Share-Based Compensation

12 Months Ended

Dec. 31, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Note 12 – Share-Based Compensation

The Company has various stockholder-approved programs which allow for the grant of share-based compensation to officers, employees, and non-employee directors.

The amount of compensation cost related to share-based payment transactions is measured based on the grant-date fair value of the equity instruments issued.  The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model.  The Company determines compensation cost for restricted stock units (“RSUs”), phantom stock units, and restricted stock based on the grant-date fair value of the underlying common stock.  Compensation cost is recognized over the period that an officer, employee, or non-employee director provides service in exchange for the award.

The following table summarizes share-based compensation expense recognized:

	Years ended December 31,
	2011			2010		2009
Stock options	$	(83	)	$	619	$	827
Restricted stock units		6,693			1,849		869
Phantom stock units		222			175		74
Total	$	6,832		$	2,643	$	1,770

Stock-based compensation expense for the year ended December 31, 2011, as presented in the table above, includes amounts associated with the acceleration of vesting of awards upon the passing of Vishay’s former Executive Chairman of the Board of Directors, Dr. Felix Zandman.  The associated expense is reported as a component of the executive compensation charge reported in the accompanying consolidated statement of operations.  In accordance with Dr. Zandman’s employment agreement, 98,375 RSUs held by Dr. Zandman immediately vested and were contributed to his estate following his passing and 202,330 RSUs with performance-based vesting criteria will be contributed to his estate upon the Company’s achievement of the performance-based criteria.  Additionally, the vesting of 77,334 unvested stock options held by Dr. Zandman at the time of his passing was accelerated.  These options may be exercised by Dr. Zandman’s estate within one year from his passing pursuant to the Company’s stock option programs.

Stock-based compensation expense for the year ended December 31, 2011, as presented in the table above, also includes amounts associated with the acceleration of vesting of awards upon the resignation of Vishay’s former Chief Financial Officer, Dr. Lior Yahalomi.  The associated expense is reported as a component of the executive compensation charge reported in the accompanying consolidated statement of operations.  In accordance with Dr. Yahalomi’s employment agreement, 18,438 RSUs held by Dr. Yahalomi immediately vested upon his resignation and 55,316 RSUs with performance-based vesting criteria will vest upon the Company’s achievement of the performance-based criteria.  Additionally, the vesting of 29,459 unvested stock options held by Dr. Yahalomi was accelerated.  These options may be exercised by Dr. Yahalomi within one year from his resignation.

The following table summarizes unrecognized compensation cost and the weighted average remaining amortization periods at December 31, 2011 (amortization periods in years):

	Unrecognized Compensation Cost
			Weighted Average Remaining Amortization Periods
Stock options	$	92		1.1
Restricted stock units		4,313		1.5
Phantom stock units		-		0.0
Total	$	4,405

2007 Stock Incentive Plan

The Company’s 2007 Stock Incentive Program (the “2007 Program”) permits the grant of up to 3,000,000 shares of restricted stock, unrestricted stock, RSUs, and stock options, to officers, employees, and non-employee directors.  Such instruments are available for grant until May 22, 2017.

The 2007 Program was originally approved by stockholders of the Company on May 22, 2007, as the “2007 Stock Option Program.”  On May 28, 2008, the Company’s stockholders approved amendments to the 2007 Stock Option Program, which was then renamed the “2007 Stock Incentive Program”.

At December 31, 2011, the Company has reserved 1,534,000 shares of common stock for future grants of equity awards pursuant to the 2007 Program.  If any outstanding awards are forfeited by the holder or cancelled by the Company, the underlying shares would be available for regrant to others.

On February 23, 2011, the Board of Directors of the Company amended and restated the 2007 Program. The amendment eliminated share recycling, so that on the exercise of an option where the exercise price is paid via the tender of previously-owned shares or pursuant to an “immaculate cashless exercise,” the total “gross” number of option shares exercised is removed from the pool of shares available for future issuance. Similarly, shares withheld to pay income taxes in connection with the exercise of an option are also removed from the pool.  The amendment also restricts re-pricing and cash repurchases of options without the prior approval of stockholders.

Stock Options

In addition to stock options outstanding pursuant to the 2007 Program, during the periods presented, the Company had stock options outstanding under previous stockholder-approved stock option programs.

Under the 1998 Stock Option Program, certain executive officers and key employees were granted options.  On March 16, 2008, the stockholder approval for the 1998 Stock Option Program expired. While no additional options may be granted pursuant to this plan, at December 31, 2011, 309,000 options issued under the 1998 Program remain outstanding and may be exercised in future periods.

