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10. Stock-based and Other Compensation

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based and Other Compensation

Stock Options

In December 2015, Lifeway shareholders approved the 2015 Omnibus Incentive Plan, which authorized the issuance of an aggregate of 3.5 million shares to satisfy awards of stock options, stock appreciation rights, unrestricted stock, restricted stock, restricted stock units, performance shares and performance units. At March 31, 2018, 3.469 million shares remain available under the Omnibus Incentive Plan. We have not established a pace for the frequency of awards under the Omnibus Incentive Plan, and may choose to suspend the issuance of new awards in the future and may grant additional awards at any time including issuing special grants of restricted stock, restricted stock units, and stock options to attract and retain new and existing executives.

The following table summarizes stock option activity during the three months ended March 31, 2018:

		Options				Weighted average exercise price				Weighted average remaining contractual life				Aggregate intrinsic value

Outstanding at December 31, 2017			45			$	10.45
Granted			–			$	–
Exercised			–			$	–
Forfeited			–			$	–
Outstanding at March 31, 2018			45			$	10.45				8.00			$	–
Exercisable at March 31, 2018			33			$	10.50				8.00			$	–

For the three months ended March 31, 2018 and 2017 total pre-tax stock-based compensation expense recognized in the consolidated statements of operations was $4 and $15, respectively. For the three months ended March 31, 2018 and 2017 tax-related benefits of $2 and $6 were also recognized. As of March 31, 2018, the total remaining unearned compensation related to non-vested stock options was $15, which is expected to be amortized over the weighted-average remaining service period of 1.13 years.

Incentive Compensation

In January 2017, Lifeway established an incentive-based compensation program (the “2017 Plan”) for certain senior executives and key employees (the “participants”). The number of participants under the 2017 Plan was expanded from the 2016 Plan. Under the 2017 Plan, incentive compensation was based on (a) the achievement of certain sales and adjusted EBITDA performance levels versus respective targets in 2017, and (b) for certain senior executives, the achievement of individual performance objectives. Under the 2017 Plan, collectively the participants had the opportunity to earn cash and equity-based incentive compensation in amounts ranging from $0 to $11,025 depending on Lifeway’s performance levels compared to the respective targets and the senior executive’s performance compared to their individual objectives. The equity portion of the incentive compensation is payable in restricted stock that vests one-third in each of the three years from the 2017 grant dates. For the three months ended March 31, 2018, $286 was accrued under the 2017 Plan as stock-based compensation expense in the consolidated statements of operations. For the three months ended March 31, 2017, $818 was accrued under the 2017 Plan, of which $389 was recorded as cash bonus expense and $429 was recorded as stock-based compensation expense in the consolidated statements of operations. As of March 31, 2018, the total remaining unearned compensation related to the 2017 Plan was $787, of which $424 is expected to be recognized through the balance of fiscal year 2018 subject to vesting; and $309 and $54 is expected to be recognized in 2019 and 2020, respectively, subject to vesting.

In January 2018, Lifeway established an incentive-based compensation program (the “2018 Plan”) for certain senior executives and key employees (the “participants”). The number of participants under the 2018 Plan was expanded from the 2017 Plan. Under the 2018 Plan, incentive compensation is based on (a) the achievement of certain sales and adjusted EBITDA performance levels versus respective targets in 2018, and (b) for certain senior executives, the achievement of individual performance objectives. Under the 2018 Plan, collectively the participants have the opportunity to earn cash and equity-based incentive compensation in amounts ranging from $0 to $11,200 depending on Lifeway’s performance levels compared to the respective targets and the senior executive’s performance compared to their individual objectives. The equity portion of the incentive compensation is payable in restricted stock that vests one-third in each of the three years from the 2018 grant dates. For the three months ended March 31, 2018, $171 was accrued under the 2018 Plan, of which $76 was recorded as cash bonus expense and $95 was recorded as stock-based compensation expense in the consolidated statements of operations.

Retirement Benefits

Lifeway has a defined contribution plan which is available to substantially all full-time employees. Under the terms of the plan, we match employee contributions under a prescribed formula. For the three months ended March 31, 2018 and 2017 total contribution expense recognized in the consolidated statements of operations was $132 and $103, respectively.