10.	Shareholders’ Equity

Dividends

Our dividend policy and the payment of cash dividends under that policy are subject to the Board of Director’s continuing determination that the dividend policy and the declaration of dividends are in the best interest of the Company’s shareholders. Future dividends and the dividend policy may be changed or cancelled at the Company’s discretion at any time. Payment of dividends is also subject to the continuing compliance with our financial covenants under our Credit Facility.

During 2016, 2015 and 2014, our Board declared the following quarterly cash dividends on our common stock:

Dividend Per Share	Record Date	Payment Date
$0.066	December 16, 2016	December 30, 2016
$0.066	September 16, 2016	September 30, 2016
$0.066	June 18, 2016	June 30, 2016
$0.066	March 18, 2016	March 31, 2016
$0.066	December 16, 2015	December 30, 2015
$0.066	September 18, 2015	September 30, 2015
$0.066	June 12, 2015	June 26, 2015
$0.066	March 19, 2015	March 31, 2015
$0.060	December 19, 2014	December 30, 2014
$0.060	September 16, 2014	September 30, 2014
$0.060	June 13, 2014	June 27, 2014
$0.050	March 19, 2014	March 31, 2014

On March 6, 2017, our Board of Directors declared a quarterly dividend of $0.075 per share. The dividend will be paid on March 31, 2017 to all shareholders of record at the close of business on March 17, 2017.

Effective August 13, 2012, the Company implemented a Dividend Reinvestment Plan (the “Plan”), under which the Company may issue up to 750,000 shares of common stock. The Plan provides a way for interested shareholders to increase their holdings in our common stock. Participation in the Plan is strictly voluntary and is open only to existing shareholders. The Plan has had limited participation.

Share-Based Compensation

The 2007 Equity Incentive Plan (the “2007 Plan”) was approved by shareholders on May 23, 2007 and replaced the 1997 Stock Option Plan (the “1997 Plan”). The 2007 Plan permits the granting of stock options and stock awards which are granted at a price equal to or greater than the fair market value of the Company’s common stock at the date of the grant. Stock options granted to employees generally vest equally over a period of three to five years from the date of the grant. Stock awards granted to employees generally vest equally over a period of four to five years from the date of the grant. During 2016, approximately 105,000 stock options and 267,000 restricted stock awards were granted to plan participants under the 2007 Plan. During 2015, approximately 286,000 stock options and 323,000 restricted stock awards were granted to plan participants under the 2007 Plan. There are approximately 53,000 performance-based awards outstanding at December 31, 2016 and December 31, 2015. The remainder of the awards outstanding are service based awards that vest over a service period. The number of shares reserved for issuance under the 2007 Plan is 3,300,000, of which approximately 414,000 shares were available for future grant as of December 31, 2016.

Share-based compensation expense for stock options and restricted stock awards under these plans of $2.2 million, $1.9 million and $1.7 million was recorded in the years ended December 31, 2016, 2015 and 2014, respectively. The tax benefit related to share based compensation expense was $0.2 million, zero, and $0.2 million in 2016, 2015 and 2014, respectively.

Employee Stock Purchase Plan

The 2009 Employee Stock Purchase Plan (“ESPP”) was approved by shareholders on May 21, 2009.

The ESPP is administered by the Compensation Committee. The aggregate maximum number of shares of the Company’s common stock that may be granted under the ESPP is 1,500,000 shares over the ten-year term of the ESPP, subject to adjustment in the event there is a reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, or similar transaction with respect to the common stock.

The ESPP allows employees to purchase shares of common stock at a 15% discount from market price and pay for the shares through payroll deductions. Eligible employees can enter the plan at specific “offering dates” that occur in six month intervals.

The Company recognized employee stock purchase plan expense of $71,000, $54,000 and $19,000 during the years ended December 31, 2016, 2015 and 2014, respectively.

Employees’ Stock Ownership Trust

The Company sponsors an employee stock ownership plan under which it may make discretionary contributions to the trust, either in cash or in shares of Company common stock, for certain salaried employees of Met-Pro in the United States who are eligible to participate in the Plan. There were no contributions to the Employees’ Stock Ownership Trust for the years ended December 31, 2016, 2015 and 2014. All shares are considered to be allocated to participants or to be released for allocation to participants, and are included in the earnings per share computations.

Stock Options and Restricted Awards

The weighted-average fair value of stock options granted during 2016, 2015, and 2014 was estimated at $2.07, $4.35 and $6.48 per option, respectively, using the Black-Scholes option-pricing model based on the following assumptions:

Expected Volatility: The Company utilizes a volatility factor based on the Company’s historical stock prices for a period of time equal to the expected term of the stock option utilizing weekly price observations. For 2016, 2015, and 2014, the Company utilized weighted-average volatility factors of 39%, 44% and 55%, respectively.

