NOTE 12 – Equity-Based compensation

At September 28, 2014, CTS had five equity-based compensation plans: the 2001 Stock Option Plan (“2001 Plan”), 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 2001 Plan and 2004 Plan, provides for grants of incentive stock options or nonqualified stock options to officers, key employees, and nonemployee members of CTS’ Board of Directors. In addition, 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 Unaudited Condensed Consolidated Statements of Earnings related to equity-based compensation plans:


	Three Months Ended				Nine Months Ended
*($ in thousands)*	September 28, 2014		September 29, 2013		September 28, 2014		September 29, 2013
Service-Based RSUs		397		444		1,080		1,961
Performance-Based RSUs		146		117		419		690
Market-Based RSUs		117		99		340		490

Total	$	660	$	660	$	1,839	$	3,141

Income tax benefit	$	252	$	252	$	703	$	1,200

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:


*($ in thousands)*	Unrecognized compensation expense at September 28, 2014		Weighted average period
Service-Based RSUs		1,439	1.2 years
Performance-Based RSUs		1,064	1.4 years
Market-Based RSUs		775	1.3 years

Total	$	3,278

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 status of these plans as of September 28, 2014:


	2014 Plan		2009 Plan		2004 Plan		2001 Plan
Awards originally available		1,500,000		3,400,000		6,500,000		2,000,000
Stock options outstanding		—		—		5,200		—
Restricted stock units outstanding		6,500		425,156		101,223		—
Options exercisable		—		—		5,200		—
Awards available for grant		1,493,500		1,593,853		106,423		—

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 the Company’s stock on the date of grant. The stock options generally 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.

A summary of the status of stock options as of September 28, 2014 and the nine month period then ended is presented below:


	Nine Months Ended
	September 28, 2014
	Options			Weighted- Average Exercise Price
Outstanding at beginning of year		123,000		$	12.78
Exercised		(115,100	)	$	12.84
Expired		(2,700	)	$	11.04
Forfeited		—		$	—

Outstanding at end of period		5,200		$	12.35

Exercisable at end of period		5,200		$	12.35


	Nine Months Ended
	September 28, 2014
Intrinsic values of share options exercised	$	831,000

Weighted average remaining contractual life		1.2 years

Aggregate intrinsic values of options outstanding and options exercisable	$	22,000

There are no unvested stock options at September 28, 2014.

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. A summary of the status of RSUs is presented below:


	Nine Months Ended
	September 28, 2014
	RSUs			Weighted- average Grant-Date Fair Value
Outstanding at beginning of year		630,288		$	10.36
Granted		90,115		$	19.05
Converted		(128,108	)	$	10.74
Forfeited		(59,416	)	$	11.99

Outstanding at end of period		532,879		$	11.55

Performance-Based Restricted Stock Units

CTS grants performance-based restricted stock unit awards for certain executives. Vesting may occur in the range from zero percent to 200% of the target amount. Vesting is subject to certification of the fiscal results of the year prior to the target year by CTS’ independent auditors. Vesting is dependent upon CTS’ achievement of either sales growth targets or cash flow targets as noted in the table below.

Performance-Based RSUs include the following components:


Grant Date	Target Units		Vesting Year	Vesting Dependency	Units Awarded
February 8, 2012		45,850	2014	Sales growth		—
February 8, 2012		39,300	2014	Cash flow		69,600
February 11, 2013		77,700	2016	Sales growth		—
February 11, 2013		66,600	2016	Cash flow		—
February 14, 2014		25,085	2017	Sales growth		—
February 14, 2014		21,500	2017	Cash flow		—

Market-Based Restricted Stock Units

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

Market-Based RSUs include the following components:


Grant Date	Target Units		Vesting Year	Number of Peer Group Companies	Units Awarded
February 8, 2012		45,850	2014	28		63,800
February 11, 2013		77,700	2016	20		—
February 11, 2013		32,500	2016	20		—
February 14, 2014		25,085	2017	15		—