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Accounting for Stock Based Compensation | 12 Months Ended
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Dec. 31, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Accounting for Stock Based Compensation | Note 18 — Accounting for Stock Based Compensation On May 16, 2013, the Compensation Committee of the Company’s Board of Directors (the “Board”) approved the Gentherm Incorporated 2013 Equity Incentive Plan (the “2013 Plan”), covering 3,500,000 shares of our Common Stock. On May 19, 2017, the 2013 Plan was amended, increasing the amount of available shares by 2,000,000. The 2013 Plan permits the granting of various awards including stock options (including both nonqualified options and incentive options), stock appreciation rights (“SARs”), restricted stock and restricted stock units, performance shares and certain other awards to employees, outside directors and consultants and advisors of the Company. All shares of our Common Stock that remained available for issuance under the Amended and Restated 2006 Stock Incentive Plan (the “2006 Plan”) and the Gentherm Incorporated 2011 Equity Incentive Plan (the “2011 Plan), were reduced to zero; however, some options under the 2006 Plan are still outstanding. As of December 31, 2019, the Company had an aggregate of 1,308,458 shares of Common Stock available to issue under the 2013 Plan. All plans are administered by the Compensation Committee of the Board. The selection of participants, allotment of shares, determination of price and other conditions are determined by the Compensation Committee at its sole discretion, subject to the terms of the applicable plan, in order to attract and retain personnel instrumental to the success of the Company. Stock options, for example, granted under such plans have lives for a period of up to ten years from the date of grant at an exercise price which is not less than the fair market value of the Common Stock on the date of the grant. During the three-year period ended December 31, 2019, the Company has outstanding stock options, stock appreciation rights (“SARs”), restricted stock awards and restricted stock units to employees, directors and consultants. These awards become available to the recipient upon the satisfaction of a vesting condition, either based on a period of service or based on the performance of a specific achievement. For equity-based awards with a service condition, the requisite service period typically ranges between three to five years for employees and consultants and one year for directors. As of December 31, 2019, there were 190,080 performance-based restricted stock units (“PSUs”) outstanding. These awards vest over a three-year period after the Company’s achievement of either a target return on invested capital ratio (“ROIC”), as defined in the award agreement, for a specified fiscal year, or the Company’s common stock market price returning a target total shareholder return (“TSR”), as defined, during a specific three-year measurement period. Approximately one-half of the PSUs are earned based on the ROIC condition, while the other one-half are earned based on the TSR condition. In each case, awards will be earned at 50% of the target number of shares for achieving a minimum threshold or up to 200% of the target number of shares for exceeding the target, with a linear adjustment between threshold and target or between target and stretch performance goals. All other outstanding, unvested equity-based awards were service based. Equity-based award vesting may be accelerated at the discretion of the Board under conditions specified in the applicable plan. Under FASB ASC Topic 718, the provisions of the PSUs that vest upon the achievement of relative TSR are considered a market condition, and therefore the effect of that market condition is reflected in the grant date fair value for this portion award. A third party was engaged to complete a “Monte Carlo simulation” to account for the market condition. That simulation takes into account the beginning stock price of our common stock, the expected volatilities for the TSR comparator group, the expected volatilities for the Company’s stock price, correlation coefficients, the expected risk-free rate of return and the expected dividend yield of the Company and the comparator group. The single grant-date fair value computed by this valuation method is