Note 12 – Share-Based Compensation

The Company has various stockholder-approved programs which allow for the grant of share-based compensation to officers, employees, and non-employee directors.

The amount of compensation cost related to share-based payment transactions is measured based on the grant-date fair value of the equity instruments issued. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The Company determines compensation cost for RSUs, phantom stock units, and restricted stock based on the grant-date fair value of the underlying common stock. Compensation cost is recognized over the period that an officer, employee, or non-employee director provides service in exchange for the award.

The following table summarizes share-based compensation expense recognized:

	Years ended December 31,
	2013		2012		2011

Stock options	$	18	$	73	$	(83	)
Restricted stock units		510		3,378		6,693
Phantom stock units		108		93		222
Total	$	636	$	3,544	$	6,832

The Company recognizes compensation cost for RSUs that are expected to vest and records cumulative adjustments in the period that the expectation changes. Stock-based compensation for the year ended December 31, 2013, as presented in the table above, includes the material reversal of stock-based compensation expense recognized for the performance-based RSUs scheduled to vest on January 1, 2014 recorded in the second fiscal quarter of 2013. $1,778 of these reversed costs had been originally reported as a separate line item upon cessation of employment of certain former executives in 2011, and accordingly, this adjustment is also reported as a separate line item in the accompanying consolidated statements of operations. A portion of the stock-based compensation expense related to certain current executives that was reversed in the second fiscal quarter of 2013 was recognized in the fourth fiscal quarter of 2013 due to certain amendments to the performance-based RSUs granted to certain current executives in 2011 approved by the Compensation Committee of the Board of Director's in the fourth fiscal quarter of 2013. Pursuant to their original terms, the performance-based RSUs would vest on January 1, 2014 only if all of the associated performance criteria were met for the three-year period ending December 31, 2013. Pursuant to the amended terms, 75% of the performance-based RSUs of each of the certain current executives vested effective December 5, 2013 in light of the Compensation Committee of the Board of Director's assessment that the performance criteria would be achieved in substantial part by December 31, 2013.

Stock-based compensation expense for the year ended December 31, 2011, as presented in the table above, includes amounts associated with the acceleration of vesting of awards upon the passing of Vishay's former Executive Chairman of the Board of Directors, Dr. Felix Zandman, and the resignation of Vishay's former Chief Financial Officer, Dr. Lior Yahalomi. The associated expenses are reported as a component of the executive compensation charges reported in the accompanying consolidated statement of operations. The stock-based compensation expense recognized for the performance-based RSUs scheduled to vest on January 1, 2014 was reversed in the second fiscal quarter of 2013, as described above.

Note 12 – Share-Based Compensation (continued)

The following table summarizes unrecognized compensation cost and the weighted average remaining amortization periods at December 31, 2013 (amortization periods in years):

	Unrecognized Compensation Cost		Weighted Average Remaining Amortization Periods

Stock options	$	-		0.0
Restricted stock units		9,636		1.2
Phantom stock units		-		0.0
Total	$	9,636

2007 Stock Incentive Program

The Company's 2007 Stock Incentive Program (the "2007 Program") permits the grant of up to 3,000,000 shares of restricted stock, unrestricted stock, RSUs, and stock options, to officers, employees, and non-employee directors. Such instruments are available for grant until May 22, 2017.

The 2007 Program was originally approved by stockholders of the Company on May 22, 2007, as the "2007 Stock Option Program." On May 28, 2008, the Company's stockholders approved amendments to the 2007 Stock Option Program, which was then renamed the "2007 Stock Incentive Program".

On February 23, 2011, the Board of Directors of the Company amended and restated the 2007 Program. The amendment eliminated share recycling, so that on the exercise of an option where the exercise price is paid via the tender of previously-owned shares or pursuant to an "immaculate cashless exercise," the total "gross" number of option shares exercised is removed from the pool of shares available for future issuance. Similarly, shares withheld to pay income taxes in connection with the exercise of an option are also removed from the pool. The amendment also restricts re-pricing and cash repurchases of options without the prior approval of stockholders. The 2007 Program was subsequently re-approved by the Company's stockholders at the 2013 Annual Stockholders Meeting held on May 23, 2013.

