STOCK-BASED COMPENSATION PLANS

12 Months Ended

Dec. 31, 2022

STOCK-BASED COMPENSATION PLANS

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, 2022, the Company had 848,631 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
2022	182,497	$	33.21	111,251
2021	109,462	$	32.06	63,432
2020	240,656	$	22.34	150,605

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, 2023. 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 2022, 2021 and 2020:

	Number of
	shares
Balance, December 31, 2019	280,053
Awarded	240,656
Vested	(159,698)
Forfeited	(3,669)
Balance, December 31, 2020	357,342
Awarded	109,462
Vested	(162,419)
Forfeited	(10,808)
Balance, December 31, 2021	293,577
Awarded	182,497
Vested	(156,847)
Forfeited	(14,280)
Balance, December 31, 2022	304,947

The following is a summary of performance based restricted stock activity during years 2022, 2021 and 2020:

	Total performance
	grants
Outstanding, December 31, 2019	38,214
Awarded	150,605
Performance criteria met	(96,576)
Forfeited	(3,233)
Outstanding, December 31, 2020	89,010
Awarded	63,432
Performance criteria met	(42,290)
Forfeited	(10,229)
Outstanding, December 31, 2021	99,923
Awarded	111,251
Performance criteria met	(97,342)
Forfeited	(9,174)
Outstanding, December 31, 2022	104,658

The performance criteria and forfeitures in the above table did not occur until the Board of Directors approved them during the March 2023, March 2022 and March 2021 meetings.

Share-Based Compensation Expense

During 2022, 2021 and 2020 compensation expense net of forfeitures of $5,073, $4,161 and $3,550 was recorded, respectively. As of December 31, 2022, there was $7,527 of total unrecognized compensation expense related to restricted stock awards, of which approximately $4,902 is expected to be recognized in 2023.

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 2022, 2021 and 2020)

or ii) the annual interest payable on any loan outstanding to the Company from the ESOP. Company contributions to the Plan accrued for 2022, 2021 and 2020, were $1,248, $1,206 and $988, 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 2022, 2021 and 2020 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 $2,146, $1,672 and $1,774 in 2022, 2021 and 2020, respectively.

Dividends

For the years ended December 31, 2022, 2021 and 2020 a total of $0.100, $0.095 and $0.08 per share on all outstanding shares was declared and paid, respectively. Total dividends paid for the years ended December 31, 2022, 2021 and 2020 were $1,536, $1,371 and $1,160, 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.