Stock-Based Compensation

The Company has an incentive compensation plan (the “2012 Plan”), which authorizes the granting of a variety of different types of awards including, but not limited to, non-qualified stock options, incentive stock options, Stock Appreciation Rights (“SARs”), Restricted Stock Awards (“RSAs”), deferred stock and performance units to its executive officers, employees, consultants and Directors. The 2012 Plan is administered by the Compensation Committee of the Board.

Under the 2012 Plan, 830,925 shares were initially made available for awards, with 700,000 additional shares added to the 2012 Plan in 2013. Forfeited shares are added back to the pool of shares available for future awards.

As of December 31, 2019, the Company had 16,174 shares available for issuance of future awards. To date, the Company’s granted awards have generally been either RSAs or SARs.

SAR awards entitle the recipients to receive, upon exercise, a number of shares of Common Stock equal to (i) the number of shares for which the SAR is being exercised multiplied by the value of one share of Common Stock on the date of exercise (determined as provided in the SAR award agreement), less (ii) the number of shares for which the SAR is being exercised multiplied by the applicable exercise price, divided by (iii) the value of one share of Common Stock on the date of exercise (determined as provided in the SAR award agreement). The exercised SAR is to be settled only in whole shares of Common Stock, and the value of any fractional share of Common Stock is forfeited.

RSA grants represent Common Stock issued subject to forfeiture or other restrictions that will lapse upon satisfaction of specified conditions.

Both SAR awards and RSA grants are time-based awards that generally vest over a 2 to 3-year vesting schedule (except grants to members of the Board which have a 1-year vesting schedule). SAR awards generally have a term of ten years. Compensation expense for recipients of these time-based awards is recognized on a straight-line basis over the vesting period from the date of grant. The Company accounts for forfeitures as they occur rather than apply an estimated forfeiture rate. Stock-based compensation expense is primarily recorded is Selling, general and administrative expenses in the Consolidated Statements of Operations.

RSAs are valued based on the fair value of the common stock at grant date.

For all SAR award assumptions, the Company used rates on the grant date of zero-coupon government bonds with maturities over periods covering the term of the awards. The Company considered the historical volatility of its stock price over a term similar to the expected life of the awards in determining expected volatility. The expected term is the period that the awards granted are expected to remain outstanding. The Company has never declared or paid a cash dividend on its Common Stock and has no plans to pay cash dividends in the foreseeable future.

The following table represents stock-based compensation expense and the related income tax benefits:



(in thousands)	For the Year Ended December 31,
	2019		2018
Stock-based compensation expense	$	1,248	$	2,663
Income tax benefit	$	279	$	96

SAR Awards

The Company granted 9,000 and 60,000 SAR awards in 2019 and 2018, respectively. The assumptions used for determining the fair value of the SARs included the following:



	For the Year Ended December 31,
	2019			2018
Market closing price of the Common Stock	$	7.00		$	7.92
Exercise price	$	7.30		$	7.92
Risk-free interest rate	2.5		%	2.6		%
Estimated price volatility	77.8		%	78.5		%
Expected term	6.51 years			6.58 years
Dividend yield	—		%	—		%
Weighted average fair value	$	4.89		$	5.63

SAR activity consisted of the following:



Number of Shares under SARs	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2017	83,720		$	11.02	8.21	$	1
Granted	60,000		7.92			—
Exercised	—		—			—
Forfeited	(1,000	)	11.25			—
Expired	(4,700	)	11.25			—
Outstanding at December 31, 2018	138,020		9.66		8.05	89
Granted	9,000		7.30			—
Exercised	—		—			—
Forfeited	(7,334	)	9.81			—
Expired	(9,616	)	10.70			—
Outstanding at December 31, 2019	130,070		9.41		7.21	11

Exercisable at December 31, 2018	87,370		$	11.14	6.21	$	5
Exercisable at December 31, 2019	86,736		$	10.33	5.91	$	5

The total fair value of SARs that vested during 2019 and 2018 was $0.1 million and $0.2 million, respectively. Unrecognized compensation expense related to SARs as of December 31, 2019 and 2018 was $0.2 million. As of December 31, 2019, the weighted-average period over which the unrecognized compensation cost is expected to be recognized was approximately 1.6 years.

Restricted Stock Awards

Restricted stock activity consisted of the following:



	Shares		Weighted-Average Grant Date Fair Value
December 31, 2017	496,273		$	12.20
Granted	50,000		10.92
Forfeited	(32,547	)	25.95
Vested	(254,440	)	10.14
Balance as of December 31, 2018	259,286		$	12.25
Granted	48,000		9.72
Forfeited	(11,226	)	14.16
Vested	(230,374	)	9.83
Balance as of December 31, 2019	65,686		$	18.58

The total grant date fair value of restricted stock that vested during 2019 and 2018 was $2.3 million and $2.6 million, respectively. Unrecognized compensation expense related to RSAs as of December 31, 2019 and 2018 was $0.9 million and $1.7 million, respectively. As of December 31, 2019, the weighted-average period over which the unrecognized compensation cost is expected to be recognized was approximately 2.8 years.