Stock-Based Compensation and Stockholders’ Deficit

The Company records stock-based compensation expense in accordance with ASC Topic 718, Accounting for Stock Compensation ("Topic 718") and has used the straight-line attribution method to recognize expense for time-based restricted stock units ("RSU's") and deferred stock units ("DSUs") and recognizes expense for the performance and market-based restricted stock units based on management's estimate of performance against the targets in each plan. The Company recorded stock-based compensation expense during the years ended December 31, 2014, 2013 and 2012 as follows:



	For the Years Ended December 31,
	2014		2013		2012
RSU and DSU Awards (1)	$	2,176	$	1,457	$	1,856
Management Incentive/Performance Award Programs (2)	—		—		—
Other Awards (3)	372		279		93
Total	$	2,548	$	1,736	$	1,949


(1)	Related to RSUs and DSUs awarded to certain employees and non-employee directors.


(2)	No amount was recorded for the 2012 Management Incentive Compensation Program (the “2012 MIC”), as the performance targets were not met at December 31, 2012. In 2013 and 2014, the Management Incentive Program was converted to pay out entirely in cash. Therefore, no stock-based compensation was recorded.


(3)	This amount relates to options awarded on August 15, 2012 to the CEO.

The related tax impact on stock-based compensation was a tax benefit of $28, $7 and $36 for the years ended December 31, 2014, 2013 and 2012, respectively.

2010 Equity Incentive Plan

The Company adopted the 2010 Equity Incentive Plan (the “2010 Plan”) in May of 2010. The 2010 Plan provides for the grant of awards consisting of any or a combination of stock options, stock appreciation rights, restricted stock, unrestricted stock or stock unit awards.

Long-Term Incentive Program—2014 LTIP

On May 8, 2014, the Board approved the granting of awards under the 2014 Executive Long-Term Incentive Plan (the "2014 Executive LTIP") under the 2010 Plan. Awards under the 2014 Executive LTIP are time-based, performance-based and market-based and will be paid in the form of RSUs or shares of common stock of the Company. Time-based awards, or 35% of the total award, were granted in the form of 60,339 time-based RSUs under the Company’s 2010 Plan. These time-based awards will cliff vest on May 8, 2017, and will be converted to common stock, net of applicable tax withholdings.

The performance-based awards, which constitute 32.5% of the total award, were granted in the form of 56,029 performance-based RSUs under the Company’s 2010 Plan. These awards will vest based on a targeted Adjusted EBITDA performance. The targeted Adjusted EBITDA performance portion of the award measures the Company’s performance against a three-year cumulative Adjusted EBITDA metric, adjusted for currency fluctuations during the term of the 2014 – 2016 Executive LTIP. These awards will convert into shares of the Company’s common stock and be paid after the close of a three-year performance period of January 1, 2014 through December 31, 2016. The amount of the payment will range from 0% to 100% of the employee's total Adjusted EBITDA performance shares. Upon attainment of cumulative Adjusted EBITDA equal to 80% or less of the target, none of the Adjusted EBITDA performance shares will vest. Upon attainment of more than 80% of the target, the adjusted EBITDA performance shares will begin vesting on a straight-line basis from 0% at 80% of the target to 100% at 100% of the target, up to a maximum payout of 100% of the Adjusted EBITDA performance shares.

The market-based awards, which constitute 32.5% of the total award, were granted in the form of 56,029 market-based RSU's under the Company's 2010 Plan. These awards will vest, based on the performance of the Company's stock against the performance of listed companies on the S&P Global Small Cap Index, on the third anniversary of the grant date, or May 8, 2017. These awards will convert into shares of the Company’s common stock and be paid after the close of the three-year performance period of May 8, 2014 through May 8, 2017. The shares that may vest will be up to 100%, with a lower threshold of a a 50% payout for 35th percentile performance and full payout at 100% for 55th percentile performance. Performance between the 35th and 55th percentile performance will result in an interpolated payout percentage between 50% and 100%.