At December 31, 2013, the Company has reserved 766,000 shares of common stock for future grants of equity awards pursuant to the 2007 Program. If any outstanding options are forfeited by the holder or cancelled by the Company, the underlying shares would be available for regrant to others.

Stock Options

In addition to stock options outstanding pursuant to the 2007 Program, during the periods presented, the Company had stock options outstanding under previous stockholder-approved stock option programs.

Under the 1998 Stock Option Program, certain executive officers and key employees were granted options. On March 16, 2008, the stockholder approval for the 1998 Stock Option Program expired. While no additional options may be granted pursuant to this plan, at December 31, 2013, 99,000 options issued under the 1998 Program remain outstanding and may be exercised in future periods.

On November 2, 2001, Vishay acquired General Semiconductor, Inc., which became a wholly owned subsidiary of the Company. As a result of the acquisition, each outstanding option to acquire General Semiconductor common stock became exercisable for shares of Vishay common stock. Based on the conversion ratio in the acquisition of 0.563 of a Vishay share for each General Semiconductor share, the former General Semiconductor options become exercisable in the aggregate for 4,282,000 shares of Vishay common stock on the date of the acquisition. All such options were immediately vested and exercisable as a result of the merger but the terms of the options otherwise remained unchanged. As of November 2, 2011, the tenth anniversary of the acquisition, no options related to this plan were outstanding and no additional options may be granted from this plan.

Note 12 – Share-Based Compensation (continued)

The following table summarizes the Company's stock option activity (number of options in thousands):

	Years ended December 31,
	2013				2012					2011
	Number of Options		Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price

Outstanding:
Beginning of year		109	$	15.24		384		$	15.40		1,254		$	15.04
Granted		-		-		-			-		-			-
Exercised		-		-		(22	)		7.89		(651	)		14.87
Cancelled or forfeited		-		-		(253	)		16.12		(219	)		14.92
End of year		109	$	15.24		109		$	15.24		384		$	15.40

Vested and expected to vest		109				109					384

Exercisable:
End of year		109				79					323

The following table summarizes information concerning stock options outstanding and exercisable at December 31, 2013 (number of options in thousands, contractual life in years):

		Options Outstanding						Options Exercisable
Exercise Price		Number of Options		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number of Options		Weighted Average Exercise Price

$	11.54 - $12.90		32		2.85	$	12.73		32	$	12.73
$	16.29		77		3.39		16.29		77		16.29
Total			109		3.23	$	15.24		109	$	15.24

The weighted-average remaining contractual life of all exercisable options is 3.23 years.

Note 12 – Share-Based Compensation (continued)

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. There were no options granted in 2013, 2012, or 2011.

The pretax aggregate intrinsic value (the difference between the closing stock price on the last trading day of 2013 of $13.26 per share and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2013 is $17. This amount changes based on changes in the market value of the Company's common stock. No options were exercised during the year ended December 31, 2013. During the years ended December 31, 2012 and 2011, 22,095 and 650,621 options, respectively, were exercised. The total intrinsic value of options exercised during the years ended December 31, 2012 and 2011 was $110 and $1,693, respectively.

The following table summarizes information concerning unvested stock options (number of options in thousands):

	Years ended December 31,
	2013					2012					2011
	Number of Options			Weighted Average Grant-date Fair Value		Number of Options			Weighted Average Grant-date Fair Value		Number of Options			Weighted Average Grant-date Fair Value

Unvested:
Beginning of year		30		$	10.14		61		$	9.96		253		$	9.33
Granted		-			-		-			-		-			-
Vested		(30	)		10.14		(31	)		9.79		(192	)		9.13
End of year		-		$	-		30		$	10.14		61		$	9.96

Note 12 – Share-Based Compensation (continued)

Restricted Stock Units

Each RSU entitles the recipient to receive a share of common stock when the RSU vests.