On November 2, 2001, Vishay acquired General Semiconductor, Inc., which became a wholly owned subsidiary of the Company. As a result of the acquisition, each outstanding option to acquire General Semiconductor common stock became exercisable for shares of Vishay common stock. Based on the conversion ratio in the acquisition of 0.563 of a Vishay share for each General Semiconductor share, the former General Semiconductor options become exercisable in the aggregate for 4,282,000 shares of Vishay common stock on the date of the acquisition. All such options were immediately vested and exercisable as a result of the merger but the terms of the options otherwise remained unchanged. All options related to this plan either expired or were exercised during the year ended December 31, 2011.  No additional options may be granted from this plan.

As a consequence of the spin-off of VPG on July 6, 2010, the exercise price of all stock options was reduced 9.48% and 259,000 make-up options were granted to reflect the loss of value to the option holders due to the decrease in the trading price of Vishay’s common stock as result of the spin-off. Additionally, approximately 102,000 stock options that were held by VPG employees expired.

The following table summarizes the Company’s stock option activity (number of options in thousands):

	Years ended December 31,
	2011					2010					2009
				Weighted Average Exercise Price					Weighted Average Exercise Price					Weighted Average Exercise Price
	Number of Options					Number of Options					Number of Options
Outstanding:
Beginning of year		1,254		$	15.04		2,728		$	19.84		3,904		$	18.55
Granted		-			-		-			-		-			-
Exercised		(651	)		14.87		-			-		-			-
Cancelled or forfeited		(219	)		14.92		(1,733	)		20.35		(1,176	)		15.55
Adjustment due to VPG spin-off*		-			-		259			-		-			-
End of year*		384		$	15.40		1,254		$	15.04		2,728		$	19.84
Vested and expected to vest*		384					1,254					2,728
Exercisable:
End of year*		323					1,001					2,400

* The weighted average exercise price of the stock options included in the line item “Adjustment due to VPG spin-off” is equal to the weighted average exercise price of such stock options prior to the spin-off, as reduced by the spin-off adjustment.  The weighted average exercise price of stock options outstanding, vested and expected to vest, and exercisable as of December 31, 2010 also reflects the decrease in the exercise price as a result of the spin-off adjustment.

The following table summarizes information concerning stock options outstanding and exercisable at December 31, 2011 (number of options in thousands, contractual life in years):

	Options Outstanding			Options Exercisable
		Weighted Average Remaining Contractual Life
			Weighted Average Exercise Price		Weighted Average Exercise Price
	Number of Options			Number of Options
Exercise Price
$7.89	22	0.67	$7.89	22	$7.89
$11.54 - $14.33	53	3.18	13.31	43	13.42
$16.29	309	1.67	16.29	258	16.29
Total	384	1.82	$15.40	323	$15.34

The weighted-average remaining contractual life of all exercisable options is 1.17 years.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model.  There were no options granted in 2011, 2010, or 2009 other than the replacement options.

The pretax aggregate intrinsic value (the difference between the closing stock price on the last trading day of 2011 of $8.99 per share and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2011 is $24.  This amount changes based on changes in the market value of the Company’s common stock.  During the year ended December 31, 2011, 651,000 options were exercised.  No options were exercised during the years ended December 31, 2010 and 2009.  The total intrinsic value of options exercised during the year ended December 31, 2011 was $1,693.

The following table summarizes information concerning unvested stock options (number of options in thousands):

	Years ended December 31,
	2011					2010					2009
				Weighted Average Grant-date Fair Value					Weighted Average Grant-date Fair Value					Weighted Average Grant-date Fair Value
	Number of Options					Number of Options					Number of Options
Unvested:
Beginning of year		253		$	9.33		328		$	9.93		447		$	9.64
Granted		-			-		-			-		-			-
Vested		(192	)		9.13		(81	)		9.24		(93	)		8.96
Forfeited		-			-		(19	)		7.95		(26	)		8.47
Adjustment due to VPG spin-off*		-			-		25			-		-			-
End of year*		61		$	9.96		253		$	9.33		328		$	9.93

* The weighted average grant date fair value of the stock options included in the line item “Adjustment due to VPG spin-off” is equal to the weighted average grant date fair value of such stock options prior to the spin-off, as reduced by the spin-off adjustment.  The weighted average grant date fair value of stock options outstanding as of December 31, 2010 also reflects the decrease in the grant date fair value as a result of the spin-off adjustment.

Restricted Stock Units

Each RSU entitles the recipient to receive a share of common stock when the RSU vests.

