
15.	Share-Based Compensation

We have five plans under which we have awarded share-based compensation grants: The 1995 Stock Incentive Plan (“1995 Plan”) and 1999 Amended and Restated Stock Incentive Plan (“1999 Plan”), which provided for share-based compensation grants to our executives and key employees, the 1997 Non-Employee Directors Option Plan (“1997 Plan”), which provided for stock option grants to our non-employee Directors, the 2007 Stock Incentive Plan (“2007 Plan”) and the Amended and Restated 2010 Stock Incentive Plan, as Amended (“2010 Plan”), which were adopted as a continuing step toward aggregating our equity compensation programs to reduce the complexity of our equity compensation programs.

The 1995 and 1997 Plans were terminated in 2006 and all remaining shares were transferred to the 1999 Plan as approved by the shareholders in 2006. Awards granted under the 1995 and 1997 Plans prior to 2006 that remain outstanding continue to be governed by the respective plan under which the grant was made. Upon approval of the 1999 Plan in 2006, we ceased making grants of future awards under these plans and subsequent grants of future awards were made from the 1999 Plan and governed by its terms.

The 2007 Plan terminated our rights to grant awards under the 1999 Plan except that the 1999 Plan will remain available for grants of reload options upon exercise of previously granted options with one-time reload features. We have not granted options with reload features since March 1, 2004. Awards previously granted under the 1999 Plan remain outstanding and continue to be governed by the terms of that plan.

The 2010 Plan, originally approved by our shareholders on April 28, 2010 and amended and restated by our shareholders on April 25, 2012, terminated our rights to grant awards under the 2007 Plan; however, any awards granted under the 2007 or 2010 Plans that do not result in the issuance of shares of Common Stock may again be used for an award under the 2010 Plan. The 2010 Plan was amended and restated by our shareholders on April 24, 2013, increasing the number of shares available under the amended 2010 Plan from 1,500,000 shares to 2,600,000 shares.

As of December 31, 2013, there were 499,248 shares reserved for issuance under the 1995 Plan, the 1997 Plan, the 1999 Plan and the 2007 Plan for outstanding compensation awards and 1,643,264 shares were available for issuance under the 2010 Plan for current and future equity awards. The Compensation Committee of the Board of Directors determines the number of shares awarded and the grant date, subject to the terms of our equity award policy.

We recognized total Share-Based Compensation Expense of $6,116, $9,092 and $5,407, respectively, during the years ended 2013, 2012 and 2011. The total excess tax benefit recognized for share-based compensation arrangements during the years ended 2013, 2012 and 2011 was $5,178, $2,047 and $1,266, respectively.

Stock Option Awards

We determined the fair value of our stock option awards using the Black-Scholes valuation model that uses the assumptions noted in the table below. The expected life selected for stock options granted during the year represents the period of time that the stock options are expected to be outstanding based on historical data of stock option holder exercise and termination behavior of similar grants. The risk-free interest rate for periods within the contractual life of the stock option is based on the U.S. Treasury rate over the expected life at the time of grant. Expected volatilities are based upon historical volatility of our stock over a period equal to the expected life of each stock option grant. Dividend yield is estimated over the expected life based on our dividend policy and historical dividends paid. We use historical data to estimate pre-vesting forfeiture rates and revise those estimates in subsequent periods if actual forfeitures differ from those estimates.

The following table illustrates the valuation assumptions used for the 2013, 2012 and 2011 grants:



	2013	2012	2011
Expected volatility	51%	51 - 52%	49 - 50%
Weighted-average expected volatility	51%	52%	49%
Expected dividend yield	1.6%	1.6 - 1.7%	1.7 - 1.8%
Weighted-average expected dividend yield	1.6%	1.7%	1.8%
Expected term, in years	6	0.2 - 6	6
Risk-free interest rate	0.9 - 1.1%	0.1 - 1.1%	1.3 - 2.5%

Employee stock option awards prior to 2005 include a reload feature for options granted to key employees. This feature allows employees to exercise options through a stock-for-stock exercise using mature shares, and employees are granted a new stock option (reload option) equal to the number of shares of Common Stock used to satisfy both the exercise price of the option and the minimum tax withholding requirements. The reload options granted have an exercise price equal to the fair market value of the Common Stock on the grant date. Stock options granted in conjunction with reloads vest immediately and have a term equal to the remaining life of the initial grant. Compensation expense is fully recognized for reload stock options as of the reload date.

