11. Stock Based Compensation—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 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.

The below tables illustrate the Company’s stock based compensation, unamortized stock-based compensation, and remaining weighted average period for the three months and six months ended June 30, 2015 and 2014.


	Stock-Based Compensation for the Three months ended		Stock-Based Compensation for the Six months ended			Unamortized Stock-Based Compensation		Remaining Weighted Average Period (years)
June 30, 2015
Incentive Stock Options	$	116	$	231		$	1,204		2.5
Restricted Stock		790		1,962			3,521		1.5
Performance Based Restricted Stock		107		205			811		2.0
Performance Based Options		45		87			454		2.5

Total	$	1,058	$	2,485		$	5,990

June 30, 2014
Incentive Stock Options	$	10	$	21		$	—		—
Restricted Stock		985		1,819			7,153		2.1
Performance Based Restricted Stock		43		(34	)		1,559		2.6

Total	$	1,038	$	1,806		$	8,712

Stock Options—During the six months ended June 30, 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
Options exercised, $7.50		(34,800	)		7.50
Options forfeited, $11.49		(2,481	)		11.49

Balance outstanding, June 30, 2015		660,573		$	9.29	$	7.72

Information relating to stock options at June 30, 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		369,750		64	$	7.50		369,750	$	7.50
$11.32—$14.75		290,823		111	$	11.56		16,679	$	12.69

		660,573			$	9.29		386,429	$	7.72

The weighted average exercise prices for options granted and exercisable and the weighted average remaining contractual life for options outstanding as of June 30, 2015 was as follows:


	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Months)		Intrinsic Value (thousands)
As of June 30, 2015:
Incentive Stock Option Plans:
Outstanding		660,573	$	9.29		85	$	2,987
Expected to Vest		650,455	$	9.25		84	$	2,964
Exercisable		386,429	$	7.72		64	$	2,354

During the three months ended June 30, 2015 and 2014, the Company recognized stock-based compensation related to stock options of $116 and $10, respectively.

During the six months ended June 30, 2015 and 2014, the Company recognized stock-based compensation related to stock options of $231 and $21, respectively.

As of June 30, 2015, the Company had approximately $1,204 of unamortized stock-based compensation related to unvested stock options outstanding. This amount will be recognized over the weighted-average period of 2.5 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 status summary of non-vested shares as of and for the six months ended June 30, 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
Granted		21,005			14.28
Vested		(28,505	)		13.53
Forfeited		(1,201	)		14.92

Nonvested shares at June 30, 2015		389,453		$	21.37

Restricted stock grants — During the six months ended June 30, 2015, the Company granted a total of 51,005 shares of common stock. Of these, 21,005 shares vest immediately, 7,500 shares will vest after 90 days and the balance will cliff vest after three years of service. The shares granted in 2015 were average fair valued at $12.60 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.

During the six months ended June 30, 2014, the Company granted a total of 240,724 shares of common stock. Of these, 23,478 shares vest immediately, and the balance will cliff vest after three years of service. The shares granted in 2014 were average fair valued at $14.81 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.

During the three months ended June 30, 2015 and 2014, the Company recognized stock-based compensation related to restricted shares of $790 and $985, respectively.

During the six months ended June 30, 2015 and 2014, the Company recognized stock-based compensation related to restricted shares of $1,962 and $1,819, respectively.

As of June 30, 2015, the Company had approximately $3,521 of unamortized stock-based compensation related to unvested restricted shares. This amount will be recognized over the weighted-average period of 1.5 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 six months ended June 30, 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
Granted		—		—
Vested		—		—
Forfeited		—		—

Nonvested shares at June 30, 2015		111,407	$	17.35

Performance Based Shares — During the six months ended June 30, 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 goals measure 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 June 30, 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 June 30, 2015 and 2014, the Company recognized stock-based compensation related to performance based shares of $107 and $43, respectively.

During the six months ended June 30, 2015, the Company recognized stock-based compensation related to performance based shares of $205. During the six months ended June 30, 2014, the Company recognized a reduction in stock-based compensation related to performance based shares of $34.

As of June 30, 2015, the Company had approximately $811 of unamortized stock-based compensation related to unvested performance based shares. This amount will be recognized over the weighted-average period of 2.0 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 six months ended June 30, 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, June 30, 2015		107,689	$	11.49	$	—

Information relating to outstanding stock options at June 30, 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		30	$	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 June 30, 2015 are as follows:


	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Months)		Intrinsic Value (thousands)
As of June 30, 2015:
Incentive Stock Option Plans:
Outstanding		107,689	$	11.49		30	$	199
Expected to Vest		107,689	$	11.49		30	$	199
Exercisable		—	$	—		—	$	—

During the three months ended June 30, 2015 the Company recognized stock-based compensation related to performance stock options of $45. There were no performance incentive stock options issued by the Company prior to those issued during the quarter ended December 31, 2014.

During the six months ended June 30, 2015 the Company recognized stock-based compensation related to performance stock options of $87. There were no performance incentive stock options issued by the Company prior to those issued during the quarter ended December 31, 2014.

As of June 30, 2015, the Company had approximately $454 of unamortized stock-based compensation related to unvested performance incentive stock options outstanding. This amount will be recognized over the weighted-average period of 2.5 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.