recognized by the Company in accounting for the awards regardless of the actual future outcome of the relative TSR feature. The grant date fair value of the other PSUs and RSUs are calculated as the closing price of our common stock as quoted on Nasdaq on the grant date multiplied by the number of shares subject to the award. ROIC is considered a performance condition and the grant-date fair value for ROIC PSUs corresponds with management's expectation of the probable outcome of the performance condition as of the grant date. Total unrecognized compensation cost related to non-vested options, restricted stock and SARs outstanding under all of the Company’s equity plans was $13,168 and $15,932 as of December 31, 2019 and 2018, respectively. That cost is expected to be recognized over a weighted average period of two years. Compensation expense for the years ended December 31, 2019, 2018 and 2017 was $8,589, $12,177 and $12,727, respectively, and the related deferred tax benefit was $1,573, 2,434 and $4,339, respectively. No share-based payment arrangements expired during the three-year period ended December 31, 2019. If Gentherm were to realize expired shared-based payment arrangements, they would be reported as a forfeit in the activity roll forward tables below. Stock Options The following table summarizes stock option activity during the three-year period ended December 31, 2019:
Options |  | Shares |  |  | Weighted-Average Exercise Price |  |  | Weighted-Average Remaining Contractual Term |  |  | Aggregate Intrinsic Value |
Outstanding at December 31, 2016 |  |  | 2,103,470 |  |  | $ | 32.72 |  |  |  | 4.86 |  |  | $ | 12,265 |
Granted |  |  | 808,500 |  |  |  | 37.23 |  |  |  |  |  |  |  |  |
Exercised |  |  | (202,328 | ) |  |  | 13.62 |  |  |  |  |  |  |  |  |
Forfeited |  |  | (57,500 | ) |  |  | 42.54 |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2017 |  |  | 2,652,142 |  |  | $ | 35.34 |  |  |  | 4.76 |  |  | $ | 6,964 |
Granted |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Exercised |  |  | (615,358 | ) |  |  | 24.01 |  |  |  |  |  |  |  |  |
Forfeited |  |  | (383,784 | ) |  |  | 39.59 |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2018 |  |  | 1,653,000 |  |  | $ | 38.53 |  |  |  | 4.28 |  |  | $ | 3,610 |
Granted |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Exercised |  |  | (428,250 | ) |  |  | 38.66 |  |  |  |  |  |  |  |  |
Forfeited |  |  | (355,750 | ) |  |  | 39.99 |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2019 |  |  | 869,000 |  |  | $ | 37.87 |  |  |  | 3.51 |  |  | $ | 5,172 |
Exercisable at December 31, 2017 |  |  | 984,374 |  |  | $ | 29.84 |  |  |  | 3.44 |  |  | $ | 6,534 |
Exercisable at December 31, 2018 |  |  | 788,125 |  |  | $ | 38.15 |  |  |  | 3.71 |  |  | $ | 2,200 |
Exercisable at December 31, 2019 |  |  | 665,000 |  |  | $ | 38.10 |  |  |  | 3.23 |  |  | $ | 3,725 |
The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model in order to measure the compensation cost associated with the award. This model incorporates certain assumptions for inputs including a risk-free interest rate, expected dividend yield of the underlying Common Stock, expected option life and expected volatility in the market value of the underlying Common Stock. The following assumptions were used for options issued in the following periods:
|  | 2019 |  | 2018 |  | 2017 |
Expected volatility |  | N/A |  | N/A |  | 33% |
Weighted-average expected volatility |  | N/A |  | N/A |  | 33% |
Expected lives |  | N/A |  | N/A |  | 3 years |
Risk-free interest rate |  | N/A |  | N/A |  | 1.49−1.93% |
Expected dividend yield |  | none |  | none |  | none |
N/A – No new stock options were granted during 2019 and 2018. Expected volatilities are based on the historical volatility of the Company’s Common Stock. The Company uses historical exercise data and several other factors in developing an assumption for the expected lives of stock options, including the average holding period of outstanding options and their remaining terms. The risk-free interest rate is based upon quoted market yields for United States Treasury debt securities. The expected dividend yield is based upon the Company’s history of having never issued a dividend, the limitations to issue a dividend under terms of the Amended Credit Agreement and management’s current expectation regarding future dividends. We do not expect any of the options granted to be forfeited for purposes of computing fair value. The weighted-average grant-date fair value of options granted during the years ended December 31, 2017 was $9.11. There were no stock options granted during the year ended December 31, 2019 and 2018. The total intrinsic value of options exercised during the years ended December 31, 2019, 2018 and 2017 was $1,681, $5,061 and $4,715, respectively. Restricted Stock The following table summarizes restricted stock activity during the three-year period ended December 31, 2019:
