Equity Compensation Plans

3 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

As of September 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 stockholders on April 24, 2020, authorizes 3.0 million shares of common stock for awards. The 2012 Plan also authorized 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 and performance-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 ultimately vest depends upon achievement of certain relative performance metrics as measured against the performance of the S&P 600 industrial index during a three-year performance period. The Company estimates the grant date value of performance awards using a Monte Carlo simulation model on the date of grant. The Company accounts for forfeitures as they occur. 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 $0.7 million and $0.6 million for the three-month periods ended September 30, 2020 and 2019, respectively, and $2.5 million and $2.1 million for the nine-month periods ended September 30, 2020 and 2019, respectively, for the Plans, including restricted stock awards. The Company also incurred equity compensation expense of $0.2 million and $0.2 million for the three-month periods ended September 30, 2020 and 2019, respectively, and $0.5 million and $0.5 million for the nine-month periods ended September 30, 2020 and 2019, respectively, for stock awards granted to Directors. 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 and nine-month periods ended September 30, 2020:


	For the Three Months Ended September 30, 2020						For the Nine Months Ended September 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	748	$	25.36	683	$	27.15
Granted	11	$	16.27	180	$	17.37
Exercised	—	$	—	(4)	$	8.67
Forfeited or Expired	(71)	$	26.25	(171)	$	25.46
Stock Options outstanding at September 30, 2020	688	$	25.11	688	$	25.11

Exercisable at September 30, 2020	305	$	32.54	305	$	32.54
Unvested at September 30, 2020	383	$	19.20	383	$	19.20

There was no cash received from exercise of stock options during the three-month period ended September 30, 2020. The amount of cash received from the exercise of stock options was less than $0.1 million during the nine-month period ended September 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 nine-month period ended September 30, 2020.

At September 30, 2020, the total unrecognized compensation cost related to non-vested stock option awards was approximately $2.1 million, with a weighted average expected amortization period of 2.7 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 and nine-month periods ended September 30, 2020:


	For the Three Months Ended September 30, 2020	For the Nine Months Ended September 30, 2020
In thousands	Shares	Shares
Unvested at the beginning of the period	220	159
Granted	—	77
Vested	(5)	(8)
Forfeited or Expired	(12)	(25)
Unvested at September 30, 2020	203	203

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


	For the Three Months Ended September 30, 2020	For the Nine Months Ended September 30, 2020
In thousands	Shares	Shares
Unvested at the beginning of the period	161	129
Granted	5	71
Vested	—	—
Forfeited or Expired	(18)	(52)
Unvested at September 30, 2020	148	148

At September 30, 2020, there were 350,348 total unvested restricted stock awards with total unrecognized compensation cost related to these awards of $4.4 million with a weighted average expected amortization period of 2.1 years.