10. Share-Based Employee Compensation

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

10. Share-Based Employee Compensation

The Company has an employee and non-employee director incentive compensation equity plan. Related to these programs, the Company recorded $55 and $49 of share-based employee compensation expense during the years ended December 31, 2017 and 2016, respectively, which is included as a component of cost of products and SG&A expenses in the accompanying consolidated statements of operations. No amount of share-based employee compensation expense was capitalized as part of capital expenditures or inventory for the years presented.

The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant. The share-based employee compensation expense recorded in the years ended December 31, 2017 and 2016 was calculated using the assumptions noted in the following table. Expected volatilities are based on the historical volatility of the Company’s common stock over the period of time commensurate with the expected life of the stock options. The dividend yield assumption is based on the Company’s expectations of dividend payouts at the grant date. In 2017, the Company paid dividends on January 13, for a dividend declared in 2016, April 17, July 17 and October 16. In 2017, the Company’s board of directors also declared a quarterly dividend that was paid on January 16, 2018. The Company has estimated its future stock option exercises. The expected term of option grants is based upon the observed and expected time to the date of post vesting exercises and forfeitures of options by the Company’s employees. The risk-free interest rate is derived from the average U.S. Treasury rate for the period, which approximates the rate at the time of the stock option grant.

	FY 2017			FY 2016
Expected Volatility		53.6	%		60.7	%
Expected Dividends		5.0	%		2.0	%
Expected Term (in years)		3.0-6.5			3.0-6.5
Risk-Free Rate		2.10	%		1.35	%
Estimated Forfeitures		0.0	%		0.0	%

A summary of stock option activity under the Company’s equity compensation plans as of December 31, 2017, and changes during the year ended December 31, 2017, are presented below:

As of January 1, 2017	Stock Options		Wgt. Avg. Exercise Price ($)  Per Share		Wgt. Avg. Remaining Contractual Life (Years)		Wgt Avg. Grant Date Fair Value ($) Per Share		Aggregate Intrinsic Value ($)
Outstanding		311,000		3.48		—		1.96		—
Vested		231,000		3.30		—		1.97		—
Nonvested		80,000		4.01		—		1.93		—
Period activity
Issued		248,500		4.84		—		1.54		—
Exercised		125,000		2.88		—		1.62		—
Forfeited		80,000		4.31		—		1.95		—
Expired		—		—		—		—		—
As of December 31, 2017
Outstanding		354,500		4.46		7.35		1.79		34,660
Vested		113,000		3.75		3.15		2.23		34,660
Nonvested		241,500		4.80		9.31		1.58		—

Outstanding:
Range of Exercise Prices ($) Per Share			Stock Options Outstanding		Wgt. Avg. Exercise Price ($) Per Share		Wgt. Avg. Remaining Contractual Life (Years)
	1.89	3.83		36,000		2.67		5.91
	4.07	5.10		318,500		4.67		7.51
				354,500		4.46		7.35

Exercisable:
Range of Exercise Prices ($) Per Share			Stock Options Exercisable		Wgt. Avg. Exercise Price ($)
	1.89	3.83		28,000		2.33
	4.07	5.10		85,000		4.21
				113,000		3.75

The weighted-average grant-date fair value per option granted during the years ended December 31, 2017 and 2016 was $1.58 and $1.93, respectively. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2017 and 2016 was approximately $107 and $82, respectively.

In connection with the restricted stock units granted to non-employee directors, the Company accrues compensation expense based on the estimated number of shares expected to be issued utilizing the most current information available to the Company at the date of the financial statements. The Company estimates the fair value of the restricted stock unit awards based upon the market price of the underlying common stock on the date of grant.