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Stock Based Compensation Expense | 3 Months Ended
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Mar. 31, 2015
Stock Based Compensation Expense | 11. Stock Based Compensation Expense—The Company accounts for stock-based awards to employees and directors in accordance with FASB ASC 718, “Share-Based Payment,” which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including shares of common stock granted for services, employee stock options, and employee stock purchases related to the Employee Stock Purchase Plan (“employee stock purchases”) based on estimated fair values. Stock Options—During the three months ended March 31, 2015, the Company did not grant any employees options to acquire shares of common stock. 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, 2014 |  |  | 724,904 |  |  | $ | 9.22 |  |  | $ | 7.82 |
Options exercised, $7.50 |  |  | (16,650 | ) |  |  | 7.50 |  |  |  |  |
Options forfeited, $11.49 and $13.24 |  |  | (10,400 | ) |  |  | 11.49 |  |  |  |  |
Balance outstanding, March 31, 2015 |  |  | 697,854 |  |  | $ | 9.21 |  |  | $ | 7.71 |
Information relating to stock options at March 31, 2015 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 |  |  | 404,550 |  |  |  | 68 |  |  | $ | 7.50 |  |  |  | 404,550 |  |  | $ | 7.50 |
$11.32—$14.75 |  |  | 293,304 |  |  |  | 114 |  |  | $ | 11.56 |  |  |  | 16,679 |  |  | $ | 12.69 |
|  |  | 697,854 |  |  |  |  |  |  | $ | 9.21 |  |  |  | 421,229 |  |  | $ | 7.71 |
The weighted average exercise prices for options granted and exercisable and the weighted average remaining contractual life for options outstanding as of March 31, 2015 were as follows:
|  | Number of Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life (Months) |  |  | Intrinsic Value (thousands) |
As of March 31, 2015: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Incentive Stock Option Plans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Outstanding |  |  | 697,854 |  |  | $ | 9.21 |  |  |  | 87 |  |  | $ | 1,262 |
Expected to Vest |  |  | 686,973 |  |  | $ | 9.17 |  |  |  | 89 |  |  | $ | 1,262 |
Exercisable |  |  | 421,229 |  |  | $ | 7.71 |  |  |  | 71 |  |  | $ | 1,262 |
As of March 31, 2015, the intrinsic value of $1,262 is calculated based on the Company’s publicly traded closing price of $10.62 per share as compared to the specific exercise price of each option. At March 31, 2015, 404,550 incentive stock options were outstanding, expected to vest and exercisable and have an exercise price below the closing market price. Incentive stock options in each category in excess of 404,550 (293,304 of outstanding options, 282,423 of those options expected to vest and 16,679 of those options that are exercisable at March 31, 2015) had exercise price above $10.62 and were therefore excluded from the intrinsic value computation. During the three months ended March 31, 2015 and 2014, the Company recognized stock-based compensation expense, excluding expense related to modifications, related to stock options of $115 and $11, respectively. As of March 31, 2015, the Company had approximately $1,336 of unamortized stock-based compensation expenses related to unvested stock options outstanding. This amount will be recognized over the weighted-average period of 2.7 years. This projected expense will change if any stock options are granted or cancelled prior to the respective reporting periods or if there are any changes required to be made for estimated forfeitures. Restricted Shares — A summary of non-vested shares as of and for the three months ended March 31, 2015 is presented below:
|  | Number of Shares |  |  | Weighted Average Grant- Date Fair Value |
Nonvested shares at December 31, 2014 |  |  | 560,842 |  |  | $ | 21.44 |
Granted |  |  | 30,000 |  |  |  | 11.42 |
Vested |  |  | (192,266 | ) |  |  | 20.47 |
Forfeited |  |  | (422 | ) |  |  | 14.92 |
Nonvested shares at March 31, 2015 |  |  | 398,154 |  |  | $ | 21.17 |
Restricted Shares — During the three months ended March 31, 2015, the Company granted a total of 30,000 shares of common stock. Of these, 7,500 shares will vest after 90 days and the balance will vest one-third each year on the anniversaries of the employee’s employment date. The shares granted in 2015 were average fair valued at $11.42 per share. The fair value was determined by using the publicly traded share price as of the date of grant. The Company is recognizing as expense the value of restricted shares over the required service period of three years. During the three months ended March 31, 2015, there were 422 restricted shares that forfeited, which had an average grant-date value of $14.92 per share. During the three months ended March 31, 2014, the Company did not grant any shares of restricted common stock. During the three months ended March 31, 2015 and 2014, the Company recognized stock-based compensation expense related to restricted shares of $1,172 and $834, respectively. As of March 31, 2015, the Company had approximately $4,010 of unamortized stock-based compensation expense related to unvested restricted shares. This amount will be recognized over the weighted-average period of 1.3 years. This projected expense will change if any restricted shares are granted or cancelled prior to the respective reporting periods or if there are any changes required to be made for estimated forfeitures. Performance Based Shares—A summary of non-vested performance based shares as of and for the three months ended March 31, 2015 is presented below:
