STOCK OWNERSHIP AND BENEFIT PLANS

Our stock-based compensation expense results from restricted stock awards (RSAs), restricted stock units (RSUs), performance share units (PSUs), and stock issued under the Employee Stock Purchase Plan. The following table sets forth the total stock-based compensation expense included in the Consolidated Statements of Operations:



	2017		2016		2015
Cost of products sold	$	282	$	235	$	243
General and administrative expenses	2,337		1,755		2,240
Selling and distribution expenses	356		336		343
Restructuring expense	—		74		536
Stock-based compensation expense before income taxes	2,975		2,400		3,362
Income tax benefit	—		—		(915		)
Stock-based compensation expense, net of income taxes	2,975		2,400		2,447

Earnings per share impact
Basic	$	0.21	$	0.17	$	0.18
Diluted	$	0.21	$	0.17	$	0.18

On November 4, 2016, our stockholders approved the 2016 Omnibus Incentive Plan (“2016 Plan”). The 2016 Plan provides for the grant of various types of equity-based incentives, including stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance shares, performance units, other stock-based awards, and cash-based awards. Our stockholders approved a total of 5,000,000 shares available for grant under the 2016 Plan, less the number of awards outstanding under the 2006 Stock Incentive Plan ("2006 Plan") on September 21, 2016, which was the expiration date of the 2006 Plan. As of September 21, 2016, we had granted an aggregate of 1,639,881 shares of restricted stock awards and restricted stock units under the 2006 Plan, leaving 3,360,119 shares available for grant under the 2016 Plan. As of December 31, 2017, we have granted an aggregate of 379,095 shares of restricted stock awards and restricted stock units under the 2016 Plan, and 2,981,524 shares are available for future grant.

Historically, RSAs and RSUs have been granted to employees and non-employee directors based on time-vesting and/or performance conditions. For currently outstanding RSAs or RSUs with time-vesting only, vesting occurs in one-third increments on the first, second, and third anniversary of the grant date. For currently outstanding RSAs or RSUs with time and performance conditions, one-quarter of the shares vest on each of the first and second anniversaries of the grant date. On the third anniversary, all or a portion of the remaining one-half of the shares will vest based on a formula that takes into account the Company’s achievement of Adjusted EBITDA compared to a target amount and the relative total return to the Company’s stockholders in comparison to the total stockholder return of the Company’s peer group of public companies. Each RSA represents a restricted share that has voting rights, the right to receive dividends, and becomes fully unrestricted upon vesting. Each RSU represents the right to receive one share of the Company's stock upon vesting.

The fair value of RSAs and RSUs granted to employees and non-employee directors is based on the fair value of DMC’s stock on the grant date. RSAs and RSUs granted to employees and non-employee directors are amortized to compensation expense over the vesting period on a straight-line basis. Our policy is to recognize forfeitures of RSAs and RSUs as they occur.

Performance share units (PSUs) are granted to employees with vesting based on performance and market conditions. Each PSU represents the right to receive one share of the Company’s stock, contingent on the achievement of two separate, equally-weighted performance conditions - the achievement of a targeted Adjusted EBITDA goal and total shareholder return (TSR) performance relative to a disclosed peer group. A target number of PSUs is awarded on the grant date, and the recipient is eligible to earn shares of common stock between 0% and 200% of the number of targeted PSUs awarded, and the PSUs earned, if any, cliff vest at the end of the third year following the year of grant based on the degree of satisfaction of the PSU performance and market conditions.

The fair value of PSUs with target Adjusted EBITDA performance conditions is based on the fair value of DMC’s stock on the grant date, and the value is amortized to compensation expense over the vesting period based on the relative satisfaction of the performance condition to date. The fair value of PSUs with TSR performance conditions is based on a third-party valuation simulating a range of possible TSR outcomes over the performance period, and the value is amortized to compensation expense over the vesting period based on a straight-line basis. Our policy is to recognize forfeitures of PSUs as they occur.

