Under the Company’s Equity Incentive Plan of 1993, as amended (“the Plan”), all employees are eligible to receive non-assignable and non-transferable restricted stock, options to purchase common stock, and other forms of equity. As of December 31, 2019, the number of securities remaining available for future issuance under the Plan is 1,171,059.

Under the terms of the Company’s ISOP, under which options to purchase 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.

	Incentive Stock Option Plans			Weighted Average Price Per Share		Exercisable Weighted Average Price Per Share
Balance outstanding, December 31, 2016		541,905		$	9.33	$	7.97
Options exercised		(55,979	)	$	8.37
Options forfeited		(13,143	)		11.49
Balance outstanding, December 31, 2017		472,783		$	9.38	$	9.38
Options exercised		(88,719	)		10.62
Balance outstanding, December 31, 2018		384,064		$	9.10	$	9.10
Options exercised		(51,241	)		8.87
Balance outstanding, December 31, 2019		332,823		$	9.14	$	9.14

Information relating to stock options at December 31, 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		195,850		11	$	7.50		195,850	$	7.50
$11.32-$14.75		136,973		58	$	11.48		136,973	$	11.48
		332,823		30	$	9.14		332,823	$	9.14

During 2017, the Company recognized stock-based compensation expense related to incentive stock options of $345. During 2019 and 2018, the Company did not recognized stock-based compensation expense related to incentive stock options.

The weighted average exercise prices for options granted and exercisable and the weighted average remaining contractual life for options outstanding as of December 31, 2019 and 2018 was as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Months)		Intrinsic Value (thousands)
As of December 31, 2019:
Incentive Stock Option Plans:
Outstanding		332,823	$	9.14		30	$	3,439
Vested		332,823	$	9.14		30	$	3,439
Exercisable		332,823	$	9.14		30	$	3,439
As of December 31, 2018:
Incentive Stock Option Plans:
Outstanding		384,064	$	9.10		42	$	2,338
Vested		384,064	$	9.10		42	$	2,338
Exercisable		384,064	$	9.10		42	$	2,338

The total intrinsic value of options exercised during 2019, 2018 and 2017 was $393, $955, and $545, respectively. Cash received from stock options exercised during 2019, 2018, and 2017 was $454, $951, and $468, respectively.

The Company did not grant any non-statutory stock options during the three years ended December 31, 2019.

During 2019, the Company issued a total of 341,653 shares of common stock to certain employees and non-executive board members. Of these, 33,973 shares vest immediately, 500 shares will vest 6 months from the employee’s employment date, 1,000 shares will vest one year from the employee’s employment date, 500 shares will vest two years from the employee’s employment date, 15,001 shares will vest three years from the employee’s employment date, and majority of the balance will cliff vest after three years of service. The fair values of the grants range from $13.09 to $17.34 per share based on the publicly traded share prices as of the market close on the date of grants. The total fair value of $5,754 is being recognized over the vesting period, which is representative of the related service periods. During 2019, 60,778 shares of common stock granted to employees were forfeited.

During 2018, the Company issued a total of 282,030 shares of common stock to certain employees and non-executive board members. Of these, 25,312 shares vest immediately, 1,017 shares will vest 6 months from the employee’s employment date, 1,017 shares will vest eighteen months from the employee’s employment date, 5,250 shares will vest two years from the employee’s employment date, and majority of the balance will cliff vest after three years of service. The fair values of the grants range from $16.85 to $23.60 per share based on the publicly traded share prices as of the market close on the date of grants. The total fair value of $5,651 is being recognized over the vesting period, which is representative of the related service periods. During 2018, 33,269 shares of common stock granted to employees were forfeited

A status summary of non-vested shares as of December 31, 2019 and 2018, are presented below:

	December 31, 2019					December 31, 2018
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Nonvested shares at January 1^st		587,210		$	17.59		391,753		$	15.61
Granted		341,653			16.84		282,030			20.21
Vested		(148,240	)		14.99		(53,304	)		17.06
Forfeited		(60,778	)		18.12		(33,269	)		17.29
Nonvested shares at December 31^st		719,845		$	17.67		587,210		$	17.59

During 2019, 2018 and 2017, the Company recognized stock-based compensation expense related to restricted shares of $4,066, $3,657, and $2,705, respectively.