Unvested Restricted Shares |  | Shares |  |  | Weighted-Average Grant Date Fair Value |
Outstanding at December 31, 2016 |  |  | 210,481 |  |  | $ | 39.02 |
Granted |  |  | 237,542 |  |  |  | 37.30 |
Exercised |  |  | (165,923 | ) |  |  | 37.99 |
Forfeited |  |  | — |  |  |  | — |
Outstanding at December 31, 2017 |  |  | 282,100 |  |  | $ | 38.06 |
Granted |  |  | 21,681 |  |  |  | 35.00 |
Exercised |  |  | (130,684 | ) |  |  | 38.62 |
Forfeited |  |  | (36,531 | ) |  |  | 37.60 |
Outstanding at December 31, 2018 |  |  | 136,566 |  |  | $ | 37.16 |
Granted |  |  | 19,920 |  |  |  | 40.16 |
Exercised |  |  | (91,566 | ) |  |  | 37.09 |
Forfeited |  |  | (30,000 | ) |  |  | 38.05 |
Outstanding at December 31, 2019 |  |  | 34,920 |  |  | $ | 38.31 |
The compensation cost associated with restricted shares is estimated on the date of grant using quoted market prices (Level 1 input). The total fair value of restricted shares vested in 2019, 2018 and 2017 was $3,697, $4,599 and $6,006, respectively. Restricted Stock Units The following table summarizes restricted stock unit activity during the two-year period ended December 31, 2019:
|  |  |  |  |  | Performance-Based Awards |  |  |  |  |
Unvested Restricted Stock Units |  | Time Vesting Shares |  |  | ROIC Target Shares |  |  | TSR Target Shares |  |  | Total |
Outstanding at December 31, 2017 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Granted |  |  | 86,392 |  |  |  | 64,785 |  |  |  | 64,792 |  |  |  | 215,969 |
Vested |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Forfeited |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Outstanding at December 31, 2018 |  |  | 86,392 |  |  |  | 64,785 |  |  |  | 64,792 |  |  |  | 215,969 |
Granted |  |  | 107,391 |  |  |  | 56,380 |  |  |  | 56,375 |  |  |  | 220,146 |
Vested |  |  | (23,956 | ) |  |  | — |  |  |  | — |  |  |  | (23,956 | )
Forfeited |  |  | (28,086 | ) |  |  | (26,124 | ) |  |  | (26,128 | ) |  |  | (80,338 | )
Outstanding at December 31, 2019 |  |  | 141,741 |  |  |  | 95,041 |  |  |  | 95,039 |  |  |  | 331,821 |
No restricted stock units were granted prior to 2018. Stock Appreciation Rights The following table summarizes SARs activity during the three-year period ended December 31, 2019:
Stock Appreciation Rights |  | Shares |  |  | Weighted-Average Exercise Price |  |  | Weighted-Average Remaining Contractual Term |  |  | Aggregate Intrinsic Value |
Outstanding at December 31, 2016 |  |  | 1,244,600 |  |  | $ | 36.11 |  |  |  | 4.80 |  |  | $ | 3,511 |
Granted |  |  | 235,000 |  |  |  | 38.05 |  |  |  |  |  |  |  |  |
Exercised |  |  | (94,250 | ) |  |  | 22.21 |  |  |  |  |  |  |  |  |
Forfeited |  |  | (193,000 | ) |  |  | 32.53 |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2017 |  |  | 1,192,350 |  |  | $ | 38.17 |  |  |  | 4.36 |  |  | $ | 2,278 |
Granted |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Exercised |  |  | (204,250 | ) |  |  | 26.35 |  |  |  |  |  |  |  |  |
Forfeited |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2018 |  |  | 988,100 |  |  | $ | 40.61 |  |  |  | 3.57 |  |  | $ | 2,064 |
Granted |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Exercised |  |  | (179,500 | ) |  |  | 32.84 |  |  |  |  |  |  |  |  |
Forfeited |  |  | (254,350 | ) |  |  | 42.63 |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2019 |  |  | 554,250 |  |  | $ | 39.41 |  |  |  | 2.84 |  |  | $ | 2,981 |
Exercisable at December 31, 2017 |  |  | 613,808 |  |  | $ | 37.68 |  |  |  | 3.72 |  |  |  | 1,904 |
Exercisable at December 31, 2018 |  |  | 683,600 |  |  | $ | 41.21 |  |  |  | 3.09 |  |  |  | 1,728 |
Exercisable at December 31, 2019 |  |  | 401,438 |  |  | $ | 39.62 |  |  |  | 2.46 |  |  |  | 2,135 |
The total intrinsic value of SARs converted during the years ended December 31, 2019, 2018 and 2017 was $1,588, $3,532 and $1,495, respectively.

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