RSU activity for the years ended December 31, 2013, 2012, and 2011 is presented below (number of RSUs in thousands):

	Years ended December 31,
	2013					2012					2011
	Number of RSUs			Weighted Average Grant-date Fair Value		Number of RSUs			Weighted Average Grant-date Fair Value		Number of RSUs			Weighted Average Grant-date Fair Value

Outstanding:
Beginning of year		1,316		$	12.53		891		$	12.58		634		$	9.61
Granted		374			12.76		437			12.31		423			16.57
Vested*		(598	)		10.92		(12	)		8.29		(154	)		11.25
Cancelled or forfeited		(33	)		16.54		-			-		(12	)		13.26
End of year		1,059		$	13.40		1,316		$	12.53		891		$	12.58

Expected to vest		570					1,040					891

______________

* The number of RSUs vested includes shares that the Company withheld on behalf of employees to satisfy the statutory tax withholding requirements.

The number of performance-based RSUs scheduled to vest on January 1, 2014 and January 1, 2015 is fixed based on the full achievement of the defined target performance criteria. The number of performance-based RSUs scheduled to vest on January 1, 2016 increases ratably based on the achievement of defined performance criteria between the established target and maximum levels. RSUs with performance-based vesting criteria are expected to vest as follows (number of RSUs in thousands):

Vesting Date	Expected to Vest		Not Expected to Vest		Total
January 1, 2014**		-		102		102
January 1, 2015		-		276		276
January 1, 2016		111		111		222

______________

** The performance vesting criteria for the performance-based RSUs with a vesting date of January 1, 2014 has not been achieved.

In the event of (i) the termination of the executive's employment by the Company without cause, by the executive for "good reason," or as a result of death or disability, the executive's outstanding RSUs shall immediately vest and the outstanding performance-based RSUs shall vest on their normal vesting date to the extent applicable performance criteria are realized; and (ii) a change of control of Vishay, all of such executive's outstanding RSUs and performance-based RSUs shall immediately vest. In the event of voluntary termination by the executive (without "good reason") or termination for cause, the executive's outstanding RSUs and performance-based RSUs will be forfeited.

Note 12 – Share-Based Compensation (continued)

Phantom Stock Plan

The Company maintains a phantom stock plan for certain senior executives. The Phantom Stock Plan authorizes the grant of up to 300,000 phantom stock units to the extent provided for in the Company's employment agreements with such senior executives. Each phantom stock unit entitles the recipient to receive a share of common stock at the individual's termination of employment or any other future date specified in the individual's employment agreement. The phantom stock units are fully vested at all times.

If the Company declares dividends on its common stock, the dividend amounts with respect to the phantom stock units will be deemed reinvested in additional units of phantom stock.

The Board of Directors of the Company can amend or terminate the Phantom Stock Plan at any time, except that phantom stock units already granted to any individual cannot be adversely affected without the individual's consent. Furthermore, stockholder approval of an amendment is required if the amendment increases the number of units subject to the Phantom Stock Plan or otherwise materially amends the Phantom Stock Plan or if stockholder approval is otherwise required by applicable law or stock exchange rules. If the Board of Directors does not terminate the Phantom Stock Plan, it will terminate when all phantom stock units have been awarded with respect to all 300,000 shares of common stock reserved for the Phantom Stock Plan.

The following table summarizes the Company's phantom stock units activity for the years ended December 31, 2013, 2012, and 2011 (number of phantom stock units in thousands):

	Years ended December 31,
	2013				2012				2011
	Number of Phantom Stock Units		Grant- date Fair Value per Unit		Number of Phantom Stock Units		Grant- date Fair Value per Unit		Number of Phantom Stock Units			Grant- date Fair Value per Unit

Outstanding:
Beginning of year		97				87				116
Granted		10	$	10.75		10	$	9.33		15		$	14.78
Redeemed for common stock		-				-				(44	)
End of year		107				97				87

Available for future grants		75				85				95