During the year ended December 31, 2019, the Company issued a total of 137,557 performance-based shares to employees. The shares granted during 2019 have an 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 and Monte Carlo Valuation method. 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.

During 2019, the Company 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, was both met at 200% of targeted performance and all related additional expenses were recorded as of December 31, 2019. The 2016 and 2017 performance shares based on market price was met at 125% and 50%, respectively, however, the market condition is reflected in the grant date fair value valuation and no additional expenses were recognized. As a result, 42,368 additional shares were earned since the Company achieved performance targets when compared to the peer group.

During the year ended December 31, 2018, the Company issued a total of 130,332 performance-based shares to employees. The shares granted during 2018 have an 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 is recognizing 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.

During the year ended December 31, 2017, the Company issued a total of 128,594 performance-based shares to employees. The shares granted during 2017 have an average fair value of $15.43. The fair value was determined by using the publicly traded share price as of the date of grant. The Company recognized as expense the value of the performance-based shares over the required service period from grant date. The shares will cliff vest on February 8, 2020 with a measurement period commencing January 1, 2017 and ending December 31, 2019. 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 2016 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 December 31, 2019, the 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.

As of December 31, 2018, the performance-based shares related to EBIT and net sales have an average fair value of $19.95 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 $16.49 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.

As of December 31, 2017, the performance-based shares related to EBIT and net sales have an average fair value of $16.10 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 $12.60 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 2019, 2018 and 2017, the Company recognized stock-based compensation expense related to performance-based shares of $3,094, $2,148, and $1,248, respectively. In 2019, the Company assessed the likelihood of achieving the performance measures based on peer group information currently available for the performance-based shares granted in 2018. Based on the performance thus far, the Company has concluded that it is likely that the performance measure based on EBIT and net sales will be met at 125% of targeted performance and have recorded the related additional expense in 2019. The performance shares based on market price are expected to be met at 125% of targeted performance. The effect of market conditions for performance shares based on market are included in the grant date fair value valuation and no additional expenses were recognized in 2019.

As of December 31, 2019, the Company had approximately $2,835 of unamortized stock-based compensation expenses 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, changes to expected vesting for performance-based shares or if there are any changes required to be made for estimated forfeitures.

A summary of non-vested shares as of December 31, 2019 and 2018, is presented below:

	December 31, 2019					December 31, 2018
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Nonvested shares at January 1^st		287,077		$	16.87		186,057		$	14.93
Granted		137,557			16.96		130,332			18.74
Additional granted based on performance achievement		42,368			12.97		—			—
Vested		(92,572	)		14.78		(22,857	)		11.90
Forfeited		(28,998	)		17.70		(6,455	)		16.22
Nonvested shares at December 31^st		345,432		$	16.92		287,077		$	16.87

For the three years ended December 31, 2019, 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, 2017		81,666		$	11.49	$	11.49
Additional vesting based on performance		77,598			11.49		11.49
Options exercised		(18,853	)		11.49		11.49
Balance outstanding, December 31, 2018		140,411		$	11.49	$	11.49
Options exercised		(19,629	)		11.49		11.49
Balance outstanding, December 31, 2019		120,782		$	11.49	$	11.49

Information relating to performance stock options at December 31, 2019 is 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:

120,782

11.49

120,782

11.49

The weighted average exercise price for performance options granted and exercisable and the weighted average remaining contractual life for performance options outstanding as of December 31, 2019 and 2018 was as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Months)		Intrinsic Value (thousands)
As of December 31, 2019:
Performance Incentive Stock Option Plans:
Outstanding		120,782	$	11.49		60	$	964
Vested		120,782	$	11.49		60	$	964
Exercisable		120,782	$	11.49		60	$	964
As of December 31, 2018:
Performance Incentive Stock Option Plans:
Outstanding		140,411	$	11.49		72	$	520
Vested		140,411	$	11.49		72	$	520
Exercisable		140,411	$	11.49		72	$	520

During 2017, the Company recognized stock-based compensation expense related to performance incentive stock options of $416. During 2019 and 2018, the Company did not recognize stock-based compensation expense related to performance incentive stock options.