5. Stock-Based Compensation

At September 30, 2013, total compensation expense (included in selling, general and administrative expense) related to stock-based compensation plans for the three and nine months ended September 30, 2013 was $114,000 and $446,000 ($85,000 and $326,000 net of tax), respectively. For the three and nine months ended September 30, 2012, total compensation expense was $165,000 and $909,000 ($154,000 and $631,000, net of tax), respectively.

During the first quarter of 2013, the Company implemented a Long-Term Incentive Plan (the “2013 LTIP”) pursuant to the 2008 Incentive Stock Plan (the “2008 Plan”) which awarded restricted stock units (“RSUs”) to eligible executives. Under the terms of the 2013 LTIP, the number of RSUs that may vest, if any, will be based on, among other things, the Company achieving certain sales and return on invested capital (“ROIC”), as defined, targets during the January 2013 to December 2015 performance period. Earned RSUs, if any, cliff vest at the end of fiscal 2015 (100% of earned RSUs vest at December 31, 2015). The final value of these RSUs will be determined by the number of shares earned. The value of these RSUs is charged to compensation expense on a straight-line basis over the three year vesting period with periodic adjustments to account for changes in anticipated award amounts. The weighted-average price for these RSUs was $19.17 per share based on the grant date of March 5, 2013. During the three and nine months ended September 30, 2013, $31,000 and $74,000 was charged to compensation expense, respectively. As of September 30, 2013, total unamortized compensation expense for this grant was $292,000. As of September 30, 2013, the maximum number of achievable RSUs under the 2013 LTIP was 28,000 RSUs.

On May 9, 2013, the Company granted each Director 3,000 restricted shares pursuant to the 2008 Plan. The shares vest upon the first anniversary of the grant date. Based on the terms of the awards the value of these restricted shares is charged to compensation expense on a straight-line basis over the one year vesting period. As a result, the Company recognized $77,000 and $122,000 of stock compensation expense during the three and nine months ended September 30, 2013, respectively. As of September 30, 2013, total unamortized compensation expense for this grant was $187,000. The weighted-average price of these restricted stock grants was $20.60 per share based on the grant date of May 9, 2013. As of September 30, 2013, no shares were granted under this award.

Stock Options

Option activity under the principal option plans as of September 30, 2013 and changes during the nine months ended September 30, 2013 were as follows:


	Outstanding Options			Weighted Average Exercise Price		Weighted Average Remaining Life		Aggregate Intrinsic Value
	(in thousands)					(in years)		(in thousands)
Outstanding as of December 31, 2012		135		$	12.79		4.33	$	670
Granted		—			—
Exercised		(46	)		13.64
Forfeited		—			—
Expired		—			—


Outstanding as of September 30, 2013		89		$	12.35		3.58	$	1,129


Exercisable as of September 30, 2013		83		$	11.99		3.54	$	1,074

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the third quarter of fiscal 2013 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2013. This amount changes based on the fair market value of the Company’s stock. The total intrinsic value of options exercised for the nine months ended September 30, 2013 was $563,000. No options were exercised during the nine months ended September 30, 2012.

As of September 30, 2013, $10,000 of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 0.2 years.

Tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options are classified as financing cash flows. Cash received from option exercises for the nine months ended September 30, 2013 was $631,000. The actual tax benefit realized for the tax deduction from option exercises of share-based payment arrangements totaled $203,000 for the nine months ended September 30, 2013. No options were exercised during the nine months ended September 30, 2012. The Company has applied the “Short-cut” method in calculating the historical windfall tax benefits. All tax shortfalls will be applied against this windfall before being charged to earnings.