Note 7 - Stock-based Compensation

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE

7

– STOCK-BASED COMPENSATION

Stock Option Awards

In accordance with accounting standards, the Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. That cost will be recognized over the period in which the employee is required to provide the services – the requisite service period (usually the vesting period) – in exchange for the award.

All outstanding stock options vested prior to the end of

2013,

and therefore there was

no

stock option compensation expense in the

first

nine

months of

2018

or

2017.

As of

September 30, 2018,

there were

62,500

stock options outstanding and exercisable, at an average exercise price of

$7.88

per share. There were

no

stock options granted in

2018

or

2017.

There were

20,000

stock options exercised in the

first

nine

months of

2018

and

no

forfeitures during those

nine

months. There were

no

exercises or forfeitures of stock options in the

first

nine

months of

2017.

The aggregate intrinsic value of the outstanding and exercisable stock options was

$1.0

million as of

September 30, 2018.

Restricted Stock Awards

During the

nine

months ended

September 30, 2018

and

October 1, 2017,

the Company awarded restricted stock to certain employees. Awards of restricted stock (or a portion thereof) vest with respect to each recipient over a

one

to

three

-year period from the date of grant, provided the individual remains in the employment or service of the Company as of the vesting date. Additionally, certain awards (or a portion thereof) could vest earlier in the event of a change in control of the Company, or upon involuntary termination without cause.

Compensation expense related to restricted stock grants was

$2.9

million and

$2.0

million for the

nine

months ended

September 30, 2018

and

October 1, 2017,

respectively. Accounting standards allow that the Company estimate forfeitures for restricted stock and reduce compensation expense accordingly. The Company has reduced its expense by the assumed forfeiture rate and will evaluate experience against this forfeiture rate going forward.

The following table summarizes restricted stock outstanding as of

September 30, 2018,

as well as activity during the

nine

months then ended:

	Restricted Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2017		463,000	$	17.79
Granted		194,000		25.57
Vested		67,000		17.56
Forfeited or canceled		11,000		18.06
Outstanding at September 30, 2018		579,000	$	25.16

As of

September 30, 2018,

the unrecognized total compensation cost related to unvested restricted stock was

$5.6

million. That cost is expected to be recognized by the end of

2021.

Performance Share Awards

During the

nine

months ended

September 30, 2018

and

October 1, 2017,

the Company issued awards of performance shares to certain employees. These awards vest based on the achievement of certain performance-based goals over a performance period of

one

to

three

years, subject to the employee’s continued employment through the last date of the performance period, and will be settled in shares of our common stock or in cash at the Company’s election. The number of shares that

may

be issued in settlement of the performance shares to the award recipients

may

be greater (up to

200%

) or lesser than the nominal award amount depending on actual performance achieved as compared to the performance targets set forth in the awards.

The following table summarizes the performance shares outstanding as of

September 30, 2018,

as well as the activity during the

nine

months then ended:

	Performance Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2017		669,500	$	17.51
Granted		261,000		25.69
Vested		119,000		17.78
Forfeited or canceled		20,000		18.05
Outstanding at September 30, 2018		791,500	$	20.15

Compensation expense related to performance shares was

$6.3

million and

$2.4

million for the

nine

months ended

September 30, 2018,

and

October 1, 2017,

respectively. Unrecognized compensation expense related to these performance shares was approximately

$5.9

million as of

September 30, 2018.

That cost is expected to be recognized by the end of

2021.

The tax benefits recognized with regard to restricted stock and performance shares were approximately

$1.8

million for the

nine

months ended

September 30, 2018.