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Stock Options | 12 Months Ended
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Dec. 31, 2014
Stock Options | (11) Stock Options Incentive Stock Option Plans (“ISOP”) Under the terms of the Company’s ISOP, under which options to purchase 4,296,000 shares of common stock can be issued, all employees are eligible to receive non-assignable and non-transferable options to purchase shares. The exercise price of any option may not be less than the fair market value of the shares on the date of grant; provided, however, that the exercise price of any option granted to an eligible employee owning more than 10% of the outstanding common stock may not be less than 110% of the fair market value of the shares underlying such option on the date of grant. No options granted may be exercisable more than ten years after the date of grant. In 2014, the Company granted incentive stock options to purchase 277,025 shares of common stock to employees. Of these options, 26,483 option shares vest on each of the first, second, and third anniversaries of the date of grant. All options granted are non-assignable and non-transferable. In 2013 and 2012, no options were granted. Nonstatutory Stock Options (“NSSO”) The Company did not grant any non-statutory stock options during the three years ended December 31, 2014. Option activity within each plan is as follows:
|  | Incentive Stock Option Plans |  |  | Weighted Average Price Per Share |  |  | Exercisable Weighted Average Price Per Share |
Balance outstanding, December 31, 2011 |  |  | 1,388,514 |  |  | $ | 7.44 |  |  | $ | 7.26 |
Options exercised, range from $3.67-$14.99 |  |  | (659,733 | ) |  |  | 7.05 |  |  |  |  |
Options expired |  |  | (23,436 | ) |  |  | 10.41 |  |  |  |  |
Balance outstanding, December 31, 2012 |  |  | 705,345 |  |  | $ | 7.70 |  |  | $ | 7.95 |
Options exercised, $7.50 |  |  | (126,149 | ) |  |  | 7.50 |  |  |  |  |
Options expired |  |  | (18,167 | ) |  |  | 7.50 |  |  |  |  |
Balance outstanding, December 31, 2013 |  |  | 561,029 |  |  | $ | 7.76 |  |  | $ | 7.70 |
Options granted, $11.49 |  |  | 277,025 |  |  |  | 11.49 |  |  |  |  |
Options exercised, $7.50 |  |  | (113,150 | ) |  |  | 7.50 |  |  |  |  |
Balance outstanding, December 31, 2014 |  |  | 724,904 |  |  | $ | 9.22 |  |  | $ | 7.82 |
Information relating to stock options at December 31, 2014 summarized by exercise price is as follows:
|  | Outstanding Weighted Average |  |  | Exercisable Weighted Average |
Exercise Price Per Share |  | Shares |  |  | Remaining Life (Months) |  |  | Exercise Price |  |  | Shares |  |  | Exercise Price |
Incentive Stock Option Plan: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
$7.50 |  |  | 421,200 |  |  |  | 71 |  |  | $ | 7.50 |  |  |  | 421,200 |  |  | $ | 7.50 |
$11.32-$14.75 |  |  | 303,704 |  |  |  | 115 |  |  | $ | 11.61 |  |  |  | 26,679 |  |  | $ | 12.90 |
|  |  | 724,904 |  |  |  |  |  |  | $ | 9.22 |  |  |  | 447,879 |  |  | $ | 7.82 |
The weighted average exercise prices for options granted and exercisable and the weighted average remaining contractual life for options outstanding as of December 31, 2013 and 2014 was as follows:
|  | Number of Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life (Months) |  |  | Intrinsic Value (thousands) |
As of December 31, 2013: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Incentive Stock Option Plans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Outstanding |  |  | 561,029 |  |  | $ | 7.76 |  |  |  | 83 |  |  | $ | 9,276 |
Expected to Vest |  |  | 560,972 |  |  | $ | 7.76 |  |  |  | 83 |  |  | $ | 9,275 |
Exercisable |  |  | 554,362 |  |  | $ | 7.70 |  |  |  | 83 |  |  | $ | 9,196 |
As of December 31, 2014: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Incentive Stock Option Plans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Outstanding |  |  | 724,904 |  |  | $ | 9.22 |  |  |  | 90 |  |  | $ | 1,774 |
Expected to Vest |  |  | 713,172 |  |  | $ | 9.19 |  |  |  | 89 |  |  | $ | 1,773 |
Exercisable |  |  | 447,879 |  |  | $ | 7.82 |  |  |  | 71 |  |  | $ | 1,738 |
