11. Share-Based Compensation

Capital Stock

The authorized capital of the Company consists of an unlimited number of common shares without nominal or par value. Holders of common shares are entitled to one vote per share. Holders of common shares are entitled to receive dividends, if and when declared by the Board of Directors, and to share ratably in its assets legally available for distribution to the stockholders in the event of liquidation. Holders of common shares have no redemption or conversion rights.

2010 Incentive Award Plan

In November 2010, the Company’s shareholders approved the 2010 Incentive Award Plan (the “2010 Incentive Plan”), under which the Company may grant share-based compensation awards to employees, consultants and directors. In May 2014, the Company’s shareholders approved the amended and restated 2010 Incentive Award Plan (the “Amended and Restated 2010 Incentive Plan”). The maximum number of shares which can be issued pursuant to the Amended and Restated 2010 Incentive Plan is 4,398,613, subject to adjustment as set forth in the Amended and Restated 2010 Incentive Plan. The Amended and Restated 2010 Incentive Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights, deferred stock, deferred stock units, dividends equivalents, performance awards and stock payments (collectively referred to as “Awards”) to employees, consultants and directors. The Amended and Restated 2010 Incentive Plan allows the Company to continue to grant awards intended to constitute “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, and includes certain provisions that reflect good corporate governance practices. The Amended and Restated 2010 Incentive Award Plan provides for specific limits on the number of shares that may be subject to different types of Awards and the amount of cash that can be paid with respect to different types of Awards. The Amended and Restated 2010 Incentive Plan will expire and no further Awards may be granted after April 9, 2024, As of December 31, 2014, there are 2,284,553 shares available for future awards under the Amended and Restated 2010 Incentive Plan.

Restricted stock units represent the right to receive common shares or the fair market value of such shares in cash as determined by the administrator of the Amended and Restated 2010 Incentive Plan at a specified date in the future, subject to forfeiture of such right. The purchase price for restricted stock units, if any, will be determined by the administrator of the Amended and Restated 2010 Incentive Plan on an award-by-award basis. Deferred stock units entitle the recipient thereof to receive one share of common stock on the date such deferred stock unit becomes vested and other conditions are removed or expire, if applicable or upon a specified settlement date thereafter. Deferred stock units are typically awarded without payment of consideration.

Shares subject to Awards that have expired, forfeited or settled in cash, or repurchased by the Company at the same price paid by the awardee may be added back to the number of shares available for grant under the Amended and Restated 2010 Incentive Plan and may be granted as new Awards. Shares that are used to pay the exercise price for an option, shares withheld to pay taxes, with respect to an option or stock appreciation rights, shares subject to a stock appreciation right that are not issued in connection with the stock settlement of the stock appreciation right on exercise thereof, and shares purchased on the open market with the cash proceeds from the exercise of options will not be added back to the number of shares available for grant under the Amended and Restated 2010 Incentive Plan. Shares issued to satisfy Awards under the Amended and Restated 2010 Incentive Plan may be previously authorized but unissued shares, treasury shares or shares bought on the open market.

The table below summarizes activities relating to restricted stock units issued and outstanding under the 2010 Incentive Plan during year ended December 31, 2014:

	Restricted Stock Units (In thousands)			Weighted Average Grant Date Fair Value		Weighted Average Remaining Vesting Period in Years	Aggregate Intrinsic Value (1) (In thousands)
Unvested at December 31, 2013		809		$	10.20
Granted		338		$	12.26
Vested		(361	)	$	10.79
Forfeited		(37	)	$	11.06
Unvested at December 31, 2014		749		$	10.80	1.82 years	$	11,019
Expected to vest as of December 31, 2014		734		$	10.80	1.82 years	$	10,797

(1)	The aggregate intrinsic value is calculated based on the fair value of $14.72 per share of the Company’s common stock on December 31, 2014 due to the fact that the restricted stock units carry a $0 purchase price.

The total fair value of restricted stock units that vested in 2014, based on the market price of the underlying stock on the day of vesting, was $4.5 million.

Other Issuances

On September 2, 2010, the Company granted 83,337 deferred stock units to the members of its Board of Directors at a weighted average grant date fair value of $6.66 per share. The deferred stock units were issued pursuant to standalone award agreements that are independent of an equity incentive plan. These transactions were exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) of such act as transactions not involving a public offering. Each deferred stock unit represents the right to receive one common share of the Company on the date of termination of the holder’s service with the Company’s Board of Directors. The deferred stock units were fully vested and nonforfeitable on the date of grant.

In connection with the JADAK acquisition on March 14, 2014, the Company acquired 100% of the outstanding stock of JADAK. In addition to the total purchase price, the Company granted restricted stock units in an aggregate of 180,000 shares to the former owner-managers of JADAK as employment inducement awards. These restricted stock units are performance-based awards and will vest after two years if certain financial targets and service conditions have been achieved.

Share-Based Compensation Expense

The table below summarizes share-based compensation expense recorded in income from continuing operations (in thousands):

	Year Ended December 31,
	2014		2013		2012
Selling, general and administrative	$	3,967	$	5,144	$	4,339
Research and development and engineering		196		180		112
Cost of sales		166		118		83
Restructuring and acquisition related costs		322		125		51
Total share-based compensation expense	$	4,651	$	5,567	$	4,585

The expense recorded during each of the years ended December 31, 2014, 2013 and 2012 included $0.5 million, $0.5 million and $0.6 million, respectively, related to deferred stock units granted to the members of the Company’s Board of Directors pursuant to the Company’s Amended and Restated 2010 Incentive Plan. The expense associated with the respective deferred stock units was recognized in full on the respective date of grant, as the deferred stock units were fully vested and nonforfeitable upon grant.

The Company’s restricted stock unit awards have generally been issued with a three-year vesting period and vest based solely on service conditions. Accordingly, the Company generally recognizes compensation expense on a straight-line basis over the requisite service period. The Company reduces the compensation expense by an estimated forfeiture rate which is based on anticipated forfeitures and actual experience.

As of December 31, 2014, the Company’s outstanding equity awards for which compensation expense will be recognized in the future consist of time-based restricted stock units granted under the Amended and Restated 2010 Incentive Plan and the JADAK inducement awards. The Company expects to record aggregate share-based compensation expense of $5.8 million, net of an estimate of forfeitures, subsequent to December 31, 2014, over a weighted average period of 1.8 years, for all outstanding equity awards.