STOCK PLANS

As of December 31, 2013, the Company sponsors three stock incentive plans under which awards denominated or payable in shares, units or options to purchase shares of Knoll common stock may be granted to officers, certain other employees, directors and consultants of the Company. In May 2007, the Company approved the 2007 Stock Incentive Plan which authorized the issuance of 2,000,000 shares of common stock. As of December 31, 2013, 18,857 shares remained available for issuance under this plan. In May of 2010, the Company approved the 2010 Stock Incentive Plan which authorized the issuance of 2,000,000 shares of common stock. As of December 31, 2013, 1,213,046 shares remained available for issuance under this plan. In May of 2013, the Company approved the 2013 Stock Incentive Plan which authorized the issuance of 2,000,000 shares of common stock. As of December 31, 2013, 2,000,000 shares remained available for issuance under this plan.

A Committee of the Board of Directors, currently consisting of the Compensation Committee of the Company's Board of Directors has sole discretion concerning administration of the plans, including selection of individuals to receive awards, types of awards, the terms and conditions of the awards and the time at which awards will be granted.

Restricted Stock and Restricted Stock Units

In 2011, the Company granted restricted stock awards to certain key employees and the Company's Board of Directors aggregating 762,004 shares of common stock. These awards provide for the delivery of shares of common stock to award recipients upon the satisfaction of certain vesting requirements. 748,000 of these awards cliff vest on third anniversary of the grant date. In certain conditions, vesting may be accelerated as defined in the restricted share agreements. The remaining 14,004 shares granted in 2011 will vest in equal one-third amounts on each of the subsequent three anniversaries of the grant date. In certain conditions, vesting may be accelerated as defined in the restricted share agreements. The Company determined the fair value of the shares on the date of grant and is recognizing compensation expense ratably over the vesting period.

In 2012, the Company granted restricted stock awards to certain key employees and the Company's Board of Directors aggregating 315,030 shares of common stock. These awards provide for the delivery of shares of common stock to award recipients upon the satisfaction of certain vesting requirements. 292,500 of these awards cliff vest on the third anniversary of the grant date. 22,530 of these awards will vest in equal one-third amounts on each of the subsequent three anniversaries of the grant date. In certain conditions vesting may be accelerated as defined in the restricted share agreements. In addition, during 2012, the Company granted 110,000 restricted stock units to certain key employees. These awards provide for the delivery of shares of common stock to award recipients upon the satisfaction of certain vesting requirements. 90,000 of these awards vest in equal one-sixth amounts on each of the subsequent six anniversaries of the grant date. 20,000 of these awards cliff vest on the third anniversary of the grant date. In certain conditions, vesting may be accelerated as defined in the restricted unit agreements. The Company determined the fair value of the awards on the date of grant and is recognizing compensation expense ratably over the vesting period.

In 2013, the Company granted restricted stock awards to certain key employees and the Company's Board of Directors aggregating 441,629 shares of common stock. The awards provide for the delivery of shares of common stock to award recipients upon the satisfaction of certain vesting requirements. 309,573 of these awards cliff vest on the third anniversary of the grant date. 132,056 of these awards will vest in equal one-third amounts on each of the subsequent three anniversaries of the grant date. The Company determined the fair value of the awards on the date of grant and is recognizing compensation expense ratably over the vesting period.

18. STOCK PLANS (continued)

The following table summarizes the Company's restricted stock and restricted stock units activity during the year:



	Restricted Stock		Weighted-Average Fair Value		Restricted Stock Units		Weighted-Average Fair Value
Outstanding at December 31, 2012	1,065,989		$	17.77	110,000		$	14.04
Granted	441,629		16.56		—		—
Forfeited	(13,000	)	18.10		—		—
Vested	(264,130	)	13.17		(15,000	)	14.04
Outstanding at December 31, 2013	1,230,488		$18.32		95,000		$	14.04

Stock Options

The Company recognizes compensation expense using the graded vesting attribution method which treats each option grant as multiple grants each with its own requisite service period.

