Stock Based Compensation

The Company has a Long Term Equity Incentive Plan (the “2006 Plan”), as approved by the Company’s stockholders in May 2006. The 2006 Plan allows for grants to directors and employees of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, performance shares, performance units and other incentive awards (“Stock Awards”) up to an aggregate of 3,000,000 awards, each representing a right to buy a share of Core Molding Technologies common stock. Stock Awards can be granted under the 2006 Plan through the earlier of December 31, 2025, or the date the maximum number of available awards under the 2006 Plan have been granted. The number of shares remaining available for future issuance is 744,697.

Restricted stock granted under the 2006 Plan typically require the individuals receiving the grants to maintain certain common stock ownership thresholds and vest over three years or upon the date of the participants' sixty-fifth birthday, death, disability or change in control.

Core Molding Technologies follows the provisions of FASB ASC 718 requiring that compensation cost relating to share-based payment transactions be recognized in the financial statements. The cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee's requisite service period (generally the vesting period of the equity award).

Restricted Stock

The Company grants shares of its common stock to certain directors, officers, and key employees in the form of unvested stock (“Restricted Stock”). These awards are recorded at the market value of Core Molding Technologies’ common stock on the date of issuance and amortized ratably as compensation expense over the applicable vesting period.

The following summarizes the status of Restricted Stock and changes during the years ended December 31:



	2019				2018				2017
	Number of Shares		Wtd. Avg. Grant Date Fair Value		Number of Shares		Wtd. Avg. Grant Date Fair Value		Number of Shares		Wtd. Avg. Grant Date Fair Value
Unvested - beginning of year	349,885		$	10.62	141,095		$	16.79	158,261		$	14.55
Granted	135,268		7.65		315,429		11.32		84,643		19.17
Vested	(117,828	)	13.81		(82,067	)	16.57		(95,717	)	15.25
Forfeited	(23,406	)	15.02		(24,572	)	16.91		(6,092	)	17.93
Unvested - end of year	343,919		$	9.37	349,885		$	10.62	141,095		$	16.79

At December 31, 2019 and 2018, there was $1,923,000 and $2,598,000, respectively, of total unrecognized compensation expense related to restricted stock granted under the 2006 Plan. That cost is expected to be recognized over the weighted-average period of 1.8 years. Total compensation expense related to restricted stock grants for the years ended December 31, 2019, 2018 and 2017 was $1,379,000, $1,774,000 and $1,331,000, respectively, and is recorded as selling, general and administrative expense.

During 2017, the Company adopted Accounting Standards Update 2016-09, Compensation - Stock Compensation. The new standard provided for changes to accounting for stock compensation, including excess tax benefits and tax deficiencies related to share based payment awards to be recognized in income tax expense in the reporting period in which they occurred. Tax benefits and tax deficiencies before this update were recorded as an increase or decrease in additional paid in capital. Tax benefits and deficiencies for the years ended December 31, 2019, 2018 and 2017 were a deficiency of $110,000, a deficiency of $33,000 and a benefit of $126,000, respectively.

During 2019, 2018 and 2017, employees surrendered 16,047, 17,180 and 19,533 shares, respectfully, of the Company's common stock to satisfy income tax withholding obligations in connection with the vesting of restricted stock.

Stock Appreciation Rights

As part of the Company's 2019 annual grant, Stock Appreciation Rights (SARs) were granted with a grant price of $10. These awards have a contractual term of five years and vest ratably over a period of three years or immediately vest if the recipient is over 65 years of age. These awards are valued using the Black-Scholes option pricing model.

A summary of the Company's stock appreciation rights activity for the year ended December 31, 2019 is as follows:



	Number of Shares		Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2018	—		$	—
Granted	226,021		2.57
Exercised	—		—
Forfeited	(3,909	)	2.57
Outstanding at the period ended December 31, 2019	222,112		$	2.57
Exercisable at the period ended December 31, 2019	29,028		$	2.57

The average remaining contractual term for those SARs outstanding at December 31, 2019 is 4.3 years, with no aggregate intrinsic value. At December 31, 2019 and 2018, there was $386,000 and $0, respectively, of total unrecognized compensation expense, net of estimated forfeitures, related to SARs. That cost is expected to be recognized over the weighted-average period of 2.3 years.

Total compensation cost related to SARs for the twelve months ended December 31, 2019 and 2018 was $185,000 and $0, respectively, all of which was recorded to selling, general and administrative expense.