17. 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, 2016 and 2015:



	Authorized	Available for Grant
Plan	Shares	2016	2015
1996 Discounted Employee Stock Purchase Plan, as amended	1,900,000	469,000	560,000
2009 Employee Stock Incentive Plan	7,100,000	2,194,000	3,361,000
Total	9,000,000	2,663,000	3,921,000

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 2016 the Compensation Committee of the Company’s Board of Directors (the “Committee”) 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 490,000 shares and had an aggregate grant date market value of $5.5 million. The PSUs granted in 2016 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 2016 was based on attaining specified levels of adjusted EBITDA, adjusted inventory levels, and adjusted trade accounts receivable days’ sales outstanding, each as defined in the PSU grant documents, for the 2016 calendar year. The PSUs granted in 2016 earned 142% of the target number of shares.

In 2015 the Committee 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 405,000 shares of common stock and had an aggregate grant date market value of $4.3 million. The PSUs granted in 2015 earned approximately 127% of the target number of shares.

In 2014 the Committee authorized awards from approved stock incentive plans of RSAs to non-employee Directors, RSUs to certain employees, and RSAs, PSAs, and PSUs to certain Company officers, which, counting PSUs at target levels, together totaled 655,000 shares of common stock and had an aggregate market value of $6.6 million. The PSUs granted in 2014 earned approximately 50% of the target number of shares.

A summary of stock grant activity for the years ended December 31, 2016, 2015, and 2014 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, 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
Granted	207,000		10.33
Vested	(278,000)		8.10
Forfeited	(110,000)		8.49
Unvested at December 31, 2015	314,000		9.31
Granted	216,000		10.84
Vested	(138,000)		7.92
Forfeited	--		--
Unvested at December 31, 2016	392,000		10.64


		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
Granted	--		--
Vested	--		--
Forfeited	--		--
Unvested at December 31, 2015	250,000		10.18
Granted	--		--
Vested	--		--
Forfeited	--		--
Unvested at December 31, 2016	250,000		10.18


		Weighted
		Average
		Remaining		Aggregate
		Contractual		Intrinsic
RSUs	Shares	Term in years		Value
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
Granted	88,000
Vested	(36,000)
Forfeited	(10,000)
Outstanding at December 31, 2015	103,000		1.17		1,110,000
Granted	146,000
Vested	(44,000)
Forfeited	(27,000)
Outstanding at December 31, 2016	178,000		1.24		3,405,000

Vested and expected to vest	164,000		1.23	$	3,132,000


		Weighted
		Average
		Remaining		Aggregate
		Contractual		Intrinsic
PSUs	Shares	Term in years		Value
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
Granted	125,000
Vested	(139,000)
Forfeited	(108,000)
Outstanding at December 31, 2015	135,000		0.74		1,455,000
Granted	144,000
Vested	(83,000)
Forfeited	(8,000)
Outstanding at December 31, 2016	188,000		0.77		3,603,000

Vested and expected to vest	178,000		0.73	$	3,412,000

During the years ended December 31, 2016, 2015, and 2014, the total fair value of $2.9 million, $4.8 million, and $5.0 million, respectively, in combined RSAs, PSAs, RSUs, and PSUs vested.

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 387,000, 328,000, and 562,000 shares in 2016, 2015, and 2014, 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, 2016, 2015, and 2014 is as follows:



				Weighted
				Average
		Weighted		Remaining		Aggregate
		Average		Contractual		Intrinsic
	Shares	Exercise Price		Term in years		Value
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
Granted	328,000		10.83
Exercised	(248,000)		7.42
Forfeited	(112,000)		9.93
Expired	(93,000)		12.08
Outstanding at December 31, 2015	1,896,000		7.65		3.31		5,992,000
Granted	387,000		10.34
Exercised	(372,000)		5.60
Forfeited	--		--
Expired	--		--
Outstanding at December 31, 2016	1,911,000		8.59		3.55		20,179,000

Vested and expected to vest	1,872,000		8.55		3.51		19,843,000
Exercisable at December 31, 2016	1,193,000		7.50		2.33		13,904,000

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



	2016		2015		2014
Weighted-average fair value of options granted	$	3.68	$	3.82	$	4.14
Intrinsic value of options exercised		2,422,000		761,000		918,000

Employees purchased common stock totaling 90,000, 78,000, and 111,000 shares in 2016, 2015, and 2014, respectively, through the Company’s ESPP.

Stock Compensation Expense

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



	2016		2015		2014
	Stock	ESPP	Stock	ESPP	Stock	ESPP
	Options	Options	Options	Options	Options	Options
Expected life of options	4.75 Years	0.5 Years	4.5 Years	0.5 Years	4.2 Years	0.5 Years
Expected stock price volatility	0.40	0.30	0.44	0.32	0.55	0.36
Dividend yield	--%	--%	1.12%	1.06%	1.16%	1.12%
Risk-free interest rate	1.20%	0.43%	1.41%	0.12%	1.34%	0.08%

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



	2016		2015		2014
RSA, PSA, RSU, and PSU expense	$	4,966	$	3,955	$	2,855
Stock option and ESPP option expense		1,636		1,371		842
Total stock compensation expense	$	6,602	$	5,326	$	3,697

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 $274,000, $237,000 and $261,000 in the years ended December 31, 2016, 2015, and 2014, respectively, of the stock compensation expense into its inventory costs and deferred preservation costs.

As of December 31, 2016 the Company had total unrecognized compensation costs of $5.1 million related to RSAs, PSAs, RSUs, and PSUs and $1.8 million related to unvested stock options, before considering the effect of expected forfeitures. As of December 31, 2016 this expense is expected to be recognized over a weighted-average period of 2.1 years for RSUs, 1.6 years for stock options, 1.3 years for RSAs, 0.8 years for PSUs, and 0.7 years for PSAs.