Stock-Based Compensation

9 Months Ended

Sep. 30, 2015

Disclosure Of Compensation Related Costs Share Based Payments [Text Block]

Note 4 – Stock-Based Compensation

The Company recognized the following share-based compensation expense in selling, general and administrative expenses in its Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2015 and 2014:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Stock options	$	164	$	171	$	548	$	492
Nonvested stock awards and restricted stock units		668		593		2,179		1,758
Employee stock purchase plan		19		18		56		54
Non-elective and elective 401(k) matching contribution in stock		449		413		1,624		1,561
Director stock ownership plan		31		32		93		94
Total share-based compensation expense	$	1,331	$	1,227	$	4,500	$	3,959

As of September 30, 2015 and 2014, the Company recorded $400 and $430, respectively, of excess tax benefits in capital in excess of par value on its Condensed Consolidated Balance Sheets related to stock option exercises. The Company’s estimated taxes payable was sufficient to fully recognize these benefits as cash inflows from financing activities in its Condensed Consolidated Statement of Cash Flows, which represented the Company’s estimate of cash savings through the nine months ended September 30, 2015 and 2014, respectively.

Stock option activity under all plans is as follows:

					Weighted Average
			Weighted Average		Remaining
		Number of	Exercise Price		Contractual
		Options	(per option)		Term (years)
Options outstanding at December 31, 2014		87,075	$	59.09
	Options granted	38,698		87.30
	Options exercised	(21,157)		46.61
	Options forfeited	(4,945)		78.42
Options outstanding at September 30, 2015		99,671	$	71.73		5.3
Options exercisable at September 30, 2015		31,457	$	56.46		4.3

As of September 30, 2015, the total intrinsic value of options outstanding was approximately $890, and the total intrinsic value of exercisable options was $643. Intrinsic value is calculated as the difference between the current market price of the underlying security and the strike price of a related option.

A summary of the Company’s outstanding stock options at September 30, 2015 is as follows:

						Weighted
						Average	Weighted			Weighted
					Number	Remaining	Average		Number	Average
Range of					of Options	Contractual	Exercise Price		of Options	Exercise Price
Exercise Prices					Outstanding	Term (years)	(per option)		Exercisable	(per option)
$	—	-	$	10.00	—	—	$	—	—	$	—
$	10.01	-	$	20.00	2,367	1.3		18.82	2,367		18.82
$	20.01	-	$	30.00	—	—		—	—		—
$	30.01	-	$	40.00	6,317	3.4		38.13	6,317		38.13
$	40.01	-	$	50.00	—	—		—	—		—
$	50.01	-	$	60.00	21,055	4.4		58.26	11,997		58.26
$	60.01	-	$	70.00	—	—		—	—		—
$	70.01	-	$	80.00	33,786	5.4		73.47	10,776		73.47
$	80.01	-	$	90.00	36,146	6.4		87.30	—		—
					99,671	5.3		71.73	31,457		56.46

As of September 30, 2015, unrecognized compensation expense related to options granted during 2013 was $85, for options granted during 2014 was $360 and for options granted in 2015 was $664.

During the first quarter of 2015, the Company granted stock options under its LTIP plan that are subject only to time vesting over a three-year period. For the purposes of determining the fair value of stock option awards, the Company uses the Black-Scholes option pricing model and the assumptions set forth in the table below:

	2015
Number of options granted	38,698
Dividend Yield	1.55	%
Expected Volatility	36.32	%
Risk-free interest rate	1.22	%
Expected term (years)	4.0

Approximately $62 and $163 of expense was recorded on these options during the three and nine months ended September 30, 2015, respectively. The fair value of these awards is amortized on a straight-line basis over the vesting period of the awards.

Activity of nonvested shares granted under the Company’s LTIP plan is shown below:

			Weighted
			Average Grant
		Number of	Date Fair Value
		Shares	(per share)
Nonvested awards, December 31, 2014		124,450	$	61.80
	Granted	27,266	$	86.39
	Vested	(33,681)	$	46.76
	Forfeited	(7,644)	$	61.12
Nonvested awards, September 30, 2015		110,391	$	72.51

The fair value of the nonvested stock is based on the trading price of the Company’s common stock on the date of grant. The Company adjusts the grant date fair value for expected forfeitures based on historical experience for similar awards. As of September 30, 2015, unrecognized compensation expense related to these awards was $4,207 to be recognized over a weighted average remaining period of 1.88 years.

Activity of nonvested restricted stock units granted under the Company’s LTIP plan is shown below:

			Weighted
			Average Grant
		Number of	Date Fair Value
		Units	(per unit)
Nonvested awards, December 31, 2014		7,158	$	61.03
	Granted	1,450	$	87.30
	Vested	(2,434)	$	43.45
Nonvested awards, September 30, 2015		6,174	$	74.14

The fair value of the nonvested restricted stock units is based on the trading price of the Company’s common stock on the date of grant. The Company adjusts the grant date fair value for expected forfeitures based on historical experience for similar awards. As of September 30, 2015, unrecognized compensation expense related to these awards was $200 to be recognized over a weighted average remaining period of 1.77 years.

Employee Stock Purchase Plan

In 2000, the Board adopted an Employee Stock Purchase Plan (“ESPP”) whereby employees may purchase Company stock through a payroll deduction plan. Purchases are made from the plan and credited to each participant’s account at the end of each month, the “Investment Date.” The purchase price of the stock is 85% of the fair market value on the Investment Date. The plan is compensatory and the 15% discount is expensed on the Investment Date. All employees, including officers, are eligible to participate in this plan. A participant may withdraw all uninvested payment balances credited to a participant’s account at any time. An employee whose stock ownership of the Company exceeds five percent of the outstanding common stock is not eligible to participate in this plan.

2013 Director Stock Ownership Plan

In 2013, the Company adopted the 2013 Director Stock Ownership Plan (the “Plan”), to encourage the Directors to increase their investment in the Company, which was approved at the Company’s May 2013 shareholders’ meeting. The Plan authorizes the issuance of up to 75,000 shares of Quaker common stock in accordance with the terms of the Plan in payment of all or a portion of the annual cash retainer payable to each of the Company’s non-employee directors in 2013 and subsequent years during the term of the Plan. Under the Plan, each director who, on May 1 of the applicable calendar year, owns less than 400% of the annual cash retainer for the applicable calendar year, divided by the average of the closing price of a share of Quaker Common Stock as reported by the composite tape of the New York Stock Exchange for the previous calendar year (the “Threshold Amount”), is required to receive 75% of the annual cash retainer in Quaker common stock and 25% of the retainer in cash, unless the director elects to receive a greater percentage of Quaker common stock (up to 100%) of the annual cash retainer for the applicable year. Each director who owns more than the Threshold Amount may elect to receive common stock in payment of a percentage (up to 100%) of the annual cash retainer. The annual retainer is $50 and the retainer payment date is June 1.