Note 16.

Stock-based Compensation

The Company applies the provisions of FASB ASC 718, Compensation – Stock Compensation, to account for the Company’s share-based compensation. Share-based compensation cost is measured at the grant date based on the calculated fair value of the award and is recognized over the employees’ requisite service period. The Company recorded share-based compensation expense of $3,007, $2,156 and $1,989 for the years ended December 31, 2014, 2013, and 2012, respectively, related to fully-vested stock awards, restricted stock awards, and performance unit awards as follows. As of December 31, 2014, unrecognized compensation expense for awards the Company expects to vest approximated $2,896. The Company will recognize this expense over the upcoming 3.2 year period through February 2018.

Shares issued as a result of vested stock-based compensation generally will be from previously issued shares which have been reacquired by the Company and held as Treasury shares or authorized but previously unissued common stock.

The excess tax benefit realized for the tax deduction from share-based compensation approximated $336, $203 and $199 for the years ended December 31, 2014, 2013, and 2012, respectively. This excess tax benefit is included in cash flows from financing activities in the Consolidated Statements of Cash Flows.

As of December 31, 2014, the Company had outstanding stock option and other stock awards issued pursuant to two shareholder-approved plans: The 2006 Omnibus Incentive Plan, as amended and restated in October 2013 (Omnibus Plan), and the 1998 Long-Term Incentive Plan for Officers and Directors, amended and restated in May 2006, (1998 Plan). The 1998 Plan expired by its terms in 2008 and no awards may be granted under that Plan, which currently has outstanding stock option awards that expire in 2015. The Company currently makes equity awards only under the Omnibus Plan.

The 1998 Plan provided for the award of stock options to key employees and directors to purchase up to 900,000 shares of common stock at no less than 100% of fair market value on the date of the grant. The 1998 Plan authorized the granting of “nonqualified options” and “incentive stock options” with a duration of not more than ten years from the date of grant. The 1998 Plan also provided that, unless otherwise set forth in the option agreement, stock options are exercisable in installments of up to 25% annually beginning one year from date of grant. Non-employee directors were automatically awarded fully vested, nonqualified stock options to acquire 5,000 shares of the Company’s common stock on each date the outside directors were elected at an annual shareholders’ meeting to serve as directors. The 1998 Plan was amended in May 2006 to remove the automatic awarding of stock options to outside directors. As noted above, the 1998 Plan expired by its terms in 2008 and there are remaining stock option awards outstanding which expire in 2015. The Company no longer issues awards under the 1998 Plan.

The Omnibus Plan allows for the issuance of 900,000 shares of common stock through the granting of stock options or stock awards (including performance units convertible into stock) to key employees and directors at no less than 100% of fair market value on the date of the grant. The Omnibus Plan provides for the granting of “nonqualified options” with a duration of not more than ten years from the date of grant. The Omnibus Plan also provides that, unless otherwise set forth in the option agreement, stock options are exercisable in installments of up to 25% annually beginning one year from the date of grant. No stock options have been granted under the Omnibus Plan and, as such, there was no share-based compensation expense related to stock options recorded in 2014, 2013, or 2012

Stock Option Awards

Certain information for the three years ended December 31, 2014 relative to employee stock options is summarized as follows:



	2014	2013	2012
Number of shares under the plans:
Outstanding and exercisable at beginning of year	18,750	22,500	39,950
Granted	-	-	-
Canceled	-	-	-
Exercised	(11,250)	(3,750)	(17,450)
Outstanding and exercisable at end of year	7,500	18,750	22,500

Certain information for the three years ended December 31, 2014 relative to stock options at respective exercise price ranges is summarized as follows:



		Options Outstanding and Exercisable
		Number	Weighted Average		Weighted		Intrinsic
December 31,	Range of Exercise Prices	of Shares	Remaining Life		Exercise Price		Value

2014	$8.97 - $9.29	7,500	0.3	$	9.08	$	296
2013	$7.81 - $14.77	18,750	1.3		10.64		687
2012	$7.81 - $14.77	22,500	2.2		10.41		743

The weighted average exercise price per share of the stock options exercised in 2014, 2013, and 2012 were $11.67, $9.30, and $7.03, respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2014, 2013, and 2012 were $426, $124, and $457, respectively.