Expected Term: Due to limited historical exercise data, the Company utilizes the simplified method of determining the expected term based on the vesting schedules and terms of the stock options. For 2016, 2015 and 2014, the Company utilized weighted-average expected term factors of 6.5 years, 6.3 years and 6.3 years, respectively.

Risk-Free Interest Rate: The risk-free interest rate factor utilized is based upon the implied yields currently available on U.S. Treasury zero-coupon issues over the expected term of the stock options. For 2016, 2015 and 2014, the Company utilized a weighted-average risk-free interest rate factor of 2.1%, 1.9% and 2.2%, respectively.

Expected Dividends: The Company utilized a weighted average expected dividend rate of 3.6%, 2.4% and 1.7% to value options granted during 2016, 2015 and 2014, respectively.

Information related to all stock options under the 2007 Plan and 1997 Plan for the years ended December 31, 2016, 2015 and 2014 is shown in the tables below:

(Shares in thousands)	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value ($000)
Outstanding at December 31, 2015		1,877		$	10.30	6.8 years
Granted		105			7.36
Forfeitures		(268	)		11.91
Exercised		(195	)		6.90
Outstanding at December 31, 2016		1,519			10.25	6.1 years	$	5,816
Exercisable at December 31, 2016		959			9.23	5.3 years	$	4,608

(Shares in thousands)	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value ($000)
Outstanding at December 31, 2014		1,727		$	10.12	7.3 years
Granted		286			11.55
Forfeitures		(106	)		12.31
Exercised		(30	)		4.47
Outstanding at December 31, 2015		1,877			10.30	6.8 years	$	1,769
Exercisable at December 31, 2015		977			8.48	5.4 years	$	1,765

(Shares in thousands)	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value ($000)
Outstanding at December 31, 2013		1,807		$	9.05	7.7 years
Granted		280			13.78
Forfeitures		(121	)		12.45
Exercised		(239	)		5.18
Outstanding at December 31, 2014		1,727			10.12	7.3 years	$	9,390
Exercisable at December 31, 2014		655			5.02	5.8 years	$	5,332

Information related to all restricted stock awards under the 2007 Plan for the years ended December 31, 2016 is shown in the table below. The fair value of restricted stock awards is based on the price of the stock in the open market on the date of the grant. The fair value of the restricted stock awards is recorded as compensation expense on a straight-line basis over the vesting periods of the awards adjusted for the Company’s estimate of pre-vesting forfeitures. The pre-vesting forfeiture estimate is based on historical activity and is reviewed periodically and updated as necessary.

(Shares in thousands)	Shares			Weighted Average Grant Date Fair Value
Nonvested at December 31, 2015		322		$	9.55
Granted		267			9.76
Vested		(17	)		10.24
Forfeited		(62	)		9.61
Nonvested at December 31, 2016		510			9.64

The weighted average grant date fair value of restricted stock awards granted was $9.76, $9.48 and $14.41 per share in fiscal years 2016, 2015 and 2014.

The Company received $1.3 million in cash from employees exercising options during the year ended December 31, 2016, $0.1 million in cash from employees exercising options during the year ended December 31, 2015 and $1.2 million from employees exercising options during the year ended December 31, 2014. The intrinsic value of options exercised during the years ended December 31, 2016, 2015 and 2014 was $1.0 million, $0.2 million and $2.4 million, respectively. Unrecognized compensation expense related to nonvested shares of stock options and restricted stock was $6.5 million at December 31, 2016 and will be recognized over a weighted average vesting period of 3.0 years.

Warrants to Purchase Common Stock

The Company has historically issued warrants to purchase common shares in conjunction with business acquisitions, debt issuances and employment contracts.

On December 28, 2006, the Company issued warrants to purchase 250,000 shares to Icarus Investment Corp. (“Icarus”), a related party, at an exercise price of $9.07 and an expiration date of December 26, 2016. On December 7, 2016, the Company and Icarus entered into an amendment of the warrant agreement pursuant to which the warrants were issued to provide for the cashless exercise of the warrants. During the year ended December 31, 2016, all of the Company’s previously outstanding warrants were exercised and the Company issued 89,640 shares of common stock through a cashless exercise pursuant to such amendment at an effective price of $9.07 per share.

Stock Purchase

During 2016, the Company repurchased 30,000 shares of common stock from a former owner of a subsidiary acquired by the Company in 2014 for a total cost of $0.2 million. In December 2016, the Company entered into an agreement to repurchase 75,000 shares of common stock from a current segment president, who is a former owner of a subsidiary acquired by the Company in 2013, for a total cost of $1.1 million, which was paid in January of 2017. This transaction is reflected in the accounts payable and accrued expenses line in the Consolidated Balance Sheets as of December 31, 2016. The shares were immediately retired subsequent to their repurchase.

There were no stock repurchases during 2015.

During 2014, the Company repurchased 61,500 shares of common stock from a former director for a total cost of $1.0 million. The shares were immediately retired.