Incentive Compensation Plans |
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Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Incentive Compensation Plans | Note 9: Incentive Compensation Plans At December 31, 2017, we had four incentive compensation plans that are described below: Universal Stainless & Alloy Products, Inc. 2017 Equity Incentive Plan We maintain the Universal Stainless & Alloy Products, Inc. 2017 Equity Incentive Plan (the “2017 Plan”), which was approved by our stockholders in May 2017. The 2017 Plan permits the issuance of stock options, restricted stock, restricted stock units, other stock-based awards and performance awards to officers, employees, non-employee directors, and consultants and advisors to the Company. At inception, there were 568,357 shares authorized for issuance under the 2017 Plan. When adopted, the 2017 Plan replaced the Omnibus Incentive Plan (“OIP”). Any awards outstanding under the OIP will remain subject to and be paid under the OIP. No new awards will be granted under the OIP. Any shares subject to outstanding awards under the OIP that cease to be subject to such awards after the adoption of the 2017 Plan will increase the shares authorized under the 2017 Plan. At December 31, 2017, there were 631,624 shares available for grant under the 2017 Plan. Omnibus Incentive Plan We maintain the OIP which was approved by our stockholders in May 2012. The OIP permits the issuance of stock options, restricted stock, restricted stock units and other stock-based awards to non-employee directors, other than those directors owning more than 5% of our outstanding common stock, consultants, officers and other key employees who are expected to contribute to our future growth and success. With the adoption of the 2017 Plan, no shares of common stock were available for grant at December 31, 2017 under OIP. Stock Options The option price for options granted under the both the 2017 Plan and OIP is equal to the fair market value of the common stock at the date of grant. Options granted to non-employee directors vest over a three-year period, and options granted to employees vest over a four-year period. All options under both the 2017 Plan and OIP will expire no later than ten years after the grant date. Forfeited options may be reissued and are included in the amount available for grants. A summary of stock option activity as of and for the year ended December 31, 2017 is presented below:
Proceeds from stock option exercises totaled $0.3 million and $0.3 million for the years ended December 31, 2017 and 2015, respectively. There were no stock option exercises in 2016. Shares issued in connection with stock option exercises are issued from available authorized shares. Based upon the closing stock price of $21.42 at December 31, 2017, the aggregate intrinsic value of outstanding and exercisable stock options was $2.9 million and $1.4 million, respectively. Intrinsic value of stock options is calculated as the amount by which the market price of our common stock exceeds the exercise price of the options. The aggregate intrinsic value of stock options exercised for the years ended December 31, 2017 and 2015 was $0.1 million and $0.1 million, respectively. The total fair value of stock option awards vested during the years ended December 31, 2017, 2016 and 2015 was $1.2 million, $1.2 million and $1.0 million, respectively. Share-based compensation to employees and directors is recognized as compensation expense in the consolidated statements of operations based on the stock options fair value on the measurement date, which is the date of the grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods. The compensation expense recognized and its related tax effects are included in additional paid-in capital. Share-based compensation expense related to stock options totaled $1.2 million, $1.3 million and $1.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. Share-based compensation expense is recognized ratably over the requisite service period for all stock option awards. Unrecognized share-based compensation expense related to non-vested stock option awards totaled $1.7 million at December 31, 2017. At such date, the weighted-average period over which this unrecognized expense was expected to be recognized was 2.6 years. We recognized no tax benefit for the exercise of stock options during the years ended December 31, 2017, 2016 and 2015. The fair value of our stock options granted is estimated on the measurement date, which is the date of grant. We use the Black-Scholes option-pricing model. Our determination of fair value of stock option awards on the date of grant is affected by our stock price as well as assumptions regarding our expected stock price volatility over the term of the awards, and actual and projected stock option exercise behaviors. The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2017, 2016 and 2015 was $9.60, $5.85 and $6.99, respectively. The assumptions used to determine the fair value of stock options granted are detailed in the table below:
The risk-free interest rate was developed using the U.S. Treasury yield curve for periods equal to the expected life of the stock options at the grant date. No dividend yield was assumed because we do not pay cash dividends on common stock and currently have no plans to pay a dividend. Expected volatility is based on the long-term historical volatility (estimated over a period equal to the expected term of the stock options) of our common stock. In estimating the fair value of stock options under the Black-Scholes option-pricing model, separate groups of employees that have similar historical exercise behavior are considered separately. The expected term of options granted represents the period of time that options granted are expected to be outstanding. Restricted Stock and Restricted Stock Units A summary of restricted stock activity for the years ended December 31, 2017 and 2016 is presented below:
As of December 31, 2015, all of the restricted shares issued in 2012 had vested. Share-based compensation expense related to restricted stock totaled $0.4 million, $0.1 million, and $0.4 for the years ended December 31, 2017, 2016 and 2015, respectively. During the year ended December 31, 2017, we granted 14,280 time-based restricted stock units to certain employees and directors. The restricted stock units vest over four years for employees and three years for directors. The fair value of the non-vested time-based restricted common stock awards was calculated using the market value of the stock on the date of issuance. During the year ended December 31, 2016, we granted 95,000 time-based restricted stock units to certain employees, which vest over two or four years. As of December 31, 2017, total unrecognized compensation cost related to non-vested time-based restricted stock units was $0.9 million. That cost is expected to be recognized over a weighted-average period of 2.4 years.
Employee Stock Purchase Plan Under the 1996 Employee Stock Purchase Plan, as amended (the “Plan”), the Company is authorized to issue up to 300,000 shares of common stock to its full-time employees, nearly all of whom are eligible to participate. Under the terms of the Plan, employees can choose as of January 1 and July 1 of each year to have up to 10% of their total earnings withheld to purchase up to 100 shares of our common stock each six-month period. The purchase price of the stock is 85% of the lower of its beginning-of-the-period or end-of-the-period market prices. At December 31, 2017, we have issued 212,089 shares of common stock since the Plan’s inception. Cash Incentive Plans We have a variable incentive compensation plan covering certain key executives and senior management and profit-sharing plans and a key performance plan that cover the remaining employees. The variable incentive compensation plan aligns the compensation of executive officers and senior management with the performance expectations of the Board of Directors in order to motivate and reward them for the achievement of Company performance metrics. The profit-sharing plans provide for the sharing of pre-tax profits in excess of specified amounts at our Bridgeville, Dunkirk and Titusville facilities. The key performance plan provides a cash incentive for achieving certain performance metrics at our North Jackson facility. For the years ended December 31, 2017, 2016 and 2015, we expensed $1.9 million, $1.5 million and $1.0 million, respectively, under these cash incentive plans of which $1.4 million $0.4 million and $0.4 million, respectively, was included as a component of cost of products sold while the remainder was included in selling and administrative expense. At December 31, 2017 and 2016, we had liabilities of $1.2 million as a component of accrued employment costs on our consolidated balance sheets related to these cash incentive plans. |