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 for the years ended December 31:



	2018		2017		2016
Cost of products sold	$	342	$	282	$	235
General and administrative expenses	2,862		2,337		1,755
Selling and distribution expenses	376		356		336
Restructuring expense	—		—		74
Stock-based compensation expense, net of income taxes	3,580		2,975		2,400

Earnings per share impact
Basic	$	0.25	$	0.21	$	0.17
Diluted	$	0.24	$	0.21	$	0.17

On November 4, 2016, our stockholders approved the 2016 Omnibus Incentive Plan (“2016 Plan”). The 2016 Plan provides for the granting of various types of equity-based incentives, including stock options, RSAs, RSUs, 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 RSAs and RSUs representing an aggregate of 1,639,881 shares of stock under the 2006 Plan, leaving 3,360,119 shares available for grant under the 2016 Plan. As of December 31, 2018, we have granted RSAs and RSUs representing an aggregate of 550,275 shares of stock under the 2016 Plan, and 2,809,844 shares are available for future grant.

RSAs and RSUs are granted to employees and non-employee directors based on time-vesting. For RSAs or RSUs granted to employees, vesting occurs in one-third increments on the first, second, and third anniversary of the grant date. For RSAs or RSUs granted to non-employee directors, vesting occurs on the first anniversary of the grant date. Each RSA represents a restricted share that has voting and dividend rights and becomes fully unrestricted upon vesting. Each RSU represents the right to receive one share of 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.

PSUs are granted to employees with vesting based on performance and market conditions. Each PSU represents the right to receive one share of stock upon 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. 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 PSUs 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 resulting fair 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 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
Granted	102,817		25.11
Vested	(63,288	)	14.89
Forfeited	(5,666	)	19.26
Balance at December 31, 2018	289,931		$	18.81

A summary of the activity of our nonvested shares of RSAs issued under the 2006 Plan is as follows:



	Shares		Weighted Average Grant Date Fair Value
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		$	13.88
Granted	—		—
Vested	(130,547	)	12.41
Forfeited	—		—
Balance at December 31, 2017	153,030		$	15.14
Granted	—		—
Vested	(71,223	)	10.03
Forfeited	(18,772	)	8.40
Balance at December 31, 2018	63,035		$	22.91

A summary of the activity of our nonvested RSUs issued under the 2016 Plan 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
Granted	36,000		21.88
Vested	(13,175	)	15.61
Forfeited	—		—
Balance at December 31, 2018	95,325		$	17.99

A summary of the activity of our nonvested RSUs issued under the 2006 Plan is as follows:



	Share Units		Weighted Average Grant Date Fair Value
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		$	13.35
Granted	—		—
Vested	(36,450	)	13.30
Forfeited	(333	)	6.22
Balance at December 31, 2017	58,398		$	13.42
Granted	—		—
Vested	(32,069	)	10.74
Forfeited	—		—
Balance at December 31, 2018	26,329		$	16.69

A summary of the activity of our nonvested PSUs issued under the 2016 Plan 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
Granted	23,000	26.47
Vested	—	—
Forfeited	—	—
Balance at December 31, 2018	46,000	$	22.32

As of December 31, 2018, total unrecognized stock-based compensation related to unvested awards was as follows:

Employee Stock Purchase Plan

We have an Employee Stock Purchase Plan (“ESPP”) pursuant to which we are authorized to issue up to 850,000 shares of DMC common stock of which 241,365 shares remain available for future purchase as of December 31, 2018. 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 stock at the lesser of 85% of the fair market value of the stock on the Offering Date or the Purchase Date. In connection with the ESPP, 18,100, 26,519, and 45,888 shares of our stock were purchased during the years ended December 31, 2018, 2017, and 2016, respectively. Our total stock-based compensation expense for 2018, 2017, and 2016 includes $121, $92, and $54 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 $828, $511, and $455 for the years ended December 31, 2018, 2017 and 2016, respectively.

Defined Benefit Plans

We have defined benefit pension plans at certain foreign subsidiaries for which we have recorded an unfunded pension obligation of $1,708 and $1,374 as of December 31, 2018 and 2017, 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 expense of $406, $10 and $235 (recorded in general and administrative expenses) for the years ended December 31, 2018, 2017 and 2016, respectively.

Unrecognized stock compensation

Weighted-average recognition period

Unvested RSAs

Unvested RSUs

Unvested PSUs