As a consequence of the spin-off of VPG on July 6, 2010, approximately 60,000 make-up RSUs were granted to reflect the loss of value to the unit holders due to the decrease in the trading price of Vishay’s common stock as result of the spin-off.  Additionally, approximately 5,000 RSUs that were held by VPG employees expired.  RSU activity for the years ended December 31, 2011, 2010, and 2009 is presented below (number of RSUs in thousands):

	Years ended December 31,
	2011					2010					2009
				Weighted Average Grant-date Fair Value					Weighted Average Grant-date Fair Value					Weighted Average Grant-date Fair Value
	Number of RSUs					Number of RSUs					Number of RSUs
Outstanding:
Beginning of year		634		$	9.61		155		$	9.14		197		$	9.88
Granted		423			16.57		509			10.87		36			5.20
Vested		(154	)		11.25		(76	)		9.68		(78	)		9.20
Cancelled or forfeited		(12	)		13.26		(14	)		8.83		-			-
Adjustment due to VPG spin-off*		-			-		60			-		-			-
End of year*		891		$	12.58		634		$	9.61		155		$	9.14

* The weighted average grant date fair value per unit included in the line item “Adjustment due to VPG spin-off” is equal to the weighted average grant date fair value per unit of such RSUs prior to the spin-off, as reduced by the spin-off adjustment.  The weighted average grant date fair value per unit of RSUs outstanding as of December 31, 2010 also reflects the decrease in the grant date fair value as a result of the spin-off adjustment.

The Company recognizes compensation cost for RSUs that are expected to vest.  The performance vesting criteria of the RSUs granted in the year ended December 31, 2010 that contain performance-based vesting criteria have been adjusted by 10% to reflect the absence of VPG within Vishay’s consolidated results. The Company expects all performance-based vesting criteria for outstanding performance-based RSUs to be achieved.  RSUs with performance-based vesting criteria are expected to vest as follows (number of RSUs in thousands):

Vesting Date	Number of RSUs
January 1, 2013	324
January 1, 2014	233

On June 16, 2010, the terms of certain senior executives’ RSUs and performance-based RSUs were modified such that in the event of (i) the termination of the executive’s employment by the Company without cause, by the executive for “good reason,” or as a result of death or disability, the executive’s outstanding RSUs shall immediately vest and the outstanding performance-based RSUs shall vest on their normal vesting date to the extent applicable performance criteria are realized; and (ii) a change of control of Vishay, all of such executive’s outstanding RSUs and performance-based RSUs shall immediately vest.  In the event of voluntary termination by the executive (without “good reason”) or termination for cause, the executive’s outstanding RSUs and performance-based RSUs will be forfeited.

The modification of the terms of the RSUs and performance-vested RSUs had no effect on the Company’s financial position, results of operations, or liquidity.

Phantom Stock Plan

The Company maintains a phantom stock plan for certain senior executives.  The Phantom Stock Plan authorizes the grant of up to 300,000 phantom stock units to the extent provided for in employment agreements with the Company.  Each phantom stock unit entitles the recipient to receive a share of common stock at the individual’s termination of employment or any other future date specified in the individual’s employment agreement.  The phantom stock units are fully vested at all times.

If the Company declares dividends on its common stock, the dividend amounts with respect to the phantom stock units will be deemed reinvested in additional units of phantom stock.

The Board of Directors of the Company can amend or terminate the Phantom Stock Plan at any time, except that phantom stock units already granted to any individual cannot be adversely affected without the individual’s consent.  Furthermore, stockholder approval of an amendment is required if the amendment increases the number of units subject to the Phantom Stock Plan or otherwise materially amends the Phantom Stock Plan or if stockholder approval is otherwise required by applicable law or stock exchange rules.  If the Board of Directors does not terminate the Phantom Stock Plan, it will terminate when all phantom stock units have been awarded with respect to all 300,000 shares of common stock reserved for the Phantom Stock Plan.

In accordance with the Phantom Stock Plan, following Dr. Zandman’s passing, 43,667 phantom stock units held by Dr. Zandman’s estate were redeemed as common stock.  As a consequence of the spin-off of VPG on July 6, 2010, approximately 15,000 make-up phantom stock units were granted to reflect the loss of value to the unit holders due to the decrease in the trading price of Vishay’s common stock as result of the spin-off.  Additionally, 38,667 phantom stock units held by a VPG employee were adjusted and redeemed as common stock on December 7, 2010.  The following table summarizes the Company’s phantom stock units activity for the years ended December 31, 2011, 2010, and 2009 (number of phantom stock units in thousands):

	Years ended December 31,
	2011					2010					2009
	Number of Phantom Stock Units			Grant- date Fair Value per Unit		Number of Phantom Stock Units			Grant- date Fair Value per Unit		Number of Phantom Stock Units		Number of Phantom Stock Units
Outstanding:
Beginning of year		116					120					100
Granted		15		$	14.78		20		$	8.76		20	$	3.70
Redeemed for common stock		(44	)				(39	)				-
Adjustment due to VPG spin-off		-					15					-
End of year		87					116					120
Available for future grants		95					110					145