Stock-Based Compensation

3 Months Ended

Mar. 31, 2016

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

Note 5 – Stock-Based Compensation

The Company recognized the following stock-based compensation expense in SG&A in its Condensed Consolidated Statements of Income for the three months ended March 31, 2016 and 2015:

	Three Months Ended
	March 31,
	2016		2015
Stock options	$	201	$	185
Nonvested stock awards and restricted stock units		848		752
Employee stock purchase plan		23		18
Non-elective and elective 401(k) matching contribution in stock		689		699
Director stock ownership plan		37		31
Total stock-based compensation expense	$	1,798	$	1,685

The Company’s estimated taxes payable as of March 31, 2016 and 2015, respectively, were sufficient to fully recognize $0.1 million and $0.3 million of excess tax benefits related to stock option exercises as cash inflows from financing activities in its Condensed Consolidated Statements of Cash Flows, for the three months ended March 31, 2016 and 2015, respectively.

Stock option activity under all plans is as follows:

					Weighted
			Weighted		Average
			Average		Remaining	Aggregate
		Number of	Exercise Price		Contractual	Intrinsic
		Options	(per option)		Term (years)	Value
Options outstanding at December 31, 2015		99,671	$	71.73
	Options granted	67,444		72.12
Options outstanding at March 31, 2016		167,115	$	71.89	5.7	$	2,317
Options expected to vest at March 31, 2016		103,040	$	75.82	6.4	$	1,027
Options exercisable at March 31, 2016		64,075	$	65.57	4.4	$	1,290

There were no options exercised during the three months ended March 31, 2016. The total intrinsic value of options exercised during the three months ended March 31, 2015 was $0.2 million. 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 March 31, 2016 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	0.8		18.82	2,367		18.82
$	20.01	-	$	30.00	—	—		—	—		—
$	30.01	-	$	40.00	6,317	2.9		38.13	6,317		38.13
$	40.01	-	$	50.00	—	—		—	—		—
$	50.01	-	$	60.00	21,055	3.9		58.26	21,055		58.26
$	60.01	-	$	70.00	—	—		—	—		—
$	70.01	-	$	80.00	101,230	6.2		72.57	22,281		73.47
$	80.01	-	$	90.00	36,146	5.9		87.30	12,055		87.30
					167,115	5.7		71.89	64,075		65.57

As of March 31, 2016, unrecognized compensation expense related to options granted during 2014, 2015, and 2016 was $0.2 million, $0.5 million, and $1.0 million, respectively.

During the first quarter of 2016, 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:

	2016
Number of options granted	67,444
Dividend yield	1.49	%
Expected volatility	28.39	%
Risk-free interest rate	1.08	%
Expected term (years)	4.0

Less than $0.1 million of expense was recorded on these options during the three months ended March 31, 2016. 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, 2015		113,910	$	72.91
	Granted	23,661	$	72.22
	Vested	(17,785)	$	58.97
Nonvested awards, March 31, 2016		119,786	$	74.84

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 March 31, 2016, unrecognized compensation expense related to these awards was $4.5 million to be recognized over a weighted average remaining period of 2.0 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, 2015		6,174	$	74.14
	Granted	1,841	$	72.12
	Vested	(1,418)	$	58.26
Nonvested awards, March 31, 2016		6,597	$	76.99

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 March 31, 2016, unrecognized compensation expense related to these awards was $0.2 million to be recognized over a weighted average remaining period of 2.1 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 $0.1 million and the retainer payment date is June 1.