Stock-Based Awards

The

2006

Incentive Plan initially adopted in

2006,

and amended and restated in

2011,

provides for grants of options with terms of up to

ten

years, grants of restricted stock or stock unit awards (SUAs), issuances of stock bonuses or grants other stock-based awards plus cash based awards, to officers, directors, employees, and consultants. Such shares are issuable out of the Company’s authorized but unissued common stock. In

2016,

the

2006

Incentive Plan was amended to increase the total number of shares issuable there under from

500

thousand to

850

thousand shares. As of

December 31, 2017,

199

thousand shares remained available for future grant under the

2006

Incentive Plan.

The fair value of the SUAs is determined by the closing price on the date of grant. The fair value of options is determined using a Black-Scholes model. The SUAs vest over a period of

two

four

years and are convertible into an equivalent number of shares of the Company’s common stock provided that the employee receiving the award remains continuously employed throughout the vesting period. The Company records compensation expense related to the SUAs and options on a straight-line basis over the vesting term. Employees are issued shares upon vesting, net of tax withholdings. As a result of our adoption of ASU

2016

2016,

we recognize the impact of forfeitures when they occur with

adjustment for estimated forfeitures and recognize excess tax benefits as a reduction of income tax expense regardless of whether the benefit reduces income taxes payable.

May 4, 2017,

the Company granted SUAs covering

12.5

thousand shares of common stock and options to acquire up to

121

thousand shares of common stock. The SUAs vest over a period of

two

years for non-employee board members and

four

years for employees and are convertible into an equivalent number of shares of the Company’s common stock provided that the director or employee receiving the award remains employed throughout the vesting period. The stock options become exercisable over

two

years for non-employee board members and

four

years for employees (the

September 15, 2015

options become exercisable over

five

years) and have a term of

years. The Company records compensation expense related to the SUAs and options on a straight-line basis over the vesting term. Employees are issued shares upon vesting, in the case of SUA’s or upon exercise of options, net of tax withholdings, unless the employee chooses to receive all shares and pay for the associated employment taxes.

other types of equity-based awards have been granted or issued under the

2006

Incentive Plan.

The following table represents all shares granted by the Company under the

2006

Incentive Plan for the last

three

years:

Grant Date	Type	Shares		Fair Value Per Share (1)
May 4, 2017	Options	121	$	4.46
May 4, 2017	SUA	13	$	18.87
May 12, 2016	Options	121	$	2.34
May 12, 2016	SUA	17	$	13.82
September 15, 2015	Options	47	$	1.91
September 15, 2015	SUA	1	$	10.21
April 29, 2015	SUA	44	$	16.10

(

)

The fair value for the SUA’s is the closing price of the Company’s stock on that date. The fair value for options represents the fair value calculated using the Black-Scholes model. Options have contractual lives of

years and the fair value calculated using a Black-Scholes model. The options granted on

September 15, 2015

have a fair value of

$1.91

per share based on the

$10.21

grant date and exercise prices and assuming a

6.5

year estimated term,

36%

volatility,

2.2%

interest rate and a

6.0%

dividend yield rate. The options granted on

May 12, 2016

have a fair value of

$2.34

per share based on the

$13.82

grant date and exercise prices and assuming a

6.25

year estimated term,

33%

volatility,

1.75%

interest rate and a

5.6%

dividend yield rate. The options granted on

May 4, 2017

have a fair value of

$4.46

per share based on the

$18.87

grant date and exercise prices and assuming a

6.25

year estimated term,

37%

volatility,

2.75%

interest rate and a

4.7%

dividend yield rate.

A summary of the Company’s stock option activity is as follows:

	Number of Shares			Weighted Ave. Exercise Price per Share		Aggregate Intrinsic Value (2)
Outstanding, December 31, 2016		160		$	12.76	$	1,907
Granted		121		$	18.87
Exercised		(2	)	$	13.82
Forfeited		-		$	-
Outstanding, December 31, 2017		279		$	15.40	$	1,436

Exercisable, December 31, 2017		56				$	446

(

)

The aggregate intrinsic value on this table was calculated based on the amount, if any, by which the closing market price of the Company’s stock on

December 31

of the applicable year exceeded the exercise price of any of the underlying options, multiplied by the number of shares subject to each such option. The closing stock price as of

December 31, 2017

and

2016

was

$20.56

and

$24.68,

respectively.

There were

2.5

thousand options exercised under the

2006

Incentive Plan during the year ended

December 31, 2017.

There were

options exercised under the

2006

Incentive Plan during the years ended

December 31, 2016

2015.

The Company had options exercised under our expired stock option plan of

134

thousand and

thousand for the years ended

December 31, 2016

and

2015,

respectively. There were

thousand options exercisable as of

December 31, 2017

and

thousand options exercisable as of

December 31, 2016.

A summary of the Company’s stock unit award activity is as follows:

				Weighted		Weighted
	Number of			Average Price		Average Fair
	Shares			per Share (3)		Value (3)
Outstanding & Unvested, December 31, 2016		74		$	14.62	$	1,077
Granted		13		$	18.87	$	236
Converted to common stock		(10	)	$	13.84	$	(138	)
Cancelled		(15	)	$	16.15	$	(241	)
Forfeited		(29	)	$	14.25	$	(418	)
Outstanding & Unvested, December 31, 2017		33		$	16.08	$	516

(

)

Weighted average price per share is the weighted grant price based on the closing market price of each of the stock grants related to each transaction type. The Weighted average fair value is the weighted average share price times the number of shares.

The fair value of stock unit award vesting was

$677

thousand,

$691

thousand and

$641

thousand for the years ended

December 31, 2017,

2016

and

2015,

respectively. The intrinsic value of stock unit awards converted to common stock was based on the stock price on the vesting date and amounted to

$776

thousand,

$727

thousand and

$824

thousand for the years ended

December 31, 2017,

2016

and

2015,

respectively.

As of

December 31, 2017,

a total of

508

thousand shares of common stock were reserved for issuance under

2006

Incentive Plan. As of

December 31, 2017,

the unamortized fair value of outstanding options and awards was

$938

thousand to be amortized over a weighted average period of approximately

2.8

years.