Fully-Vested Stock Awards

Non-employee directors are automatically awarded 3,500 fully vested shares, or a lesser amount determined by the directors, of the Company’s common stock on each date the non-employee directors are elected at an annual shareholders’ meeting to serve as directors.

The non-employee directors were granted a total of 10,182, 9,960, and 12,000 fully-vested shares for the years ended December 31, 2014, 2013, and 2012, respectively. Compensation expense recorded by the Company related to fully-vested stock awards to non-employee directors was approximately $488, $450, and $337 for the years ended December 31, 2014, 2013, and 2012, respectively.

The weighted average fair value of all the fully-vested stock grants awarded was $47.94, $45.16, and $28.05 per share for 2014, 2013, and 2012, respectively.

Restricted Stock Awards and Performance Unit Awards

Under the amended and restated 2006 Omnibus Plan, the Company grants eligible employees Restricted Stock and Performance Unit Awards. The forfeitable Restricted Stock Awards generally time-vest after a four year holding period, unless indicated otherwise by the underlying Restricted Stock Agreement. Performance Unit Awards are offered annually under separate three-year long-term incentive programs. Performance units are subject to forfeiture and will be converted into common stock of the Company based upon the Company’s performance relative to performance measures and conversion multiples as defined in the underlying program. If the Company’s estimate of the number of Performance Stock Awards expected to vest changes in a subsequent accounting period, cumulative compensation expense could increase or decrease. The change will be recognized in the current period for the vested shares and would change future expense over the remaining vesting period.

The following table summarizes the Restricted Stock Award and Performance Unit Award activity for the period ended December 31, 2014:


	Restricted	Performance		Weighted Average
	Stock	Stock		Grant Date
	Units	Units		Fair Value
Outstanding at January 1, 2012	105,168	81,489	$	31.24
Granted	108,677	43,042		30.24
Vested	(36,599)	(33,508)		27.38
Adjustment for incentive awards expected to vest	-	(31,298)		31.79
Canceled	(600)	-		38.44
Outstanding at December 31, 2012	176,646	59,725		31.65
Granted	12,973	31,418		42.49
Vested	(41,579)	-		29.18
Adjustment for incentive awards expected to vest	-	(18,408)		35.84
Canceled	(18,314)	(11,084)		33.55
Outstanding at December 31, 2013	129,726	61,651		34.00
Granted	19,051	34,652		44.07
Vested	(40,540)	(13,588)		34.59
Adjustment for incentive awards expected to vest	-	(7,845)		43.59
Canceled	-	(2,880)		44.13
Outstanding at December 31, 2014	108,237	71,990	$	36.25

Performance units are subject to forfeiture and will be converted into common stock of the Company based upon the Company’s performance relative to performance measures and conversion multiples as defined in the underlying plan. The aggregate fair value in the above table is based upon achieving 100% of the performance targets as defined in the underlying plan. During 2014 and 2012, the Company reversed $702 and $807, respectively, of incentive compensation costs under its separate three-year long-term incentive plans caused by the impact of the product warranty charges on Company performance, as it related to the awards’ underlying performance conditions. More information on the product warranty charge can be found in Note 20, Commitments and Contingent Liabilities.

Excluding the fully-vested stock awards granted to non-employee directors, the Company recorded compensation expense of $2,519, $1,706, and $1,652, respectively, for the periods ended December 31, 2014, 2013, and 2012 related to restricted stock and performance unit awards.



	2014	2013	2012
Number of shares available for future grant:
Beginning of year	513,280	517,280	271,465
End of year	469,840	513,280	517,280

The Company issued, pursuant to the Omnibus Plan, approximately 14,000 fully-vested shares during 2014 which were earned under the 2011 – 2013 three year long-term incentive plan. This non-cash transaction of $454 was reflected as a decrease to Treasury Stock in the Consolidated Balance Sheet at December 31, 2014. During 2012, approximately 34,000 fully-vested shares were issued which were earned under the 2009 – 2011 three year long-term incentive plan. This non-cash transaction of $1,130 was reflected as a decrease to Treasury Stock in the Consolidated Balance Sheet at December 31, 2012.