shares awarded in 2020, 2019 and 2018, respectively. The shares issued vested immediately and, without the Compensation Committee's approval, cannot be sold, transferred, pledged or assigned before the second anniversary of the grant date. Compensation expense related to these grants was approximately $605 thousand, $597 thousand and $553 thousand during 2020, 2019 and 2018, respectively.

Performance-Based Restricted Stock Awards

In January of every year since 2007, we have notified certain employees that they are eligible to receive awards of VSE stock under our 2006 Plan, based on our financial performance for the respective fiscal years. These restricted stock awards vest ratably over three years and are expensed on an accelerated basis over the vesting period of approximately three years. Upon issuance of shares on each vesting date, the liability is reduced and additional paid-in capital is increased. The date of award determination is expected to be in March 2021 for the 2020 awards. The date of award determination for the 2019 awards and the 2018 awards was March 2, 2020 and March 2, 2019, respectively. On each vesting date, 100% of the vested award is paid in our shares. The number of shares issued is based on the fair market value of our common stock on the vesting date. On March 2, 2020, the employees eligible for the 2019 awards, 2018 awards and 2017 awards received a total of 42,946 shares of common stock. The grant-date fair value of these awards was $28.67 per share.

Other Restricted Stock Awards

Under the 2006 Plan, restricted stock in the form of shares of our common stock can be awarded to key employees pursuant to the terms of their employment agreements. The following table summarizes the activity of non-vested restricted stock awards in shares during the years ended December 31, 2020 and 2019. There was no activity related to unvested restricted stock awards issued in shares during the year ended December 31, 2018.
Number of Shares
Weighted Average Grant Date Fair Value
Unvested as of December 31, 2018 $ — 
Granted 86,911 31.92 
Vested (29,110) 30.66 
Forfeited — 
Unvested as of December 31, 2019 57,801 32.56 
Granted 30,500 31.50 
Vested (32,017) 32.14 
Forfeited — 
Unvested as of December 31, 2020 56,284 $ 32.23