Long-Term Incentive Program—2013 LTIP

On June 13, 2013, the Board approved the granting of awards under the 2013 Executive Long-Term Incentive Plan (the "2013 Executive LTIP") under the 2010 Plan. Awards under the 2013 Executive LTIP are both time-based and market-based and will be paid in the form of RSUs or shares of common stock of the Company. Time-based awards, or 50% of the total target award, were granted in the form of 179,571 time-based RSUs under the Company’s 2010 Plan. These time-based awards will cliff vest on March 11, 2016, and will be converted to common stock, net of applicable tax withholdings. Market-based awards, which constitute the remaining 50% of the total award, will vest depending on the Company’s stock price performance during the three year participant service period from March 11, 2013 through March 10, 2016. If the awards vest, they will convert into shares of the Company’s common stock and be paid after the close of the three-year period. At December 31, 2014, the Company's stock price had exceeded all stock price performance targets and is expected to payout at 100% at the end of the three-year period.

Long-Term Incentive Program—2012 LTIP

On May 8, 2012, the Board approved the 2012 Executive Long-Term Incentive Plan (the “2012 Executive LTIP”) under the 2010 Plan. Awards under the 2012 Executive LTIP are both time-based and performance-based. A specific target share award is set for each participant in the 2012 Executive LTIP. Awards will be paid in the form of RSUs or shares of common stock of the Company. Time-based awards, or 50% of the total target award, were granted in the form of 54,750 time-based RSUs under the Company’s 2012 Plan and will vest in equal installments on March 31, 2013, March 31, 2014, and March 31, 2015. These will be converted into shares of common stock as they vest. On March 31, 2013 and March 31, 2014, a total of 31,998 time-based awards vested in accordance with the 2012 Executive LTIP, and were converted to common stock, net of applicable tax withholdings. Performance-based awards, which constitute 50% of the total award, will be determined based on the Company’s performance against a three-year cumulative Adjusted EBITDA metric, adjusted for currency fluctuations during the term of the 2012 Executive LTIP. The performance-based awards will convert into shares of the Company’s common stock and be paid after the close of the three-year performance period. The amount of the payment will be based on a sliding scale ranging from 50% if the metric is achieved at 85% of the target up to 200% if the metric is achieved at or above 115% of the target. At December 31, 2014, management determined, based on the metrics above, the performance based awards are estimated to pay out at 77.3% of total target.

Other Stock Compensation Plans

On August 15, 2012, the Board of Directors of the Company appointed Harold C. Bevis to the position of President and Chief Executive Officer. The Company granted Mr. Bevis a sign-on award of 204,208 restricted stock units and options to acquire 781,701 shares of the Company's Common Stock, par value $0.001 per share. Both the restricted stock units and the options will vest over a three year period, beginning on the second anniversary of the August 15, 2012 grant date. The options have a 10-year term and an exercise price of $4.00 per share, the August 15, 2012 closing price of the Company's common stock on the New York Stock Exchange. On August 15, 2014, one third or 68,063 of Mr. Bevis's restricted stock units vested and were converted to 35,562 shares of the Company's common stock, net of withholdings. In addition, on August 15,2014 one third or 260,541 of Mr. Bevis's options vested. Mr. Bevis exercised his options through a cashless exercise, and after withholding taxes, he received 99,189 shares of the Company's common stock.

Directors’ Deferred Stock Unit Plan

On March 15, 2011, the Board approved a new compensation plan for non-management directors (the “2011 DSU Plan”). Under this plan, each director is to receive an annual retainer of $112, to be paid on a quarterly basis in arrears beginning with the quarter ended June 30, 2011. Half of the annual retainer is payable in deferred stock units (“DSUs”), with the remaining half payable in cash. The non-management directors were awarded an aggregate 24,183 DSUs under the 2011 DSU Plan for service during the year ended December 31, 2014. In addition, in accordance with the 2011 DSU Plan, 20,462 DSUs were settled in Common Stock during the year ended December 31, 2014.

Warrants

In connection with the Company’s reorganization in 2010, the holders of the Company’s Old Common Stock also received warrants to purchase an aggregate of 1,662,350 shares of New Common Stock (the “Warrants”), representing approximately 0.0324108 Warrants for each share of Old Common Stock. The Warrants are exercisable for a term of four years from the issue date at an exercise price of $19.55 per share of New Common Stock. The exercise price was determined in accordance with a formula based on the final amount of allowed claims of the Lenders. In May of 2014, these warrants expired. Accordingly, $13.5 million was reclassified from Stock warrant additional paid in capital to Additional paid in capital on the Consolidated Balance Sheets to reflect the expiration of the warrants.

A summary of RSUs outstanding as of December 31, 2014 and their vesting dates is as follows.



