7.	Share-based Compensation

The Company has

one

active stock incentive plan for employees and directors, the

2007

Stock Incentive Plan, which provides for awards of stock options to purchase shares of common stock, stock appreciation rights, restricted and unrestricted shares of common stock, restricted stock units (“RSUs”), and performance share awards (“PSAs”).

The Company recognizes the compensation cost of employee and director services received in exchange for awards of equity instruments based on the grant date estimated fair value of the awards. Share-based compensation cost is recognized over the period during which the employee or director is required to provide service in exchange for the award and, as forfeitures occur, the associated compensation cost recognized to date is reversed. For awards with performance-based payout conditions, the Company recognizes compensation cost based on the probability of achieving the performance conditions, with changes in expectations recognized as an adjustment to earnings in the period of change. Any recognized compensation cost is reversed if the conditions are ultimately

not

met.

The following table summarizes share-based compensation expense recorded (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018			2019		2018

Cost of sales	$	118	$	(5	)	$	124	$	12
Selling, general, and administrative expense		535		205			551		269
Total	$	653	$	200		$	675	$	281

Stock Option Awards

A summary of option activity under the Company’s stock option plans is presented below:

	Options Outstanding		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Aggregate Intrinsic Value
					(in years)		(In thousands)
Balance, December 31, 2018		24,000	$	24.15
Options granted		-		-
Options exercised		-		-
Options canceled		-		-
Balance, June 30, 2019		24,000		24.15
Exercisable, June 30, 2019		24,000		24.15		0.75	$	39

Restricted Stock Units and Performance Share Awards

RSUs and PSAs are measured at the estimated fair value on the date of grant. RSUs are service-based awards and vest according to vesting schedules, which range from immediate to ratably over a

three

-year period. PSAs are service-based awards that vest according to the terms of the grant and

may

have performance- and/or market-based payout conditions.

A summary of activity under the Company’s RSUs and PSAs is presented below:

	Number of RSUs and PSAs (1)			Weighted- Average Grant Date Fair Value
Unvested PSAs as of December 31, 2018		39,992		$	19.97
RSUs and PSAs granted		86,701			23.56
Unvested RSUs and PSAs canceled		-			-
PSAs vested (2)		(39,992	)		19.97
Unvested RSUs and PSAs as of June 30, 2019		86,701			23.56

	( 1 )	The number of PSAs disclosed in this table are at the target level of 100%.

	( 2 )	The PSAs vested on March 29, 2019; the actual number of common shares that were issued was determined by multiplying the PSAs by a payout percentage of 0% as the performance-based conditions were not achieved.

The unvested balance of RSUs and PSAs as of

June

30,

2019

includes approximately

65,000

performance-based PSAs at a target level of performance. The vesting of these awards is subject to the achievement of specified performance-based conditions, and the actual number of common shares that will ultimately be issued will be determined by multiplying this number of PSAs by a payout percentage ranging from

150%.

As of

June

30,

2019,

unrecognized compensation expense related to the unvested portion of the Company’s RSUs and PSAs was

$1.9

million, which is expected to be recognized over a weighted-average period of

1.5

years.

Stock Awards

For the

six

months ended

June

30,

2019

and

2018,

stock awards of

9,772

shares and

11,172

shares, respectively, were granted to non-employee directors, which vested immediately upon issuance. The Company recorded compensation expense based on the weighted-average fair market value per share of the awards on the grant date of

$24.56

2019

and

$21.48

2018.