Stock-Based Awards

The

2006

Incentive Plan initially adopted in

2006

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. As of

December 31, 2018,

the total number of shares issuable under the

2006

Incentive Plan was

850

thousand shares, of which

thousand shares remained available for future grant. In

January 2019,

the

2006

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

850

thousand to

1.2

million, subject to shareholder approval

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 3, 2018,

the Company granted SUAs covering

6.4

thousand shares of common stock and options to acquire up to

117

thousand shares of common stock and on

July 24, 2018

the Company granted options to acquire up to

2.5

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 (shares in thousands):

Grant Date	Type		Shares		Fair Value Per Share (1)
July 24, 2018		Options		2	$	5.49
May 3, 2018		SUA		6	$	21.04
May 3, 2018		Options		117	$	5.69
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

(

)

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

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. The options granted on

May 3, 2018

have a fair value of

$5.69

per share based on the

$21.04

grant date and exercise prices and assuming

6.25

and

5.75

year estimated terms,

38%

volatility,

3.4%

interest rate and a

4.2%

dividend yield rate. The options granted on

July 24, 2018

have a fair value of

$5.49

per share based on the

$19.83

grant date and exercise prices and assuming a

6.25

year estimated term,

39%

volatility,

3.4%

interest rate and a

4.1%

dividend yield rate.

A summary of the Company’s stock option activity is as follows (in thousands, except price per share):

			Weighted Ave.		Aggregate
	Number of		Exercise Price		Intrinsic
	Shares		per Share		Value (2)
Outstanding, December 31, 2017		279	$	15.40	$	1,436
Granted		119	$	21.01
Exercised		-	$	-
Forfeited		-	$	-
Outstanding, December 31, 2018		398	$	17.09	$	493

Exercisable, December 31, 2018		143			$	313

(

)

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, 2018

and

2017

was

$15.87

and

$20.56,

respectively.

There were

options exercised under the

2006

Incentive Plan during the years ended

December 31, 2018

2016.

There were

2.5

thousand options exercised under the

2006

Incentive Plan during the year ended

December 31, 2017.

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

134

thousand for the year ended

December 31, 2016.

There were

143

thousand options exercisable as of

December 31, 2018

and

thousand options exercisable as of

December 31, 2017.

A summary of the Company’s stock unit award activity is as follows (in thousands, except price per share):

				Weighted		Weighted
	Number of			Average Price		Average Fair
	Shares			per Share (3)		Value (3)
Outstanding & Unvested, December 31, 2017		33		$	16.08	$	516
Granted		6		$	21.04	$	135
Converted to common stock		(15	)	$	15.67	$	(238	)
Cancelled		(5	)	$	15.67	$	(70	)
Forfeited		-		$	-	$	-
Outstanding & Unvested, December 31, 2018		19		$	18.20	$	343

(

)

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

$308

thousand,

$554

thousand and

$691

thousand for the years ended

December 31, 2018,

2017

and

2016,

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

$493

thousand,

$776

thousand and

$727

thousand for the years ended

December 31, 2018,

2017

and

2016,

respectively.

As of

December 31, 2018,

a total of

494

thousand shares of common stock were reserved for issuance under

2006

Incentive Plan. As of

December 31, 2018,

the unamortized fair value of outstanding options and awards was

$1.2

million to be amortized over a weighted average period of approximately

2.8

years.