NOTE 11 – STOCK-BASED COMPENSATION:

In May 2011, the shareholders of the Corporation approved the adoption of the Ampco-Pittsburgh Corporation 2011 Omnibus Incentive Plan (the “Predecessor Plan”), which authorized the issuance of up to 1,000,000 shares of the Corporation’s common stock for grants of equity-based compensation. In May 2016, the shareholders of the Corporation approved the adoption of the Ampco-Pittsburgh Corporation 2016 Omnibus Incentive Plan (the “Incentive Plan”), which authorizes the issuance of up to 1,100,000 shares of the Corporation’s common stock for awards under the Incentive Plan. The Incentive Plan replaces the Predecessor Plan and no new awards will be granted under the Predecessor Plan. Any awards outstanding under the Predecessor Plan will remain subject to and be paid under the Predecessor Plan, and any shares subject to outstanding awards under the Predecessor Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares (equal to 2,500 shares at December 31, 2016) will automatically become available for issuance under the Incentive Plan.

Awards under the Incentive Plan may include incentive non-qualified stock options, stock appreciation rights, restricted shares and restricted stock units, performance awards, other stock-based awards or short-term cash incentive awards. If any award is canceled, terminates, expires or lapses for any reason prior to the issuance of shares, or if shares are issued under the Incentive Plan and thereafter are forfeited to the Corporation, the shares subject to such awards and the forfeited shares will not count against the aggregate number of shares available under the Incentive Plan. Shares tendered or withheld to pay the option exercise price or tax withholding will continue to count against the aggregate number of shares of common stock available for grant under the Incentive Plan. Any shares repurchased by the Corporation with cash proceeds from the exercise of options will not be added back to the pool of shares available for grant under the Incentive Plan.

The Incentive Plan may be administered by the Board of Directors or the Compensation Committee of the Board of Directors. The Compensation Committee has the authority to determine, within the limits of the express provisions of the Incentive Plan, the individuals to whom the awards will be granted and the nature, amount and terms of such awards. The Incentive Plan also provides for equity-based awards during any one year to non-employee members of the Board of Directors, based on the grant date fair value, not to exceed $200. The limit does not apply to shares received by a non-employee director at his or her election in lieu of all or a portion of the director’s retainer for board service. The number of shares of common stock issued to non-employee directors was 32,090 in 2016 under the Incentive Plan and 14,310 shares in 2015 and 12,500 shares in 2014 under the Predecessor Plan.

In 2016 and 2015, the Compensation Committee granted time-vesting restricted stock units (RSUs) and performance-vesting restricted stock units (PSUs) to select individuals. Each RSU represents the right to receive one share of common stock of the Corporation at a future date after the RSU has become earned and vested, subject to the terms and conditions of the RSU award agreement. The RSUs vest over a three-year period. The PSUs can be earned depending upon the achievement of a performance or market condition and a time-vesting condition as follows: (1) achievement of a targeted basic earnings per share during the performance period beginning in the year of grant and continuing for two subsequent years, (2) achievement of a three-year cumulative relative total shareholder return as ranked against other companies included in the Corporation’s peer group and (3) remaining continuously employed with the Corporation through the end of the year following three years from the date of grant. Earlier vesting of the stock units is permitted under certain conditions, such as upon a change of control of the Corporation.

The grant date fair value for the RSUs equals the closing price of the Corporation’s common stock on the NYSE on the date of grant. The grant date fair value for PSUs subject to a market condition is determined using a Monte Carlo simulation model and the grant date fair value for PSUs that vest subject to a performance condition is equal to the closing price of the Corporation’s stock on the NYSE on the date of grant. The determination of the fair value of these awards takes into consideration the likelihood of achievement of the market or performance condition and is adjusted for subsequent changes in the estimated or actual outcome of the condition. Unrecognized compensation expense associated with the RSUs and PSUs equaled $2,897 at December 31, 2016 and is expected to be recognized over a weighted average period of approximately 2 years.

A summary of outstanding and exercisable incentive options (RSUs and PSUs) as of December 31, 2016, and activity for the year ended December 31, 2016 is as follows:


	Number of RSUs			Weighted Average Fair Value		Number of PSUs			Weighted Average Fair Value
Outstanding at January 1, 2016		90,836		$	15.72		26,263		$	15.89
Granted		94,644			18.70		21,164			26.54
Converted		(29,635	)		15.72		0			N/A
Forfeited/cancelled		0			N/A		(8,079	)		15.89
Outstanding at December 31, 2016		155,845		$	17.53		39,348		$	21.62

In 2014, the Compensation Committee granted 176,000 non-qualified stock options under the Predecessor Plan which have a ten-year life and vest over a three-year period. The exercise price is $20, equal to the closing price of the Corporation’s common stock on the NYSE on the date of grant. The fair value of the option as of the date of grant was $7.40, calculated using the Black-Scholes option-pricing model using the following assumptions: expected life of 6 years; risk-free interest rate of 1.98%, expected annual dividend yield of 3.6%, expected forfeiture rate of 8% and expected volatility of 53.02%. Resulting stock compensation expense approximated $1,199. Unrecognized compensation expense equaled $120 at December 31, 2016 and is expected to be recognized in 2017.

A summary of outstanding and exercisable stock options as of December 31, 2016, and activity for the year ended December 31, 2016 is as follows:


	Number of Shares Under Options			Weighted Average Exercise Price		Remaining Contractual Life In Years		Intrinsic Value
Outstanding at January 1, 2016		1,013,336		$	24.03		5.2	$	0
Granted		0			N/A
Exercised		0			N/A
Forfeited		(7,500	)		19.37
Outstanding at December 31, 2016		1,005,836		$	24.07		4.2	$	0
Exercisable at December 31, 2016		957,113		$	24.28		4.0	$	0
Vested or expected to vest at December 31, 2016		1,005,836		$	24.07		4.2	$	0

Stock-based compensation expense for all awards, including expense for shares to be issued to non-employee directors, approximated $2,332, $1,328 and $1,102 for 2016, 2015 and 2014, respectively. The related income tax benefit recognized in the consolidated statements of operations was $465 and $386 for 2015 and 2014, respectively. There was no income tax benefit for 2016 due to the Corporation having a valuation allowance recorded against its deferred income tax assets for the jurisdiction where the expense is recognized. See Note 15.