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Share-Based Compensation | 9 Months Ended
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Sep. 30, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Share-Based Compensation | NOTE I – SHARE-BASED COMPENSATION The 1999 Stock Option Plan Activity in the Company’s 1999 Stock Option Plan for the nine months ended September 30, 2019 was as follows:
|  | Number of Shares |  |  | Weighted Average Exercise Price per Share |  |  | Weighted Average Remaining Contractual Term (Years) |  |  | Aggregate Intrinsic Value (000's) |
Outstanding at January 1, 2019 |  |  | 750 |  |  | $ | 39.10 |  |  |  |  |  |  |  |  |
Granted |  |  | 0 |  |  | $ | 0.00 |  |  |  |  |  |  |  |  |
Exercised |  |  | 750 |  |  | $ | 39.10 |  |  |  |  |  |  |  |  |
Forfeited |  |  | 0 |  |  | $ | 0.00 |  |  |  |  |  |  |  |  |
Outstanding (exercisable and vested) at September 30, 2019 |  |  | 0 |  |  | $ | 0.00 |  |  |  | 0.0 |  |  | $ | 0 |
There were 750 and -0- stock options exercised under this Plan during the nine months ended September 30, 2019 and 2018, respectively. As all stock options from the 1999 Stock Option Plan had been fully vested and exercised, the Company recorded no compensation expense related to stock options for the nine months ended September 30, 2019 and 2018. Long Term Incentive Plan of 2008 and 2016 Incentive Plan The Company maintains an equity award program to give the Company a competitive advantage in attracting, retaining, and motivating officers, employees and directors and to provide an incentive to those individuals to increase shareholder value through long-term incentives directly linked to the Company’s performance. Under the Preformed Line Products Company Long Term Incentive Plan of 2008 (the “LTIP”), certain employees, officers, and directors were eligible to receive awards of options, restricted shares and restricted share units (RSUs). The total number of Company common shares reserved for awards under the LTIP was 900,000, of which 800,000 common shares were reserved for RSUs and 100,000 common shares have been reserved for share options. The LTIP was terminated and replaced with the Preformed Line Products Company 2016 Incentive Plan (the “Incentive Plan”) in May 2016 upon approval by the Company’s Shareholders at the 2016 Annual Meeting of Shareholders on May 10, 2016. No further awards will be made under the LTIP and previously granted awards remain outstanding in accordance with their terms. Under the Incentive Plan, certain employees, officers, and directors will be eligible to receive awards of options, restricted shares and RSUs. The total number of Company common shares reserved for awards under the Incentive Plan is 1,000,000 of which 900,000 common shares have been reserved for restricted share awards and 100,000 common shares have been reserved for share options. The Incentive Plan expires on May 10, 2026. Restricted Share Units For the regular annual grants, a portion of the RSUs is subject to time-based cliff vesting and a portion is subject to vesting based upon the Company’s performance over a set period for all participants except the CEO. All of the CEO’s regular annual RSUs are subject to vesting based upon the Company’s performance over a set-year period. The RSUs are offered at no cost to the employees. The fair value of RSUs is based on the market price of a common share on the grant date and the shares underlying the awards are not issued until they vest. Dividends declared are accrued in cash. A summary of the RSUs outstanding under the LTIP for the nine months ended September 30, 2019 is as follows:
|  | Restricted Share Units |
|  | Performance and Service Required (1) |  |  | Service Required |  |  | Total Restricted Share Units |  |  | Weighted-Average Grant-Date Fair Value |
Nonvested as of January 1, 2019 |  |  | 213,624 |  |  |  | 17,298 |  |  |  | 230,922 |  |  | $ | 76.20 |
Granted |  |  | 65,392 |  |  |  | 8,123 |  |  |  | 73,515 |  |  |  | 56.22 |
Vested |  |  | (75,921 | ) |  |  | (1,292 | ) |  |  | (77,213 | ) |  |  | 34.16 |
Forfeited |  |  | (6,753 | ) |  |  | (1,068 | ) |  |  | (7,821 | ) |  |  | 68.95 |
Nonvested as of September 30, 2019 |  |  | 196,342 |  |  |  | 23,061 |  |  |  | 219,403 |  |  | $ | 60.86 |
(1) | Nonvested, performance-based RSUs are reflected above at the maximum performance achievement level.