Beginning in 2004, new stock option awards granted vest one-third each year over a three year period and have a ten year contractual term. These grants do not contain a reload feature. Compensation expense equal to the grant date fair value is recognized for these awards over the vesting period.

In addition to stock options, we also occasionally grant cash-settled stock appreciation rights (“SARs”) to employees in certain foreign locations. There were no outstanding SARs as of December 31, 2013 and no SARs were granted during 2013, 2012 or 2011.

The following table summarizes the activity during the year ended December 31, 2013 for stock option awards:



	Shares		Weighted-Average Exercise Price
Outstanding at beginning of year	1,191,421		$	24.16
Granted	142,755		46.96
Exercised	(445,266	)	18.67
Forfeited	(11,588	)	42.34
Outstanding at end of year	877,322		$	30.42
Exercisable at end of year	601,747		$	23.89

The weighted-average grant date fair value of stock options granted during the years ended December 31, 2013, 2012 and 2011 was $19.62, $16.60 and $16.67, respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2013, 2012 and 2011 was $15,641, $5,826 and $5,600, respectively. The aggregate intrinsic value of options outstanding and exercisable at December 31, 2013 was $32,805 and $26,427, respectively. The weighted-average remaining contractual life for options outstanding and exercisable as of December 31, 2013, was 7 years and 6 years, respectively. As of December 31, 2013, there was unrecognized compensation cost for nonvested options of $3,102 which is expected to be recognized over a weighted-average period of 1.6 years.

Restricted Share Awards

Restricted share awards for employees generally have a three year vesting period from the effective date of the grant. Restricted share awards to non-employee directors vest upon a change of control or upon termination of service as a director occurring at least six months after grant date of the award so long as termination is for one of the following reasons: death; disability; retirement in accordance with Tennant policy (e.g., age, term limits, etc.); resignation at request of Board (other than for gross misconduct); resignation following at least six months’ advance notice; failure to be renominated (unless due to unwillingness to serve) or reelected by shareholders; or removal by shareholders.

The following table summarizes the activity during the year ended December 31, 2013, for nonvested restricted share awards:



	Shares		Weighted-Average Grant Date Fair Value
Nonvested at beginning of year	142,354		$	33.40
Granted	34,508		48.04
Vested	(24,866	)	26.06
Forfeited	(1,053	)	40.02
Nonvested at end of year	150,943		$	37.89

The total fair value of shares vested during the year ended December 31, 2013, 2012 and 2011 was $643, $861 and $650, respectively. As of December 31, 2013, there was $1,993 of total unrecognized compensation cost related to nonvested shares which is expected to be recognized over a weighted-average period of 2.1 years.

Performance Share Awards

We grant performance share awards to key employees as a part of our long-term management compensation program. These awards are earned based upon achievement of certain financial performance targets over a three year period. We determine the fair value of these awards as of the date of grant and recognize the expense over a three year performance period. Performance shares are granted in restricted stock units. They are payable in stock and vest solely upon achievement of certain financial performance targets during this three year period.

The 2013 performance share award covers the three year performance period from the beginning of fiscal year 2013 to the end of fiscal year 2015. The 2012 performance share award covers the three year performance period from the beginning of fiscal year 2012 to the end of fiscal year 2014. The 2011 performance share award covered the three year performance period from the beginning of fiscal year 2011 to the end of fiscal year 2013.

The 2010 performance share award covered the three year performance period from the beginning of fiscal year 2010 to the end of fiscal year 2012. Performance shares were granted in restricted stock units. They were paid in cash and vested solely upon achievement of certain financial performance targets during this three year period.

In 2009, we granted a combination of stock options, restricted stock awards and restricted stock units payable in cash to key employees as part of our management compensation program and did not grant performance share awards. These stock options and restricted share awards vested over a three year period and did not contain a performance requirement.

Share-Based Liabilities

As of December 31, 2013 and 2012, we had $292 and $3,650 in total share-based liabilities recorded on our Consolidated Balance Sheets, respectively. During the years ended December 31, 2013, 2012 and 2011 we paid out $3,134, $2,212 and $506 related to 2010, 2009 and 2008 share-based liability awards, respectively.