16. Stock Compensation

Overview

The Company is currently authorized to grant and has available for grant the following number of shares under the Company’s stock plans as of December 31, 2014 and 2013:



	Authorized	Available for Grant
Plan	Shares	2014	2013
1996 Discounted Employee Stock Purchase Plan, as amended	1,900,000	638,000	749,000
2004 Employee Stock Incentive Plan	2,100,000	--	60,000
2009 Employee Stock Incentive Plan	7,100,000	3,929,000	2,221,000
Total	11,100,000	4,567,000	3,030,000

During 2014 the Company amended the 2009 Employee Stock Incentive Plan to increase the authorized shares under the plan by 3.0 million shares. Upon the exercise of stock options or grants of RSAs, PSAs, RSUs, or PSUs, the Company may issue the required shares out of authorized but unissued common stock or out of treasury stock, at management’s discretion.

Stock Awards

In 2014 the Compensation Committee of the Company’s Board of Directors authorized awards from approved stock incentive plans of RSAs to non-employee directors, RSUs to certain employees, and RSAs, PSUs, and PSAs to certain Company officers, which, counting PSUs at target levels, together totaled 655,000 shares and had an aggregate grant date market value of $6.6 million. The PSUs granted in 2014 represented the right to receive from 50% to 150% of the target number of shares of common stock. The performance component of PSU awards granted in 2014 was based on the attainment of specified levels of adjusted earnings, as defined in the PSU grant documents, for the 2014 calendar year. The PSUs granted in 2014 earned 50% of the target number of shares. The performance component of the PSA award granted in 2014 was based upon attaining specified levels of adjusted earnings over any four consecutive calendar quarters during a three-year employment period, as defined in the PSA grant document. The Company currently believes that achievement of the performance component is probable, and it will reevaluate this likelihood on a quarterly basis.

In 2013 the Compensation Committee of the Company’s Board of Directors authorized awards from approved stock incentive plans of RSAs to non-employee Directors, RSUs to certain employees, and RSAs and PSUs to certain Company officers, which, counting PSUs at target levels, together totaled 467,000 shares of common stock and had an aggregate grant date market value of $3.1 million. The PSUs granted in 2013 earned approximately 115% of the target number of shares.

In 2012 the Compensation Committee of the Company’s Board of Directors authorized awards from approved stock incentive plans of RSAs to non-employee Directors, RSUs to certain employees, and RSAs and PSUs to certain Company officers, which, counting PSUs at target levels, together totaled 451,000 shares of common stock and had an aggregate market value of $2.4 million. The PSUs granted in 2012 earned approximately 125% of the target number of shares.

A summary of stock grant activity for the years ended December 31, 2014, 2013, and 2012 for RSAs, PSAs, RSUs, and PSUs, based on the target number of shares, is as follows:


		Weighted
		Average
		Grant Date
RSAs	Shares	Fair Value
Unvested at December 31, 2011	552,000	$	5.91
Granted	229,000		5.39
Vested	(142,000)		7.00
Unvested at December 31, 2012	639,000		5.48
Granted	232,000		6.10
Vested	(215,000)		5.80
Forfeited	(34,000)		5.31
Unvested at December 31, 2013	622,000		5.62
Granted	232,000		9.97
Vested	(324,000)		5.55
Forfeited	(35,000)		7.22
Unvested at December 31, 2014	495,000		7.65


		Weighted
		Average
		Grant Date
PSAs	Shares	Fair Value
Unvested at December 31, 2013	--		--
Granted	250,000	$	10.18
Vested	--		--
Forfeited	--		--
Unvested at December 31, 2014	250,000		10.18


		Weighted
		Average
		Remaining		Aggregate
		Contractual		Intrinsic
RSUs	Shares	Term in years		Value
Outstanding at December 31, 2011	97,000		1.66	$	466,000
Granted	64,000
Vested	(37,000)
Forfeited	(4,000)
Outstanding at December 31, 2012	120,000		1.54		747,000
Granted	73,000
Vested	(54,000)
Forfeited	(10,000)
Outstanding at December 31, 2013	129,000		1.56		1,425,000
Granted	5,000
Vested	(52,000)
Forfeited	(21,000)
Outstanding at December 31, 2014	61,000		1.21		687,000