The total intrinsic value of options exercised during 2014, 2013 and 2012 was $1,480, $2,365, and $15,910, respectively. Cash received from stock options exercised during 2014, 2013, and 2012 was $849, $946, and $2,996, respectively. Upon exercise in 2012, the Company also received 49,638 shares in payment for the options which were valued on the day of exercise at $1,651. Restricted Stock Grants During 2014, the Company issued a total of 240,724 shares of common and restricted stock to certain employees and non-executive board members. Vesting ranges from immediate to three years from the date of grant. The fair values of the grants range from $13.84 to $14.92 per share based on the publicly traded share prices. The total fair value of $3,566 is being recognized over the related service periods. During 2014, 20,772 shares of common stock granted to employees were forfeited. During 2013, the Company issued a total of 162,336 shares of common and restricted stock to certain employees and non-executive board members. Vesting ranges from immediate to three years from the date of grant. The fair values of the grants range from $23.43 to $31.83 per share based on the publicly traded share prices. The total fair value of $5,018 is being recognized over the related service periods. During 2013, 11,999 shares of common stock granted to employees were forfeited. During 2012, the Company issued a total of 248,536 shares of common and restricted stock to certain employees and non-executive board members. Vesting ranges from immediate to three years from the date of grant. The fair values of the grants range from $13.34 to $34.04 per share based on the publicly traded share prices. The total fair value of $5,346 is being recognized over the related service periods. During 2012, 1,367 shares of common stock granted to employees were forfeited. A status summary of non-vested shares as of December 31, 2014, is presented below:
|  | Number of Shares |  |  | Weighted Average Grant-Date Fair Value |
Nonvested shares at January 1, 2014 |  |  | 376,702 |  |  | $ | 24.85 |
Granted |  |  | 240,724 |  |  | $ | 14.81 |
Vested |  |  | (35,812 | ) |  | $ | 14.74 |
Forfeited |  |  | (20,772 | ) |  | $ | 17.91 |
Nonvested shares at December 31, 2014 |  |  | 560,842 |  |  | $ | 21.44 |
Performance Based Stock Grants During 2014, the Company granted a total of 79,270 performance based shares that will cliff vest on May 23, 2017, provided that recipient is continuously employed by the Company during the vesting period. Of these performance based shares, 80% are based upon financial performance of the Company, specifically, an earnings before interest and tax (“EBIT”) goal weighted at 50% and a net sales goal weighted at 30% for the period commencing April 1, 2014 and ending December 31, 2016; the remaining 20% of performance based shares are based upon AVD stock price appreciation (shareholder return) over the same performance measurement period. The net sales and EBIT goal measures the relative growth of the Company’s net sales and EBIT for the performance measurement period, as compared to the median growth of net sales and EBIT for an identified peer group. The shareholder return goal measures the relative growth of the fair market value of the Company’s stock price over the performance measurement period, as compared to that of the Russell 2000 Index and the median fair market value of the common stock of the comparator companies. All parts of these awards vest in three years, but are subject to reduction to a minimum (or even zero) for meeting less than the targeted performance and to increase to a maximum of 200% for meeting in excess of the targeted performance. The performance based shares related to net sales and EBIT were average fair valued at $14.92 per share. The fair value was determined by using the publicly traded share price as of the date of grant. The performance based shares related to AVD stock price were average fair valued at $12.85 per share. The fair value was determined by using the Monte Carlo valuation method. The Company is recognizing as expense the value of these shares over the required service period of three years. During 2013, the Company granted a total of 24,637 performance based shares that will cliff vest after three years of service. Of these performance based shares, 80% are based upon net income and net sales for the period commencing April 1, 2013 and ending December 31, 2015; the remaining 20% of performance based shares are based upon the Company’s stock price appreciation over the course of the period commencing June 6, 2013 and ending on December 31, 2015. Both parts of these awards vest in three years, but are subject to reduction to a minimum (or even zero) for meeting less than the targeted performance and to increase to a maximum of 200% for meeting in excess of the targeted performance. The performance based shares related to net income and net sales have an average fair value of $30.13 per share. The fair value was determined by using the publicly traded share price as of the date of grant. The performance based shares related to the Company’s stock price have an average fair value of $15.31 per share. The fair value was determined by using the Monte Carlo valuation method. For awards with performance conditions, the Company recognizes share-based compensation cost on a straight-line basis for each performance criteria over the implied service period when the Company