Share-Based Compensation

12 Months Ended

Dec. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 8 – Share-Based Compensation

The Company recognized the following share-based compensation expense in its Consolidated Statements of Income for the years ended December 31, 2019, 2018 and 2017:

		2019		2018		2017
Stock options	$	1,448	$	1,053	$	958
Nonvested stock awards and restricted stock units		3,206		2,459		2,935
Employee stock purchase plan		84		89		88
Non-elective and elective 401(k) matching contribution in stock		—		—		72
Director stock ownership plan		123		123		137
Total share-based compensation expense	$	4,861	$	3,724	$	4,190

Share-based compensation expense is recorded in SG&A, except for $0.9 million and $0.1 million during the years ended December 2019 and 2018, respectively, recorded within Combination and other acquisition-related expenses.

Stock Options

Stock option activity under all plans is as follows:

			Weighted		Weighted
			Average		Average
			Exercise		Remaining	Aggregate
		Number of	Price		Contractual	Intrinsic
		Options	(per option)		Term (years)	Value
Options outstanding as of January 1, 2019		122,072	$	116.39
	Options granted	51,610		154.92
	Options exercised	(28,535)		80.22
	Options forfeited	(735)		147.01
Options outstanding as of December 31, 2019		144,412	$	137.15	4.8	$	4,066
Options expected to vest after December 31, 2019		84,839	$	151.12	5.6	$	1,204
Options exercisable as of December 31, 2019		59,573	$	117.27	3.7	$	2,862

The total intrinsic value of options exercised during the years ended December 31, 2019, 2018 and 2017 was approximately $2.5 million, $2.0 million and $3.4 million, respectively. 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 as of December 31, 2019 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)
$	50.01	-	$	60.00	874	0.2	$	58.26	874	$	58.26
$	60.01	-	$	70.00	—	—		—	—		—
$	70.01	-	$	80.00	17,268	2.7		72.29	17,268		72.29
$	80.01	-	$	90.00	2,797	2.1		87.30	2,797		87.30
$	90.01	-	$	130.00	—	—		—	—		—
$	130.01	-	$	140.00	37,167	4.0		134.60	24,898		134.60
$	140.01	-	$	150.00	—	—		—	—		—
$	150.01	-	$	160.00	86,306	5.7		153.65	13,736		152.26
					144,412	4.8		137.15	59,573		117.27

As of December 31, 2019, unrecognized compensation expense related to options granted in 2019, 2018 and 2017 was $1.0 million, $0.4 million and less than $0.1 million, respectively, to be recognized over a weighted average period of 1.3 years. The Company granted stock options under its LTIP plan that are subject only to time vesting generally over a three-year period during 2019, 2018, 2017 and 2016. 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:

	2019		2018		2017		2016
Number of stock options granted	51,610		35,842		42,477		67,444
Dividend yield	1.12	%	1.37	%	1.49	%	1.49	%
Expected volatility	26.29	%	24.73	%	25.52	%	28.39	%
Risk-free interest rate	1.52	%	2.54	%	1.67	%	1.08	%
Expected term (years)	4.0		4.0		4.0		4.0

These awards are being amortized on a straight-line basis over the respective vesting period of each award. The compensation expense recorded on each award during the years ended December 31, 2019, 2018 and 2017, respectively, is as follows:

		2019		2018		2017
2019 Stock option awards	$	665	$	—	$	—
2018 Stock option awards		364		310		—
2017 Stock option awards		369		367		308
2016 Stock option awards		50		332		332

Restricted Stock Awards

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

	Number of	Weighted Average Grant
	Shares	Date Fair Value (per share)
Nonvested awards, December 31, 2018	52,785	$	112.09
Granted	40,382		158.16
Vested	(27,572)		84.19
Forfeited	(1,095)		123.27
Nonvested awards, December 31, 2019	64,500	$	152.67

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 December 31, 2019, unrecognized compensation expense related to these awards was $5.5 million, to be recognized over a weighted average remaining period of 1.9 years.

Restricted Stock Units

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

	Number of	Weighted Average Grant
	Units	Date Fair Value (per unit)
Nonvested awards, December 31, 2018	4,650	$	117.03
Granted	6,060		154.92
Vested	(1,972)		78.36
Forfeited	(83)		145.96
Nonvested awards, December 31, 2019	8,655	$	152.09

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 December 31, 2019, unrecognized compensation expense related to these awards was $0.8 million, to be recognized over a weighted average remaining period of 1.8 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, which was in place and active as of December 31, 2019. Purchases were made from the plan and credited to each participant’s account on the last day of each calendar month in which the organized securities trading markets in the United States were open for business (the “Investment Date”). The purchase price of the stock was 85% of the fair market value on the Investment Date. The plan was compensatory, and the 15% discount was expensed on the Investment Date. All employees, including officers, were eligible to participate in this plan. A participant could 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 was not eligible to participate in this plan. Effective January 1, 2020, the Company discontinued the ESPP.

2013 Director Stock Ownership PlanIn 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.