|  | Number of Shares |  |  | Weighted Average Grant- Date Fair Value |
Nonvested shares at December 31, 2014 |  |  | 103,907 |  |  | $ | 17.81 |
Granted |  |  | 7,500 |  |  |  | 10.96 |
Vested |  |  | — |  |  |  | — |
Forfeited |  |  | — |  |  |  | — |
Nonvested shares at March 31, 2015 |  |  | 111,407 |  |  | $ | 17.35 |
Performance Based Shares — During the three months ended March 31, 2015, the Company granted a total of 7,500 performance based shares that will cliff vest on January 5, 2018, provided that the recipient is continuously employed by the Company during the vesting period. Eighty percent of these performance based shares are based upon financial performance of the Company, specifically, an earnings before income 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 over the same performance measurement period. The EBIT and net sales goal measures the relative growth of the Company’s EBIT and net sales for the performance measurement period, as compared to the median growth of EBIT and net sales for an identified peer group. The stockholder 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, identified in the Company’s 2015 Proxy Statement. 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 Company did not grant any performance based shares during the comparable period last year. As of March 31, 2015, performance based shares related to net income and net sales have an average fair value of $11.42 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 $9.13 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 the three months ended March 31, 2015, the Company recognized stock-based compensation expense related to performance based shares of $98. During the three months ended March 31, 2014, the Company recognized a reduction in stock-based compensation expense related to performance based shares of $77. As of March 31, 2015, the Company had approximately $917 of unamortized stock-based compensation expense related to unvested performance based shares. This amount will be recognized over the weighted-average period of 1.9 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. Performance Incentive Stock Options—During the three months ended March 31, 2015 and 2014, the Company did not grant any employees performance incentive stock options to acquire shares of common stock. 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, 2014 |  |  | 107,689 |  |  | $ | 11.49 |  |  | $ | — |
Balance outstanding, March 31, 2015 |  |  | 107,689 |  |  | $ | 11.49 |  |  | $ | — |
Information relating to stock options at March 31, 2015 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 |  |  |  | 33 |  |  | $ | 11.49 |  |  |  | — |  |  | $ | — |
|  |  | 107,689 |  |  |  |  |  |  | $ | 11.49 |  |  |  | — |  |  | $ | — |
The weighted average exercise prices for options granted and exercisable and the weighted average remaining contractual life for options outstanding as of March 31, 2015 are as follows:
|  | Number of Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life (Months) |  |  | Intrinsic Value (thousands) |
As of March 31, 2015: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Incentive Stock Option Plans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Outstanding |  |  | 107,689 |  |  | $ | 11.49 |  |  |  | 33 |  |  | $ | — |
Expected to Vest |  |  | 107,689 |  |  | $ | 11.49 |  |  |  | 33 |  |  | $ | — |
Exercisable |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |
During the three months ended March 31, 2015 the Company recognized stock-based compensation expense, excluding expense related to modifications, related to performance stock options of $42. There were no performance incentive stock options issued by the Company prior to those issued during the quarter ended December 31, 2014. As of March 31, 2015, the Company had approximately $499 of unamortized stock-based compensation expenses related to unvested performance incentive stock options outstanding. This amount will be recognized over the weighted-average period of 2.8 years. This projected expense will change if any performance incentive stock options are granted or cancelled prior to the respective reporting periods or if there are any changes required to be made for estimated forfeitures.

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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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