believes it is probable that the performance targets, as defined in the agreements, will be achieved. During 2014 and 2013, the Company recognized stock-based compensation expense related to performance based shares of $168 and $90, respectively. There were no performance based shares issued by the Company prior to those issued during the quarter ended June 30, 2013. As of December 31, 2014, the Company had approximately $1,249 of unamortized stock-based compensation expenses related to unvested performance based shares. This amount will be recognized over the weighted-average period of 2.1 years. This projected expense will change if any performance based shares are granted or cancelled prior to the respective reporting periods or if there are any changes required to be made for estimated forfeitures. As of December 31, 2013, the Company had approximately $564 of unamortized stock-based compensation expenses related to unvested performance based shares. This amount will be recognized over the weighted-average period of 2.4 years. This projected expense will change if any performance based shares are granted or cancelled prior to the respective reporting periods or if there are any changes required to be made for estimated forfeitures. A status summary of non-vested shares as of December 31, 2014, is presented below:
|  | Number of Shares |  |  | Weighted Average Grant-Date Fair Value |
Nonvested shares at January 1, 2014 |  |  | 24,637 |  |  | $ | 28.43 |
Granted |  |  | 79,270 |  |  | $ | 14.51 |
Nonvested shares at December 31, 2014 |  |  | 103,907 |  |  | $ | 17.81 |
Performance Incentive Stock Option Plan During 2014, the Company granted performance incentive stock options to purchase 107,689 shares of common stock to employees. Of these performance based stock options, 80% are based upon financial performance of the Company, specifically, an earnings before interest and tax (“EBIT”) goal weighted at 50% and a net sales goal weighted at 30% for the period commencing January 1, 2015 and ending December 31, 2017; the remaining 20% of performance based shares are based upon AVD stock price appreciation (shareholder return) over the same performance measurement period. The net sales and EBIT goal measures the relative growth of the Company’s net sales and EBIT for the performance measurement period, as compared to the median growth of net sales and EBIT for an identified peer group. The shareholder return goal measures the relative growth of the fair market value of the Company’s stock price over the performance measurement period, as compared to that of the Russell 2000 Index and the median fair market value of the common stock of the comparator companies. All parts of these options vest in three years, but are subject to reduction to a minimum (or even zero) for meeting less than the targeted performance and to increase to a maximum of 200% for meeting in excess of the targeted performance. There were no performance based stock options issued by the Company prior to those issued during 2014. Performance option activity is as follows:
|  | Incentive Stock Option Plans |  |  | Weighted Average Price Per Share |  |  | Exercisable Weighted Average Price Per Share |
Balance outstanding, December 31, 2013 |  |  | — |  |  | $ | — |  |  | $ | — |
Options granted, $11.49 |  |  | 107,689 |  |  |  | 11.49 |  |  |  |  |
Balance outstanding, December 31, 2014 |  |  | 107,689 |  |  | $ | 11.49 |  |  | $ | — |
Information relating to performance stock options at December 31, 2014 summarized by exercise price is as follows:
|  | Outstanding Weighted Average |  |  | Exercisable Weighted Average |
Exercise Price Per Share |  | Shares |  |  | Remaining Life (Months) |  |  | Exercise Price |  |  | Shares |  |  | Exercise Price |
Performance Incentive Stock Option Plan: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
$11.49 |  |  | 107,689 |  |  |  | 36 |  |  | $ | 11.49 |  |  |  | — |  |  | $ | — |
|  |  | 107,689 |  |  |  |  |  |  | $ | 11.49 |  |  |  | — |  |  | $ | — |
The weighted average exercise prices for performance options granted and exercisable and the weighted average remaining contractual life for performance options outstanding as of December 31, 2014 was as follows:
|  | Number of Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life (Months) |  |  | Intrinsic Value (thousands) |
As of December 31, 2014: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performance Incentive Stock Option Plans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Outstanding |  |  | 107,689 |  |  | $ | 11.49 |  |  |  | 36 |  |  | $ | 14 |
Expected to Vest |  |  | 107,689 |  |  | $ | 11.49 |  |  |  | 36 |  |  | $ | 14 |
Exercisable |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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