13. 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 following tables illustrate the Company’s stock-based compensation, unamortized stock-based compensation, and remaining weighted average period for the three and nine months ended September 30, 2019 and 2018.

	Stock-Based Compensation for the Three months ended		Stock-Based Compensation for the Nine months ended		Unamortized Stock-Based Compensation		Remaining Weighted Average Period (years)
September 30, 2019
Restricted Stock	$	1,082	$	2,751	$	6,849		2.0
Unrestricted Stock		105		300		280		0.7
Performance Based Restricted Stock		977		2,108		3,320		2.0
Total	$	2,164	$	5,159	$	10,449
September 30, 2018
Restricted Stock	$	870	$	2,427	$	5,949		2.0
Unrestricted Stock		96		289		257		0.7
Performance Based Restricted Stock		491		1,519		2,814		2.0
Total	$	1,457	$	4,235	$	9,020

Stock Options—During the three and nine-months ended September 30, 2019, the Company did not grant any employees options to acquire shares of common stock.

	Incentive Stock Option Plans			Weighted Average Price Per Share		Exercisable Weighted Average Price Per Share
Balance outstanding, December 31, 2018		384,064		$	9.10	$	9.10
Options exercised		(14,677	)		9.18		—
Balance outstanding, March 31, 2019		369,387			9.10		9.10
Options exercised		(4,313	)		8.71		—
Balance outstanding, June 30, 2019		365,074			9.10		9.10
Options exercised		(15,800	)		7.55		—
Balance outstanding, September 30, 2019		349,274		$	9.17	$	9.17

Information relating to stock options at September 30, 2019, 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		202,445		14	$	7.50		202,445	$	7.50
$11.32—$14.49		146,829		61		11.48		146,829		11.48
		349,274			$	9.17		349,274	$	9.17

The weighted average exercise prices for options granted, and exercisable, and the weighted average remaining contractual life for options outstanding as of September 30, 2019, were as follows:

As of September 30, 2019	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Months)		Intrinsic Value (thousands)
Incentive Stock Option Plan:
Outstanding		349,274	$	9.17		33	$	2,279
Exercisable		349,274	$	9.17		33	$	2,279

Common stock grants — A summary of non-vested shares as of, and for, the three and nine-months ended September 30, 2019 and 2018 is presented below:

	Nine Months Ended September 30, 2019					Nine Months Ended September 30, 2018
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Nonvested shares at December 31^st		587,210		$	17.59		391,753		$	15.61
Granted		297,679			17.34		254,972			19.97
Vested		(105,582	)		15.21		(8,800	)		12.07
Forfeited		(6,589	)		17.69		(5,265	)		16.51
Nonvested shares at March 31^st		772,718			17.77		632,660			17.41
Granted		40,522			13.34		22,308			23.66
Vested		(32,771	)		13.35		(20,313	)		22.82
Forfeited		(21,184	)		17.77		(6,424	)		17.25
Nonvested shares at June 30th		759,285			17.72		628,231			17.40
Granted		—			—		—			—
Vested		(3,685	)		17.84		(17,591	)		13.51
Forfeited		(8,595	)		17.89		(13,659	)		17.35
Nonvested shares at September 30th		747,005		$	17.72		596,981		$	17.51

Common stock grants — During the nine-months ended September 30, 2019, the Company issued a total of 338,201 shares of common stock to employees and directors of which 31,771 shares vested immediately, 9,000 shares will vest between a range of 95 days to 1,115 days, 6,751 shares will vest in three equal tranches on the employee’s anniversary, and the remaining shares will cliff vest after three years of service. The shares granted in 2019 were average fair valued at $16.86 per share. The fair value was determined by using the publicly traded share price as of the market close on the date of grant. The Company will recognize as expense the value of restricted shares over the required service period.

During the nine months ended September 30, 2018, the Company issued a total of 277,280 shares of common stock to employees and directors of which 19,313 shares vested immediately, 19,760 shares will vest between a range of 178 days to 1,060 days, and the remaining shares will cliff vest after three years of service. The shares granted in 2018 were average fair valued at $20.27 per share. The fair value was determined by using the publicly traded share price as of the market close on the date of grant. The Company will recognize as expense the value of restricted shares over the required service period.

During the three months ended September 30, 2019 and 2018, the Company recognized stock-based compensation related to restricted shares of $1,082 and $870, respectively. During the nine months ended September 30, 2019 and 2018, the Company recognized stock-based compensation related to restricted shares of $2,751 and $2,427 respectively.

