STOCK-BASED COMPENSATION PLANS

12 Months Ended

Dec. 31, 2020

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION PLANS

6. STOCK-BASED COMPENSATION PLANS

Stock Incentive Plans

The Company’s Stock Incentive Plans provide for the granting of stock awards, including stock options, stock appreciation rights, and restricted stock, to employees and non-employees, including directors of the Company.

As of December 31, 2020, the Company had 753,187 shares of common stock available for grant under stock incentive plans.

Restricted Stock

The following is a summary of restricted stock grants, fair value and performance based awards:

				Awards with
	Unvested	Weighted average		performance
	restricted stock	grant date fair		vesting
For the year ended December 31,	awards	value		requirements
2020	160,437	$	33.51	100,403
2019	109,530	$	41.95	76,877
2018	64,656	$	35.89	30,603

The value at the date of award is amortized to compensation expense over the related service period, which is generally three years for time vested grants. Short-term performance based grants can be achieved over a period of one year, and long-term performance grants can be earned through December 31, 2022. Earned grants are then subject to either a 3 year or 5 year service period. Shares of non-vested restricted stock are forfeited if a recipient leaves the Company before the vesting date. Shares that are forfeited become available for future awards. For performance-based awards, the Company assesses the probability of the achievement of the awards during the year and recognizes expense accordingly.

The following is a summary of restricted stock activity during years 2020, 2019 and 2018:

	Number of
	shares
Balance, December 31, 2017	221,968
Awarded	64,656
Forfeited	(18,867)
Vested	(112,015)
Balance, December 31, 2018	155,742
Awarded	109,530
Forfeited	(3,166)
Vested	(75,404)
Balance, December 31, 2019	186,702
Awarded	160,437
Forfeited	(2,446)
Vested	(106,465)
Balance, December 31, 2020	238,228

The following is a summary of performance based restricted stock activity during years 2020, 2019 and 2018:

	Total performance
	grants
Outstanding, December 31, 2017	37,782
Awarded	30,603
Performance criteria met	(66,525)
Forfeited	(1,860)
Outstanding, December 31, 2018	—
Awarded	76,877
Performance criteria met	(50,852)
Forfeited	(549)
Outstanding, December 31, 2019	25,476
Awarded	100,403
Performance criteria met	(64,384)
Forfeited	(2,155)
Outstanding, December 31, 2020	59,340

The performance criteria and forfeitures in the above table did not occur until the Board of Directors approved them during the March 2021, and February 2020 and 2019 meetings.

Share-Based Compensation Expense

Restricted Stock

During 2020, 2019 and 2018 compensation expense net of forfeitures of $3,550, $3,203 and $2,643 was recorded, respectively. As of December 31, 2020, there was $4,100 of total unrecognized compensation expense related to restricted stock awards, of which approximately $2,236 is expected to be recognized in 2021.

Employee Stock Ownership Plan

The Company sponsors an Employee Stock Ownership Plan (“ESOP”) that covers all non-union U.S. employees who work over 1,000 hours per year. The terms of the ESOP require the Company to make an annual contribution equal to the greater of i) the Board established percentage of pretax income before the contribution (5% in 2020, 2019 and 2018) or ii) the annual interest payable on any loan outstanding to the Company from the ESOP. Company contributions to the Plan accrued for 2020, 2019 and 2018, were $988, $1,189 and $1,090, respectively. These amounts are included in general and administrative costs in the consolidated statements of income and comprehensive income.

Defined Contribution Plan

The Company sponsors the Allied Motion 401(k) Tax Advantaged Investment Plan (“401(k)”) which covers substantially all its U.S. based employees. The plan provides for the deferral of employee compensation under Section 401(k) and a discretionary Company match. In 2020, 2019 and 2018 this match was 100% per dollar of the first 3% of participant deferral and 50% per dollar of the next 2% contribution, up to 4% of a total 5% participant deferral. Net costs related to this defined contribution plan were $1,774, $1,362 and $1,182 in 2020, 2019 and 2018, respectively.

Dividends

For each of the years ended December 31, 2020 and 2019 a total of $0.12 per share on all outstanding shares was declared and paid, respectively. For the year ended December 31, 2018 a total of $0.115 per share on all outstanding shares was declared and paid. Total dividends paid for the years ended December 31, 2020, 2019 and 2018 were $1,160, $1,170 and $1,079, respectively. Based on the terms of the Company’s Credit Agreement, dividends paid to shareholders are acceptable, subject to the Company’s compliance with the covenants under the Credit Agreement.