Plan Description	Remaining Vesting Dates	Number of RSUs
Executive time-based RSUs granted during 2012	March 31, 2015	10,418
Non-executive time-based RSUs granted during 2012	March 31, 2015	3,290
Time-based RSUs granted to CEO during 2012	August 15, 2015 and August 15, 2016	136,145
Executive time-based RSUs granted during 2013	Cliff-vest at March 10, 2016	172,573
Executive market-based RSUs granted during 2013	March 10, 2016	172,578
DSUs	Vest immediately upon grant	71,323
Executive time-based RSUs granted during 2014	Cliff-vest at March 10, 2017	60,339
Executive market-based RSUs granted during 2014	March 10, 2017	112,058
		738,724

RSU activity during years ended December 31, 2012, 2013 and 2014, are presented below.



	Number of RSUs		Price Range of Grant- Date Fair Value Per RSU	Weighted Average Grant-Date Fair Value Price Per RSU
Outstanding, December 31, 2011	292,345		7.25 – 21.69	$	13.04
Granted	444,974		4.04 – 8.25	4.13
Forfeited	(96,725	)	4.07 – 12.93	11.87
Issued or withheld for tax withholding purposes	(179,890	)	3.60 – 21.69	8.30
Outstanding, December 31, 2012	460,704		4.04 – 21.69	6.57
Granted	371,152		9.33 – 9.83	9.81
Forfeited	(47,602	)	4.07 – 21.69	3.71
Issued or withheld for tax withholding purposes	(86,650	)	4.07 – 21.69	11.26
Outstanding, December 31, 2013	697,604		4.04 – 21.69	6.57
Granted	176,118		12.00 - 15.05	12.06
Forfeited	(702	)	4.07 – 21.69	3.71
Issued or withheld for tax withholding purposes	(134,296	)	4.07 – 21.69	5.18
Outstanding, December 31, 2014	738,724		4.04 – 21.69	$	8.61
Exercisable, December 31, 2014 (1)	71,323		2.90 – 24.05	$	9.12

(1)

The Company had 71,323 non-employee director DSUs that have vested, but have not yet been converted to common stock. These DSUs have a weighted average exercise price of $9.12, an intrinsic value of $526 and a total grant-date fair value of $650. As the non-employee director can elect to exercise these DSUs six months following their retirement from the Board of Directors, there is no definite weighted average life of these DSUs.

Assumptions

In accordance with Topic 718, the Company uses the following assumptions in determining compensation expense:

Grant-Date Fair Value

The Company calculates the grant-date fair value of time-based RSUs, performance-based RSUs and non-employee directors’ DSUs based on the closing price of the Company’s common stock on the date of grant.

For the options granted on August 15, 2012, as previously discussed, the Company calculated the grant-date fair value by using the Monte Carlo and Black Scholes-Merton pricing models with the following assumptions:



	Options
Expected term (based on historical option prices)	6.5 years
Expected volatility (historical volatility blended with peers)	55.1%
Expected dividends (Credit Facility prohibits dividends)	None
Risk-free interest rate (the yield on a U,S, Treasury Strip for the option term)	1.16%

Forfeitures

As the time-based and performance-based RSUs require continued employment or service up to the time of vesting, the amount of stock-based compensation recognized during a period is required to include an estimate of forfeitures. No estimate of forfeitures has been made for RSUs and DSU’s awarded to non-employee directors because they vest immediately upon grant. Topic 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is related to employee attrition and based on a historical analysis of its employee turnover. This analysis is re-evaluated quarterly and the forfeiture rate will be adjusted as necessary. Ultimately, the actual expense recognized over the vesting period will be only for those shares that meet the requirements of continued employment up to the time of vesting. As of December 31, 2014, the forfeiture rates for the 2012 plan is estimated at 5%. In accordance with Topic 718, the cumulative effect of applying the change in estimate retrospectively is recognized in the period of change. During 2013, the Company did not change its forfeiture rate estimates, therefore no cumulative adjustment was made.

As of December 31, 2014, there was approximately $4.8 million of total unrecognized compensation expense related to unvested share-based awards which is expected to be recognized over a weighted average period of 1.64 years.

The Company’s Credit Facility generally prohibits the payment of dividends and accordingly, no such payments were made during the years ended December 31, 2014 and 2013.