As of September 30, 2019, the Company had approximately $6,849 of unamortized stock-based compensation related to unvested restricted shares. This amount will be recognized over the weighted-average period of 2.0 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 nine months ended September 30, 2019 and 2018, respectively is presented below:

	Nine Months Ended September 30, 2019					Nine Months Ended September 30, 2018
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Nonvested shares at December 31^st		287,077		$	16.87		186,057		$	14.93
Granted		137,557			16.96		122,446			18.79
Additional granted based on performance achievement		41,568			12.88		—			—
Vested		(90,872	)		14.73		(14,625	)		11.01
Forfeited		(3,543	)		15.98		(1,765	)		15.40
Nonvested shares at March 31^st		371,787			16.99		292,113			16.74
Granted		—			—		3,850			22.69
Forfeited		(14,022	)		17.11		(2,179	)		17.67
Nonvested shares at June 30th		357,765			16.99		293,784			16.81
Additional granted based on performance achievement		800			17.50		4,036			13.53
Vested		(1,700	)		17.28		(8,232	)		13.47
Forfeited		(100	)		13.70		(1,870	)		15.67
Nonvested shares at September 30th		356,765		$	16.99		287,718		$	16.87

Performance-Based Shares — During the nine months ended September 30, 2019, the Company issued a total of 137,557 performance based shares to employees. The shares granted during the first nine months of 2019 have a weighted average fair value of $16.96. The fair value was determined by using the publicly traded share price as of the market close on the date of grant. The Company will recognize as expense the value of the performance-based shares over the required service period from grant date. The shares will cliff vest on March 28, 2022 with a measurement period commencing January 1, 2019 and ending December 31, 2021. Eighty percent of these performance-based shares are based upon the financial performance of the Company, specifically, an earnings before income taxes (“EBIT”) goal weighted at 50% and a net sales goal weighted at 30%. 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 2018 Proxy Statement. All parts of these awards vest in three years but are subject to reduction to a minimum (or even zero) for recording less than the targeted performance and to increase to a maximum of 200% for achieving in excess of the targeted performance.

As of September 30, 2019, the Company has concluded that the performance measure based on EBIT and net sales for the performance based shares granted in 2016 and 2017, when compared to the peer group, were both met at 200% of targeted performance and all related additional expenses were recorded as of September 30, 2019. The performance shares based on market price was met at 125% and 100%, respectively, however, the market condition is reflected in the grant date fair value valuation and no additional expenses were recognized as of September 30, 2019. As a result, 42,368 additional shares were earned since the Company achieved performance targets when compared to the peer group.

During the nine months ended September 30, 2018, the Company issued a total of 130,332 performance-based shares to employees. The shares granted during the first nine months of 2018 have a weighted average fair value of $18.74. The fair value was determined by using the publicly traded share price as of the market close on the date of grant. The Company will recognize as expense the value of the performance-based shares over the required service period from grant date. The shares will cliff vest on March 9, 2021 with a measurement period commencing January 1, 2018 and ending December 31, 2020. Eighty percent of these performance-based shares are based upon the financial performance of the Company, specifically, an earnings before income taxes (“EBIT”) goal weighted at 50% and a net sales goal weighted at 30%. 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 2017 Proxy Statement. All parts of these awards vest in three years but are subject to reduction to a minimum (or even zero) for recording less than the targeted performance and to increase to a maximum of 200% for achieving in excess of the targeted performance.

As of September 30, 2019, performance-based shares related to EBIT and net sales have an average fair value of $17.34 per share. The fair value was determined by using the publicly traded share price as of the market close on the date of grant. The performance-based shares related to the Company’s stock price have an average fair value of $15.46 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.

During the three months ended September 30, 2019 and 2018, the Company recognized stock-based compensation related to performance-based shares of $977 and $491, respectively. During the nine months ended September 30, 2019 and 2018, the Company recognized stock-based compensation related to performance based shares of $2,108 and $1,519, respectively.

As of September 30, 2019, the Company had approximately $3,320 of unamortized stock-based compensation expense 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 nine months ended September 30, 2019 and 2018, the Company did not grant any employees performance incentive stock options to acquire shares of common stock.

	Incentive Stock Option Plans			Weighted Average Price Per Share		Exercisable Weighted Average Price Per Share
Balance outstanding, December 31, 2018		140,411		$	11.49	$	11.49
Options exercised		(5,735	)		11.49		11.49
Balance outstanding, March 31, 2019, June 30, 2019 and September 30, 2019		134,676		$	11.49	$	11.49

Information relating to performance stock options at September 30, 2019 summarized by exercise price is as follows:

Outstanding Weighted

Average

Exercisable Weighted

Average

Exercise Price Per Share

Remaining

Life

(Months)

Exercise

Price

Exercise

Price

Performance Incentive Stock Option Plan:

134,676

11.49

134,676

11.49

The weighted average exercise prices for options granted and exercisable and the weighted average remaining contractual life for performance stock options outstanding as of September 30, 2019 are as follows:

As of September 30, 2019	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Months)		Intrinsic Value (thousands)
Performance Incentive Stock Option Plan:
Outstanding		134,676	$	11.49		63	$	567
Exercisable		134,676	$	11.49		63	$	567