Equity Compensation Plans

3 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

As of June 30, 2020, the Company’s equity compensation plans consisted of the 2003 Stock Incentive Compensation Plan (the “2003 Plan”), and the Amended and Restated 2012 Stock Incentive Plan, (the “2012 Plan” and together with the 2003 Plan, the “Plans”) under which incentive and non-qualified stock options and time and performance based restricted shares have been granted to employees and directors from authorized but unissued shares of common stock or treasury shares. The 2003 Plan is not active, but continues to govern all outstanding awards granted under the plan until the awards themselves are exercised or terminate in accordance with their terms. The 2012 Plan, amended and approved by shareholders on April 24, 2020, authorizes 3.0 million shares of common stock for awards. The 2012 Plan also authorizes an additional 19,720 shares of common stock to the extent awards granted under prior stock plans that were outstanding as of April 24, 2020 are forfeited. The 2012 Plan provides for the following types of awards: options, restricted stock, restricted stock units and other stock-based awards. During the fourth quarter of 2019, additional shares of common stock were issued pursuant to separate inducement share agreements with two individuals as material inducement to their employment with the Company (the "Inducement Grants"). The Inducement Grants awarded stock options and restricted stock to the two individuals. Amounts shown below are inclusive of the Plans and the Inducement Grants.

The Company accounts for the expense of all share-based compensation by measuring the awards at fair value on the date of grant. The Company recognizes expense on a straight-line basis over the vesting period of the entire award. Options issued by the Company under its stock option plans have a term of ten years and generally vest ratably over a period of three to four years. Time-based restricted stock grants are expensed over the vesting period of the award, which is typically two to four years. The number of performance-based restricted shares that vest or forfeit depend upon achievement of certain targets during the performance period. The Company accounts for forfeitures as they occur. Compensation expense for performance-based awards granted prior to December 2018 is recorded based upon the service period and management’s assessment of the probability of achieving the performance goals and will be adjusted based upon actual achievement. In December 2018, the performance metric changed to a 3-year relative Total Shareholder Return ("TSR") compared to the S&P 600 industrial index instead of a pre-established earnings-per-share target to better align compensation to the long-term interests of shareholders. Stock options issued under the current plan must have an exercise price that may not be less than the fair market value of the Company’s common stock on the date of grant. The Plans provide for automatic acceleration of vesting in the event of a change in control of the Company.

The Company incurred equity compensation expense of $0.9 million and $0.5 million for the three-month periods ended June 30, 2020 and 2019, respectively, and $1.8 million and $1.5 million for the six-month periods ended June 30, 2020 and 2019, respectively, for the Plans, including restricted stock awards. No equity compensation costs were capitalized as part of inventory.

Stock Options

The following table is a summary of outstanding and exercisable options for the three-month and six-month periods ended June 30, 2020:


	For the Three Months Ended June 30, 2020						For the Six Months Ended June 30, 2020
In thousands except per share amounts	Shares	Weighted- Average Exercise Price		Shares	Weighted- Average Exercise Price
Stock Options outstanding at the beginning of the period	761	$	26.35	683	$	27.15
Granted	58	$	9.41	169	$	17.44
Exercised	—	$	—	(4)	$	8.67
Forfeited or Expired	(71)	$	22.85	(100)	$	24.91
Stock Options outstanding at June 30, 2020	748	$	25.36	748	$	25.36

Exercisable at June 30, 2020	297	$	33.80	297	$	33.80
Unvested at June 30, 2020	451	$	19.79	451	$	19.79

There was no cash received from exercise of stock options during the three-month period ended June 30, 2020. The amount of cash received from the exercise of stock options was less than $0.1 million during the six-month period ended June 30, 2020. The intrinsic value of stock options exercised was less than $0.1 million with a tax benefit of less than $0.1 million during the three-month and six-month periods ended June 30, 2020.

At June 30, 2020, the total unrecognized compensation cost related to non-vested stock option awards was approximately $2.7 million, with a weighted average expected amortization period of 2.9 years.

Restricted Stock

Restricted stock includes both performance-based and time-based awards. The following is a summary of the Company's unvested time-based restricted shares for the three-month and six-month periods ended June 30, 2020:


	For the Three Months Ended June 30, 2020	For the Six Months Ended June 30, 2020
In thousands	Shares	Shares
Unvested at the beginning of the period	203	159
Granted	23	77
Vested	—	(3)
Forfeited or Expired	(6)	(13)
Unvested at June 30, 2020	220	220

The following is a summary of the Company's unvested performance-based restricted shares for the three-month and six-month periods ended June 30, 2020:


	For the Three Months Ended June 30, 2020	For the Six Months Ended June 30, 2020
In thousands	Shares	Shares
Unvested at the beginning of the period	154	129
Granted	25	66
Vested	—	—
Forfeited or Expired	(18)	(34)
Unvested at June 30, 2020	161	161

At June 30, 2020, there were 381,242 total unvested restricted stock awards with total unrecognized compensation cost related to these awards of $5.3 million with a weighted average expected amortization period of 2.2 years. Compensation expense for

performance-based awards is recorded based on the service period and management’s assessment of the probability of achieving the performance goals.