Share-Based Compensation

The Amended and Restated Vishay Precision Group, Inc. Stock Incentive Plan (as amended and restated, the “Plan”) permits the issuance of up to 1,000,000 shares of common stock. At December 31, 2018, the Company had reserved 413,234 shares of common stock for future grant of equity awards (restricted stock, unrestricted stock, restricted stock units (“RSUs”), or stock options). If any outstanding awards are forfeited by the holder, the underlying shares would be available for future grants under the Plan.

Stock Options

In connection with the spin-off, VPG agreed to issue certain replacement awards to VPG employees holding equity-based awards of Vishay Intertechnology based on VPG’s common stock. The vesting schedule, expiration date, and other terms of these awards are generally the same as those of the Vishay Intertechnology equity-based awards they replaced.

As of December 31, 2016, there were 18,000 options outstanding at a weighted average exercise price of $18.92. The fair value of those option awards was estimated on the date of grant using the Black-Scholes option-pricing model. No options were exercised during the year ended December 31, 2017, and the options expired. There were no options granted in 2018, 2017, or 2016.

Restricted Stock Units

Pursuant to the Plan, the Company issued RSUs to board members, executive officers, and certain employees of the Company during 2018. The amount of compensation cost related to share-based payment transactions is measured based on the grant-date fair value of the equity instruments issued. VPG determines compensation cost for RSUs based on the grant-date fair value of the underlying common stock. Compensation cost is recognized over the period that the participant provides service in exchange for the award. The Company recognizes compensation cost for RSUs that are expected to vest and for which performance criteria are expected to be met.

On February 16, 2018, VPG’s three executive officers were granted annual equity awards in the form of RSUs, of which 75% are performance-based. The awards have an aggregate target grant-date fair value of $1.3 million were comprised of 52,166 RSUs. Twenty-five percent of these awards will vest on January 1, 2021, subject to the executives' continued employment. The performance-based portion of the RSUs will also vest on January 1, 2021, subject to the executives' continued employment and the satisfaction of certain performance objectives relating to three-year cumulative “free cash” and net earnings goals, each weighted equally. The awards issued in 2017 and 2016 have similar allocations and vesting criteria.

On March 21, 2018, certain VPG employees were granted annual equity awards in the form of RSUs, of which 75% are performance-based. The awards have an aggregate target grant-date fair value of $0.4 million and were comprised of 13,215 RSUs. Twenty-five percent of these awards will vest on January 1, 2021 subject to the employees' continued employment. The performance-based portion of the RSUs will also vest on January 1, 2021, subject to the employee's continued employment and the satisfaction of certain performance objectives relating to three-year cumulative earnings goals and cash flow goals.

On May 17, 2018, the Board of Directors approved the issuance of an aggregate of 9,294 RSUs to the independent board members of the Board of Directors and to the non-executive Chairman of the Board of Directors. The awards have an aggregate grant-date fair value of $0.3 million and will vest on the earlier of the Annual Stockholders meeting or May 17, 2019, subject to the directors' continued service on the Board of Directors.

RSU activity is presented below (number of RSUs in thousands):



	Years ended December 31,
	2018				2017				2016
	Number of RSUs		Weighted Average Grant-date Fair Value		Number of RSUs		Weighted Average Grant-date Fair Value		Number of RSUs		Weighted Average Grant-date Fair Value
Outstanding:
Beginning of year	417		$	14.57	377		$	14.04	278		$	15.04
Granted	74		28.20		98		16.75		129		11.69
Vested	(86	)	16.75		(58	)	14.78		(30	)	13.15
Forfeited	(140	)	14.70		—		—		—		—
End of year	265		$	17.64	417		$	14.57	377		$	14.04

The fair value of the RSUs vested during 2018 is $2.7 million. Included in the 2018 activity are RSU's forfeited as a result of performance objectives not being met. These awards are therefore available for future grants under the Plan.

RSUs with performance-based vesting criteria are expected to vest as follows (number of RSUs in thousands):



Vesting Date	Expected to Vest	Not Expected to Vest	Total
January 1, 2019	33	51	84
January 1, 2020	55	3	58
January 1, 2021	47	2	49

Share-Based Compensation Expense

The following table summarizes pre-tax share-based compensation expense recognized (in thousands):



	Years ended December 31,
	2018		2017		2016
Restricted stock units	$	1,799	$	1,499	$	37

Share-based compensation expense is recognized ratably over the vesting period of the awards and for RSUs with performance criteria, is recognized for RSU's that are expected to vest and for which performance criteria are expected to be met.

During 2017, it was determined that certain performance objectives associated with awards granted in 2015 were likely to be met, when share based compensation expense related to these performance objectives had been reduced in prior years. This necessitated an increase to share-based compensation expense associated with those awards in 2017. However, it was also determined that certain performance objectives associated with awards granted in 2016 and 2017 were not likely to be fully met, necessitating a reversal of certain compensations expense associated with those awards. As a net result, adjustments increasing share based compensation expense totaling $0.4 million were recorded during the year based on anticipated performance levels..

During 2016, it was determined that certain performance objectives associated with awards granted in 2014, 2015, and 2016 to executives and certain other employees were not likely to be fully met. As a result, adjustments reducing share-based compensation expense totaling $1.4 million were recorded during the year based on anticipated performance levels.

The deferred tax benefit on share-based compensation expense was $0.0 million, $0.1 million, and $0.0 million for the years ended December 31, 2018, 2017, and 2016, respectively.

As of December 31, 2018, the Company had $1.7 million of unrecognized share-based compensation expense related to share-based awards that will be recognized over a weighted-average period of approximately 1.6 years.