In 2012, the Company granted 20,000 stock options to certain key employees of the Company. These options vest ratably over a five-year period on the anniversary of the grant date. The contractual life of these options is 10 years. In addition, the options have accelerated vesting provisions upon a change of control of the Company. The grant-date fair value of these options granted was $6.26 based on the following assumptions used in the Black-Scholes option pricing model:



Expected volatility	51		%
Expected dividend yield	2.50		%
Expected term (in years)	6
Risk-free interest rate	1.36		%
Exercise price	$	15.98

18. STOCK PLANS (continued)

The following table summarizes the Company's stock option activity for the preceding three years.



	Number of Options		Weighted-Average Exercise Price		Weighted- Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
Outstanding at December 31, 2010	2,505,101		$	14.22		$	7,742,565
Exercised	(878,658	)	14.97			4,731,919
Forfeited	(86,250	)	13.54			565,800
Outstanding at December 31, 2011	1,540,193		$	13.83	4.35	$	3,631,381
Granted	20,000		15.98			—
Exercised	(93,839	)	11.09			426,278
Expired	(37,070	)	16.34			37,070
Forfeited	(65,000	)	16.76			76,425
Outstanding at December 31, 2012	1,364,284		$	13.84	3.53	$	3,686,098
Exercised	(330,895	)	11.98			1,739,700
Forfeited	(10,000	)	10.24			42,400
Outstanding at December 31, 2013	1,023,389		$	14.48	2.71	$	4,625,520
Exercisable at December 31, 2013	1,007,389		$	14.45	2.62	$	4,588,240

The following table summarizes information regarding stock options outstanding and exercisable at December 31, 2013:



	Options Outstanding				Options Exercisable
Ranges of Exercise Prices	Number of Options	Weighted- Average Remaining Contractual Life (years)	Weighted- Average Exercise Price		Number of Options	Weighted- Average Exercise Price
$10.24 - $15.00	673,889	2.73	$	11.63	673,889	$	11.63
$15.01 - $18.77	194,500	2.31	17.81		178,500	17.97
$18.78 - $23.47	155,000	3.11	22.68		155,000	22.68
$10.24 - $23.47	1,023,389	2.71	$	14.48	1,007,389	$	14.45

A summary of the status of the Company's non-vested options as of December 31, 2013, and changes during the year ended December 31, 2013, is presented below.



	Number of Options		Weighted- Average Grant-Date Fair Value
Nonvested at December 31, 2012	244,000		$	4.43
Vested	(218,000	)	4.31
Forfeited	(10,000	)	4.32
Nonvested at December 31, 2013	16,000		$	6.26

18. STOCK PLANS (continued)

The total fair value of options vested during the years 2013, 2012, and 2011 was $0.9 million, $1.0 million, and $1.4 million, respectively.

Compensation costs related to stock-based compensation for the years ended December 31, 2013, 2012, and 2011 totaled $10.5 million pre-tax ($6.3 million after-tax), $10.4 million pretax ($6.6 million after-tax), and $9.7 million pretax ($5.9 million after-tax), respectively, and are included within selling, general, and administrative expenses.

At December 31, 2013 and 2012, the total compensation cost related to nonvested awards not yet recognized equaled $8.8 million and $13.0 million, respectively, including $0.1 million and $0.3 million for stock options, respectively, and $8.7 million and $12.7 million for restricted stock awards and restricted stock units, respectively. The weighted-average remaining period over which the cost is to be recognized is 1.7 years.

Other Stock-Based Compensation Plans

On December 31, 2011, the Company terminated its Employee Stock Purchase Plan (ESPP) whereby employees of the Company were able to purchase shares of Knoll common stock at a discounted rate. The discount rate was 5% off the average of the high and low sale price per share on the last trading day of the purchase period. Employees were able to contribute 1-10% of their eligible gross pay up to a $25,000 annual stock value limit. In 2011, employees purchased 2,567 shares in accordance with the terms of the ESPP.