A summary of the activity of our nonvested shares of RSAs issued under the 2016 Plan for the year ended December 31, 2017 is as follows:



	Shares		Weighted Average Grant Date Fair Value
Balance at December 31, 2016	—		$	—
Granted	260,095		15.27
Vested	(4,027	)	13.05
Forfeited	—		—

Balance at December 31, 2017	256,068		$	15.31

A summary of the activity of our nonvested shares of RSAs issued under the 2006 Plan for the years ended December 31, 2017, 2016, and 2015 is as follows:



	Shares		Weighted Average Grant Date Fair Value
Balance at December 31, 2014	262,720		$	19.55
Granted	148,972		14.65
Vested	(157,673	)	18.81
Forfeited	(12,332	)	18.82

Balance at December 31, 2015	241,687		$	19.55
Granted	228,532		8.07
Vested	(144,008	)	15.08
Forfeited	(42,634	)	10.82

Balance at December 31, 2016	283,577		$	11.74
Granted	—		—
Vested	(130,547	)	12.41
Forfeited	—		—

Balance at December 31, 2017	153,030		$	11.74

A summary of the activity of our nonvested RSUs issued under the 2016 Plan for the year ended December 31, 2017 is as follows:



	Shares		Weighted Average Grant Date Fair Value
Balance at December 31, 2016	—		$	—
Granted	73,000		15.62
Vested	—		—
Forfeited	(500	)	15.60

Balance at December 31, 2017	72,500		$	15.62

A summary of the activity of our nonvested RSUs issued under the 2006 Plan for the years ended December 31, 2017, 2016, and 2015 is as follows:



	Share Units		Weighted Average Grant Date Fair Value
Balance at December 31, 2014	84,566		$	18.33
Granted	50,167		13.90
Vested	(38,405	)	17.58
Forfeited	(9,166	)	14.23

Balance at December 31, 2015	87,162		$	18.33
Granted	48,855		6.88
Vested	(40,836	)	16.24
Forfeited	—		—

Balance at December 31, 2016	95,181		$	16.54
Granted	—		—
Vested	(36,450	)	13.30
Forfeited	(333	)	6.22

Balance at December 31, 2017	58,398		$	11.71

A summary of the activity of our nonvested PSUs issued under the 2016 Plan for the year ended December 31, 2017 is as follows:



	Shares	Weighted Average Grant Date Fair Value
Balance at December 31, 2016	—	$	—
Granted	23,000	18.18
Vested	—	—
Forfeited	—	—

Balance at December 31, 2017	23,000	$	18.18

As of December 31, 2017, total unrecognized stock-based compensation related to unvested awards was as follows:

Employee Stock Purchase Plan

We have an Employee Stock Purchase Plan (“ESPP”) which is authorized to issue up to 850,000 shares of which 259,465 shares remain available for future purchase. The offerings begin on the first day following each previous offering (“Offering Date”) and end six months from the Offering Date (“Purchase Date”). The ESPP provides that full time employees may authorize DMC to withhold up to 15% of their earnings, subject to certain limitations, to be used to purchase common stock of DMC at the lesser of 85% of the fair market value of DMC’s common stock on the Offering Date or the Purchase Date. In connection with the ESPP, 26,519, 45,888, and 33,346 shares of our stock were purchased during the years ended December 31, 2017, 2016, and 2015, respectively. Our total stock-based compensation expense for 2017, 2016, and 2015 includes $92, $54, and $89 respectively, in compensation expense associated with the ESPP.

401(k) Plan

We offer a contributory 401(k) plan to our employees. We make matching contributions equal to 100% of each employee’s contribution up to 3% of qualified compensation and 50% of the next 2% of qualified compensation contributed by each employee. Total DMC contributions were $511, $455, and $526 for the years ended December 31, 2017, 2016 and 2015, respectively.

Defined Benefit Plans

We have defined benefit pension plans at certain foreign subsidiaries for which we have recorded an unfunded pension obligation of $1,374 and $1,197 as of December 31, 2017 and 2016, respectively, which is included in other long-term liabilities in the Consolidated Balance Sheets. All necessary adjustments to the obligation are based upon actuarial calculations and are recorded directly to the Consolidated Statements of Operations. We recognized net adjustments of $10, $235 and $(16) for the years ended December 31, 2017, 2016 and 2015, respectively.

Unrecognized stock compensation

Weighted-average recognition period

Unvested RSAs

Unvested RSUs

Unvested PSUs