For time-based RSUs, the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award in General and administrative expense in the accompanying Statements of Consolidated Income. Compensation expense related to the time-based RSUs for the three and nine-month periods ended September 30, 2019 was $.2 million and $.4 million, respectively. Compensation expense related to the time-based RSUs for the three and nine-month periods ended September 30, 2018 was $.1 million and $.3 million, respectively. As of September 30, 2019, there was $.6 million of total unrecognized compensation cost related to time-based RSUs that is expected to be recognized over the weighted-average remaining period of approximately 1.8 years. For the performance-based RSUs, the number of RSUs in which the participants will vest depends on the Company’s level of performance measured by growth in either operating or pre-tax income and sales growth over a requisite performance period. Depending on the extent to which the performance criterions are satisfied under the LTIP and the Incentive Plan, the participants are eligible to earn common shares over the vesting period. Performance-based compensation expense for the three and nine-month periods ended September 30, 2019 was $1.2 million and $2.9 million, respectively. Performance-based compensation expense for the three and nine-month periods ended September 30, 2018 was $1.3 million and $2.7 million, respectively. As of September 30, 2019, the remaining compensation expense of $4.8 million for outstanding performance-based RSU’s is expected to be recognized over a period of approximately 1.7 years. In the event of a Change in Control (as defined in the LTIP and the Incentive Plan), vesting of the RSUs will be accelerated and all restrictions will lapse. Unvested performance-based awards will vest on a target potential payout. To satisfy the vesting of its RSU awards, the Company has reserved new shares from its authorized but unissued shares. Any additional awards granted will also be issued from the Company’s authorized but unissued shares. Share Option Awards The LTIP permitted and now the Incentive Plan permits the grant of 100,000 options to buy common shares of the Company to certain employees at not less than fair market value of the shares on the date of grant. Options issued to date under the LTIP and the Incentive Plan vest 50% after one year following the date of the grant, 75% after two years, and 100% after three years, and expire from five to ten years from the date of grant. Shares issued as a result of stock option exercises will be funded with the issuance of new shares. The Company utilizes the Black-Scholes option pricing model for estimating fair values of options. The Black-Scholes model requires assumptions regarding the volatility of the Company’s stock, the expected life of the stock award and the Company’s dividend yield. The Company utilizes historical data in determining these assumptions. The risk-free rate for periods within the contractual life of the option is based on the U.S. zero coupon Treasury yield in effect at the time of grant. There were no options granted for either of the nine-month periods ended September 30, 2019 and 2018. Stock option activity under the Company’s LTIP for nine months ended September 30, 2019 was as follows:
|  | Number of Shares |  |  | Weighted Average Exercise Price per Share |  |  | Weighted Average Remaining Contractual Term (Years) |  |  | Aggregate Intrinsic Value (000's) |
Outstanding at January 1, 2019 |  |  | 30,750 |  |  | $ | 56.81 |  |  |  |  |  |  |  |  |
Granted |  |  | 0 |  |  | $ | 0.00 |  |  |  |  |  |  |  |  |
Exercised |  |  | 0 |  |  | $ | 0.00 |  |  |  |  |  |  |  |  |
Forfeited |  | 0 |  |  | $ | 0.00 |  |  |  |  |  |  |  |  |
Outstanding (vested and expected to vest) at September 30, 2019 |  |  | 30,750 |  |  | $ | 56.81 |  |  |  | 6.2 |  |  | $ | 136 |
Exercisable at September 30, 2019 |  |  | 24,500 |  |  | $ | 56.33 |  |  |  | 5.4 |  |  | $ | 128 |
There were -0- and 3,500 shares exercised during the nine-month periods ended September 30, 2019 and 2018, respectively. For the three and nine-month periods ended September 30, 2019, the Company recorded compensation expense related to the stock options currently vested of less than $.1 million and $.1 million, respectively. For both three and nine-month periods ended September 30, 2018, the Company recorded compensation expense related to the stock options currently vested of less than $.1 million. The total compensation cost related to nonvested awards not yet recognized at September 30, 2019 is expected to be less than $.1 million over a weighted-average period of approximately 1.9 years. Deferred Compensation Plan The Company maintains a trust, commonly referred to as a rabbi trust, in connection with the Company’s deferred compensation plan. This plan allows for two deferrals. First, Directors make elective deferrals of Director fees payable and held in the rabbi trust. The deferred compensation plan allows the Directors to elect to receive Director fees in common shares of the Company at a later date instead of fees paid each quarter in cash. Second, this plan allows certain Company employees to defer restricted shares or RSUs for future distribution in the form of common shares. Assets of the rabbi trust are consolidated, and the value of the Company’s common shares held in the rabbi trust is classified in Shareholders’ equity and generally accounted for in a manner similar to treasury stock. The Company recognizes the original amount of the deferred compensation (fair value of the deferred stock award at the date of grant) as the basis for recognition in common shares issued to the rabbi trust. Changes in the fair value of amounts owed to certain employees or Directors are not recognized as the Company’s deferred compensation plan does not permit diversification and must be settled by the delivery of a fixed number of the Company’s common shares. As of September 30, 2019, 267,641 shares have been deferred and are being held in the rabbi trust.

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