Equity-Based Compensation

At June 30, 2016, CTS had four equity-based compensation plans: the Nonemployee Directors’ Stock Retirement Plan (“Directors’ Plan”), the 2004 Omnibus Long-Term Incentive Plan (“2004 Plan”), the 2009 Omnibus Equity and Performance Incentive Plan (“2009 Plan”), and the 2014 Performance & Incentive Plan (“2014 Plan”). Future grants can only be made under the 2014 Plan.

The 2009 Plan, and previously the 2004 Plan, provides for grants of incentive stock options or nonqualified stock options to officers, key employees, and non-employee members of CTS’ Board of Directors. In addition, the 2014 Plan, the 2009 Plan and the 2004 Plan allow for grants of stock appreciation rights, restricted stock, restricted stock units ("RSUs"), performance shares, performance units, and other stock awards.

The following table summarizes the compensation expense included in selling, general and administrative expenses in the Condensed Consolidated Statements of Earnings related to equity-based compensation plans:



	Three Months Ended				Six Months Ended
	June 30,		June 28,		June 30,			June 28,
	2016		2015		2016			2015
Service-Based RSUs	$	436	$	400	$	948		$	949
Performance-Based RSUs	130		251		(25		)	771
Market-Based RSUs	119		191		44			642
Total	$	685	$	842	$	967		$	2,362
Income tax benefit	$	257	$	317	$	363		$	888

The following table summarizes the unrecognized compensation expense related to non-vested RSUs by type and the weighted-average period in which the expense is to be recognized:



	Unrecognized
	compensation		Weighted-
	expense at		average
	June 30, 2016		period
Service-Based RSUs	$	2,084	1.4 years
Performance-Based RSUs	698		1.5 years
Market-Based RSUs	638		1.4 years
Total	$	3,420	1.4 years

CTS recognizes expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards.

The following table summarizes the maximum number of awards available to be granted under these plans as of June 30, 2016:



	2014 Plan	2009 Plan	2004 Plan	Directors' Plan
Awards originally available	1,500,000	3,400,000	6,500,000	N/A
Stock options outstanding	—	—	—	—
Options exercisable	—	—	—	—
Performance-based options outstanding	325,000	—	—	—
Service-based RSUs outstanding	257,371	170,442	78,947	25,985
Performance and market-based RSUs outstanding at 200% of target	351,300	86,120	—	—
RSUs vested and released	48,339	—	—	—
Awards available for grant	517,990	256,562	78,947	25,985

Stock Options

Stock options are exercisable in cumulative annual installments over a maximum 10-year period, commencing at least one year from the date of grant. Stock options are generally granted with an exercise price equal to the market price of CTS’ stock on the date of grant, vest over four years, and have a 10-year contractual life. The awards generally contain provisions to either accelerate vesting or allow vesting to continue on schedule upon retirement if certain service and age requirements are met. The awards also provide for accelerated vesting if there is a change in control event. CTS has no stock options exercisable or outstanding as of June 30, 2016, other than the performance-based stock options described below.

Performance-Based Stock Options

During the second quarters of 2015 and 2016, the Compensation Committee of the Board of Directors of the Company (the “Committee”) granted a total of 325,000 performance-based stock option awards (“Performance-Based Option Awards”) for certain CTS employees under the 2014 Plan. The Performance-Based Option Awards have an exercise price of $18.37, a term of five years, and generally will become exercisable (provided the optionee remains employed by CTS or an affiliate) upon CTS’ attainment of at least $600,000 in revenues during any of CTS’ four-fiscal-quarter trailing periods (as determined by the Committee) during the term. CTS has not recognized any expense on these Performance-Based Option Awards for the six months ended June 30, 2016, since the revenue target is not deemed likely to be attained based on our current forecast.

Service-Based Restricted Stock Units

Service-based RSUs entitle the holder to receive one share of common stock for each unit when the unit vests. RSUs are issued to officers, key employees and non-employee directors as compensation. Generally, the RSUs vest over a three-year period. RSUs granted to non-employee directors vest one month after the grant date. Upon grant, each non-employee director elects to either receive the stock associated with the RSU immediately upon vesting, or defer receipt of the stock until his or her retirement from the Board of Directors. The fair value of the RSUs is equivalent to the trading value of CTS’ common stock on the grant date.

A summary of the status of RSUs granted under the 2004, 2009, and 2014 plans is presented below:



	Six Months Ended
	June 30, 2016
	Units		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2016	471,196		$	13.27
Granted	164,922		13.97
Vested and released	(97,298	)	14.39
Forfeited	(32,060	)	17.05
Outstanding at June 30, 2016	506,760		$	13.13
Releasable at June 30, 2016	277,749		$	11.33

A summary of the status of RSUs granted under the Director's Plan is presented below:



	Six Months Ended
	June 30, 2016
	Units		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2016	33,974		$	11.75
Granted	—		—
Vested and released	(7,989	)	11.75
Forfeited	—		—
Outstanding at June 30, 2016	25,985		$	11.75
Releasable at June 30, 2016	25,985		$	11.75

Performance and Market-Based Restricted Stock Units

CTS grants performance-based restricted stock unit awards to certain executives. Vesting may occur in the amount of zero percent to 200% of the grant target. Vesting is subject to certification of the financial results for the last year in the performance period by CTS’ independent auditors. The number of awards vesting is dependent upon CTS’ achievement of either sales growth targets or cash flow targets as defined in the agreements.

CTS grants market-based restricted stock unit awards to certain executives and key employees. Vesting may occur in the amount of zero percent to 200% of the grant target. Vesting is subject to certification of the financial results for the last year of the target range by CTS’ independent auditors. The number of awards vesting is determined using a matrix based on a percentile ranking of CTS' total stockholder return with a peer group total shareholder return over the three-year period comprising the performance period. Vesting is tied exclusively to CTS' total stockholder return relative to peer group companies’ total stockholder return rates during the performance period.

The following table summarizes the performance and market-based RSU activity as of and for the six months ended June 30, 2016:



	Units		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2016, at target	249,560		14.59
Granted, at target	108,650		13.56
Attained by performance	97,017		10.48
Vested and released	(234,517	)	10.52
Forfeited, at target	(9,000	)	17.14
Outstanding at June 30, 2016, at target	211,710		16.58
Maximum potential units outstanding at June 30, 2016	437,420		16.63