14. Stock Compensation

Overview

The Company has stock option and stock incentive plans for employees and non-employee Directors that provide for grants of restricted stock awards (“RSAs”), performance stock awards (“PSAs”), restricted stock units (“RSUs”), performance stock units (“PSUs”), and options to purchase shares of Company common stock at exercise prices generally equal to the fair values of such stock at the dates of grant. The Company also maintains a shareholder-approved Employee Stock Purchase Plan (the “ESPP”) for the benefit of its employees. The ESPP allows eligible employees to purchase common stock on a regular basis at the lower of 85% of the market price at the beginning or end of each offering period.

Equity Grants

During the three months ended March 31, 2016 the Compensation Committee of the Company’s Board of Directors (the “Committee”) authorized awards from approved stock incentive plans of RSAs and PSUs to certain Company officers, which, assuming that performance under the PSUs were to be achieved at target levels, together totaled 277,000 shares and had an aggregate grant date market value of $2.8 million. The PSUs granted in 2016 represent the right to receive from 60% to 150% of the target number of shares of common stock. The performance component of PSU awards granted in 2016 was based on attaining specified levels of adjusted EBITDA, adjusted inventory levels, and trade accounts receivable days sales outstanding, each as defined in the PSU grant documents, for the 2016 calendar year. The Company currently believes that achievement of the performance component is probable, and it will reevaluate this likelihood on a quarterly basis.

During the three months ended March 31, 2015 the Committee authorized awards from approved stock incentive plans of RSUs to certain employees and RSAs and PSUs to certain Company officers, which, counting PSUs at target levels, together totaled 276,000 shares of common stock and had an aggregate grant date market value of $3.0 million. The PSUs granted in 2015 represented the right to receive from 60% to 150% of the target number of shares of common stock. The performance component of PSU awards granted in 2015 was based on attaining specified levels of adjusted EBITDA, as defined in the PSU grant documents, for the 2015 calendar year. The PSUs granted in 2015 earned 127% of the target number of shares.

The Committee authorized, from approved stock incentive plans, grants of stock options to purchase a total of 384,000 and 283,000 shares to certain Company officers during the three months ended March 31, 2016 and 2015, respectively. The exercise prices of the options were equal to the closing stock prices on their respective grant dates.

Employees purchased common stock totaling 38,000 and 36,000 shares in the three months ended March 31, 2016 and 2015, respectively, through the ESPP.

Stock Compensation Expense

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


	Three Months Ended				Three Months Ended
	March 31, 2016				March 31, 2015
	Stock Options		ESPP Options		Stock Options		ESPP Options
Expected life of options		4.75 Years		.50 Years		4.75 Years		.50 Years
Expected stock price volatility		0.40		0.30		0.45		0.34
Dividends		0.00%		0.00%		1.09%		1.06%
Risk-free interest rate		1.20%		0.49%		1.51%		0.12%

The following table summarizes total stock compensation expenses prior to the capitalization of amounts into deferred preservation and inventory costs (in thousands):


	Three Months Ended
	March 31,
	2016		2015
RSA, PSA, RSU, and PSU expense	$	1,088	$	865
Stock option and ESPP option expense		382		308
Total stock compensation expense	$	1,470	$	1,173

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 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 $57,000 and $36,000 in the three months ended March 31, 2016 and 2015, respectively, of the stock compensation expense into its inventory costs and deferred preservation costs.

As of March 31, 2016 the Company had total unrecognized compensation costs of $6.0 million related to RSAs, PSAs, RSUs, and PSUs and $2.9 million related to unvested stock options, before considering the effect of expected forfeitures. As of March 31, 2016 this expense is expected to be recognized over a weighted-average period of 2.2 years for stock options, 1.8 years for RSAs, 1.7 years for RSUs, 1.5 years for PSUs, and 1.4 years for PSAs.