Vested and expected to vest	57,000		1.21	$	651,000


		Weighted
		Average
		Remaining		Aggregate
		Contractual		Intrinsic
PSUs	Shares	Term in years		Value
Outstanding at December 31, 2012	159,000		0.93	$	989,000
Granted	182,000
Vested	(99,000)
Forfeited	(6,000)
Outstanding at December 31, 2013	236,000		0.81		2,612,000
Granted	185,000
Vested	(143,000)
Forfeited	(21,000)
Outstanding at December 31, 2014	257,000		0.73		2,907,000

Vested and expected to vest	240,000		0.69	$	2,722,000

Stock Options

The Compensation Committee of the Company’s Board of Directors authorized grants of stock options from approved stock incentive plans to certain Company officers and employees totaling 562,000, 162,000, and 159,000 shares in 2014, 2013, and 2012, respectively, with exercise prices equal to the stock prices on the respective grant dates.

A summary of the Company’s stock option activity for the years ended December 31, 2014, 2013, and 2012 is as follows:



				Weighted
				Average
		Weighted		Remaining		Aggregate
		Average		Contractual		Intrinsic
	Shares	Exercise Price		Term in years		Value
Outstanding at December 31, 2011	2,200,000	$	6.83		4.00	$	--
Granted	159,000		5.67
Exercised	(48,000)		5.64
Forfeited	(2,000)		7.01
Expired	(249,000)		7.03
Outstanding at December 31, 2012	2,060,000		6.74		3.66		1,225,000.0
Granted	162,000		6.12
Exercised	(365,000)		7.48
Forfeited	(49,000)		5.56
Expired	(14,000)		6.69
Outstanding at December 31, 2013	1,794,000		6.57		3.31		8,274,000
Granted	562,000		10.12
Exercised	(297,000)		7.26
Forfeited	(23,000)		7.97
Expired	(15,000)		7.34
Outstanding at December 31, 2014	2,021,000		7.43		3.54		8,021,000

Vested and expected to vest	1,961,000	$	7.36		3.46	$	7,938,000
Exercisable at December 31, 2014	1,333,000	$	6.48		2.21	$	6,604,000

Other information concerning stock options for the years ended December 31 is as follows:



	2014		2013		2012
Weighted-average fair value of options granted	$	4.14	$	2.54	$	2.67
Intrinsic value of options exercised		918,000		673,000		10,000

Employees purchased common stock totaling 111,000, 97,000, and 72,000 shares in 2014, 2013, and 2012, respectively, through the Company’s ESPP.

Stock Compensation Expense

The following weighted‑average assumptions were used to determine the fair value of options:



	2014		2013		2012
	Stock	ESPP	Stock	ESPP	Stock	ESPP
	Options	Options	Options	Options	Options	Options
Expected life of options	4.2 Years	0.5 Years	4.3 Years	0.5 Years	4.3 Years	0.5 Years
Expected stock price volatility	0.55	0.36	0.60	0.39	0.60	0.48
Dividend yield	1.16%	1.12%	1.91%	1.59%	N/A	N/A
Risk-free interest rate	1.34%	0.08%	0.70%	0.13%	0.71%	0.12%

The following table summarizes stock compensation expense (in thousands):



	2014		2013		2012
RSA, PSA, RSU, and PSU expense	$	2,855	$	2,616	$	2,204
Stock option and ESPP option expense		842		852		1,172
Total stock compensation expense	$	3,697	$	3,468	$	3,376

Included in the total stock compensation expense, as applicable in each period, were expenses related to RSAs, PSAs, RSUs, PSUs, and stock options issued in each respective year, as well as those issued in prior periods that continue to vest during the period, and compensation related to the Company’s ESPP. These amounts were recorded as stock compensation expense and were subject to the Company’s normal allocation of expenses to inventory costs and deferred preservation costs. The Company capitalized $261,000, $228,000 and $214,000 in the years ended December 31, 2014, 2013, and 2012, respectively, of the stock compensation expense into its inventory costs and deferred preservation costs.

As of December 31, 2014 the Company had total unrecognized compensation costs of $5.3 million related to RSAs, PSAs, RSUs, and PSUs and $2.1 million related to unvested stock options, before considering the effect of expected forfeitures. As of December 31, 2014 this expense is expected to be recognized over a weighted-average period of 2.7 years for PSAs, 1.6 years for RSUs, 1.1 years for RSAs, 0.7 years for PSUs, and 2.2 years for stock options.