NOTE 14 – Equity and Stock-Based Compensation

Former Executive Stock Based Compensation

As part of his compensation package, Mr. James J. Cotter, Sr., our now deceased former Chairman of the Board and Chief Executive Officer, was granted restricted Class A Non-voting Common Stock (“Class A Stock”) for 2014 and 2013. Mr. Cotter, Sr.’s stock compensation was granted fully vested with a five-year restriction on sale and the applicable compensation expense was recorded in the year of grant. The 2014 stock grants were issued in the first quarter of 2015. The table below summarizes the fair value on grant date recognized as compensation, the number of shares granted, and the fair value of stock per share for the years ended December 31, 2014 and 2013:


	Fair Value		Number of Shares		Fair Value Per Share
2014	$	1,200,000		160,643	$	7.47
2013		750,000		125,209		5.99

Employee and Director Stock Option Plan

The Company may grant stock options and other share-based payment awards of our Class A Stock to eligible employees, Directors, and consultants under the 2010 Stock Incentive Plan. The aggregate total number of shares of the Class A Nonvoting Common Stock authorized for issuance under our 2010 Stock Incentive Plan is 1,250,000. As of December 31, 2015, we had 551,800 shares remaining for future issuances.

Stock options are generally granted at exercise prices equal to the grant-date market prices and expire no later than ten years from the grant date. In recent periods, we have typically limited the exercise period of granted options to five years. At the discretion of our Compensation and Stock Options Committee, the vesting period of stock options ranges from zero to four years. At the time that options are exercised, at the discretion of management, we will either issue treasury shares or make a new issuance of shares to the option holder.

We estimate the grant-date fair value of our options using the Black-Scholes option-valuation model, which takes into account assumptions such as the dividend yield, the risk-free interest rate, the expected stock price volatility, and the expected life of the options. We expense the estimated grant-date fair values of options over the vesting period on a straight-line basis. Based on our historical experience and the relative market price to strike price of the options, we have not hereto estimated any forfeitures of vested or unvested options.

The weighted average assumptions used in the option-valuation model were as follows:


	2015		2014		2013
Stock option exercise price	$	13.30	$	8.56	$	6.19
Risk-free interest rate		2.23%		2.51%		2.25%
Expected dividend yield		--		--		--
Expected option life in years		4		5		5
Expected volatility		31.86%		31.33%		31.80%
Weighted average fair value	$	3.82	$	2.76	$	1.98

We recorded compensation expense of $282,308, $146,000, and $199,000 for 2015, 2014, and 2013, respectively. At December 31, 2015, the total unrecognized estimated compensation cost related to non-vested stock options was $576,248 which is expected to be recognized over a weighted average vesting period of 1.83 years. Cash and other consideration received from option exercises during 2015, 2014, and 2013 totaled $3.0 million, $978,000, and $248,000, respectively.

The following is a summary of the status of RDI’s outstanding stock options:


	Outstanding Stock Options
	Number of Options		Weighted Average Exercise Price				Weighted Average Remaining Years of Contractual Life	Aggregate Intrinsic Value
	Class A	Class B	Class A		Class B		Class A&B	Class A&B
Outstanding - January 1, 2013	672,350	185,100	$	6.24	$	9.90
Granted	175,000	--		6.19		--
Exercised	(137,500)	--		4.00		--		$	133,000
Outstanding - December 31, 2013	709,850	185,100	$	6.66	$	9.90	4.70	$	938,503
Granted	80,000	--		8.56		--
Exercised	(157,600)	--		6.21		--		$	374,022
Expired	(64,000)	--		6.83		--
Outstanding - December 31, 2014	568,250	185,100	$	6.88	$	9.90	2.40	$	4,197,000
Granted	112,000	--		13.30		--
Exercised	(185,685)	(185,100)		6.09		9.90		$	327,170
Expired	(8,000)	--		6.23		--
Outstanding - December 31, 2015	486,565	--	$	8.68	$	--	2.89	$	2,188,011

The following is a summary of the status of RDI’s vested stock options:


	Vested Stock Options
	Number of Options		Weighted Average Exercise Price				Weighted Average Remaining Years of Contractual Life	Aggregate Intrinsic Value
	Class A	Class B	Class A			Class B	Class A&B	Class A&B
December 31, 2015	256,065	--	$	7.64	$	--	2.14	$	1,401,321
December 31, 2014	348,000	185,100		6.82		9.90	3.63		2,476,230
December 31, 2013	490,350	185,100		6.85		9.90	3.11		646,032

Common Stock Repurchase

On May 16, 2014, the Company's Board of Directors authorized management, at its discretion, to spend up to an aggregate of $10.0 million to acquire shares of the Company’s common stock. This approved stock repurchase plan supersedes and effectively cancels the program that was approved by the Board of Directors on May 14, 2004, which allowed management to purchase up to 350,000 shares of Reading’s common stock.

The repurchase program allows Reading to repurchase its shares in accordance with the requirements of the SEC on the open market, in block trades and in privately negotiated transactions, depending on market conditions and other factors. All purchases are subject to the availability of shares at prices that are acceptable to Reading, and accordingly, no assurances can be given as to the timing or number of shares that may ultimately be acquired pursuant to this authorization.

The Company repurchased its common stock as follows:


	Shares Acquired	Share Price		Total Paid (in thousands)
2015	240,102	$	12.95	$	3,109
2014	432,252		9.42		4,070
Total	672,354	$	10.68	$	7,178

Accumulated Other Comprehensive Income

The following table summarizes the changes in each component of accumulated other comprehensive income attributable to RDI:


(Dollars in thousands)	Foreign Currency Items		Unrealized Gain (Losses) on Available-for-Sale Investments		Accrued Pension Service Costs		Total
Balance at January 1, 2015	$	31,084	$	10	$	(3,055)	$	28,039
Net current-period other comprehensive income		(16,442)		2		207		(16,233)
Balance at December 31, 2015	$	14,642	$	12	$	(2,848)	$	11,806