Stock-Based Compensation

The 2013 Equity and Incentive Compensation Plan (the "2013 Plan") authorizes the issuance of up to 6,800,000 shares of the Company's common stock for use in paying incentive compensation awards in the form of stock options or other equity awards such as restricted stock, restricted stock units ("RSUs"), stock appreciation rights ("SARs"), or performance share units ("PSUs"). Of the 6,800,000 shares authorized, a maximum of 3,400,000 shares may be issued for awards other than option rights or SARs, as defined in the 2013 Plan. The 2016 Non-Employee Directors' Long-Term Equity Compensation Plan (the "2016 Plan") authorizes the issuance of up to 400,000 shares of the Company's common stock for equity awards. Both plans have been approved by the Company's stockholders. At December 31, 2016, there were 3,651,413 shares available for granting equity awards under the 2013 Plan, of which 1,779,549 shares were available for awards other than option rights or SARs. At December 31, 2016, there were 290,002 shares available for granting equity awards under the 2016 Plan.

Restricted Stock Units

The Company's Board approves the granting of performance-based RSUs as the long-term equity component of director, officer and certain key employee compensation. The RSUs require no payment from the recipient and compensation cost is measured based on the market price of the Company's common stock on the grant date and is generally recorded over the vesting period. RSUs granted to officers and certain key employees in 2012, and prior, vested on a pro-rata basis over a three-year period or upon obtainment of specified retirement criteria. RSUs granted to officers and certain key employees in 2013, either "cliff" vest at the end of three years or upon obtainment of specified retirement criteria. RSUs granted to officers and certain key employees in 2014 and 2015, either "cliff" vest at the end of three years, upon obtainment of specified retirement or years of service criteria. RSUs granted to officers and certain key employees in 2016 either vest on a pro-rata basis over three years or upon obtainment of specified retirement or years of service criteria. Upon vesting, each RSU is exchanged for an equal number of shares of the Company's common stock. The vesting period for RSUs granted to non-employee directors is one year, and each RSU is exchanged for an equal number of shares of the Company's common stock following the termination of the participant's service as a director. RSUs do not have an option for cash payment.

The following table summarizes RSUs issued and the compensation expense recorded for the years ended December 31, 2016, 2015 and 2014:



	RSUs (a)	Weighted Average Fair Value		Expense
(Dollars in thousands, except per unit)	RSUs (a)	Weighted Average Fair Value		2016		2015				2014
Directors:
2013	46,287	$	20.60	$	—	$	—			$	318
2014	36,840	$	24.80	—		311				602
2015	59,985	$	15.69	314		627				—
2016	109,998	$	7.00	513		—				—
Employees:
2011	17,250	$	23.55	—		—				3
2012	141,486	$	18.75	—		(71		)	(b)	151
2013	170,582	$	20.63	66		87				325
2014	190,832	$	25.21	669		504				1,114
2015	239,679	$	16.53	880		919				—
2016	536,773	$	7.09	995		—				—
Total				$	3,437	$	2,377			$	2,513


(a)	Represents number of awards originally issued.


(b)	Represents the impact of forfeitures during 2015.

RSU activity for the year ended December 31, 2016 was as follows:



	Number of Shares		Weighted Average Grant-Date Fair Value
Non-vested at December 31, 2015	438,358		$	19.12
Granted	646,771		$	7.08
Vested	(102,256	)	$	17.65
Forfeited	(55,791	)	$	13.90
Non-vested at December 31, 2016	927,082		$	11.19

At December 31, 2016, the total unrecognized compensation cost related to non-vested RSUs was $4.0 million, which will be recognized over a weighted-average period of 1.8 years. There was a $1.1 million decrease in excess tax benefits from RSUs recognized in 2016. There was no change in excess tax benefits from RSUs recognized in 2015 and 2014.

Stock Appreciation Rights

The Company may grant SARs to officers and certain key employees under the 2013 Plan. The SARs generally vest on a pro-rata basis from one to five years from the grant date or upon specified retirement or years of service criteria, and expire no later than ten years after the grant date. The exercise price of the SARs is the fair value on the grant date. Upon exercise, shares of Company's common stock are issued based on the increase in the fair value of the Company's common stock over the exercise price of the SAR. SARs do not have an option for cash payment.

During 2014, the Company issued SARs covering 51,900 shares in April, 255,090 shares in May, 31,405 shares in July, 84,290 shares in August, 15,808 shares in September and 12,401 shares in November under the 2013 Plan. During 2015, the Company issued SARs covering 532,615 shares in May under the 2013 Plan. During 2016, the Company issued SARS covering 554,719 shares in May, and 21,686 shares in November under the 2013 Plan.

The fair value of each SAR grant was estimated on the grant date using a Black-Scholes pricing model with the following assumptions:



	Risk-free Interest rate		Dividend Yield		Expected Life (Years)	Volatility		SAR Grant Price		Fair Value of SAR
May 2013 Grant	1.17	%	3.61	%	6.5	44.1	%	$	22.70	$	6.86
June 2013 Grant	1.41	%	3.56	%	6.5	44.1	%	$	23.03	$	7.07
November 2013 Grant	1.91	%	3.13	%	6.5	43.8	%	$	26.22	$	8.60
April 2014 Grant	1.98	%	3.53	%	6.0	44.3	%	$	23.25	$	7.25
May 2014 Grant (1st)	1.90	%	3.16	%	6.0	43.2	%	$	25.93	$	8.16
May 2014 Grant (2nd)	1.82	%	3.05	%	6.0	42.8	%	$	26.92	$	8.47
July 2014 Grant	2.00	%	3.24	%	6.0	41.2	%	$	25.27	$	7.55
August 2014 Grant	1.92	%	3.27	%	6.0	41.2	%	$	25.11	$	7.46
September 2014 Grant	2.03	%	3.50	%	6.0	40.6	%	$	23.43	$	6.72
November 2014 Grant	1.78	%	4.00	%	6.0	38.6	%	$	20.48	$	5.17
May 2015 Grant	1.70	%	4.96	%	6.0	35.8	%	$	16.53	$	3.39
May 2016 Grant	1.39	%	—	%	6.0	42.1	%	$	7.00	$	2.93
November 2016 Grant	1.74	%	—	%	6.0	43.8	%	$	12.25	$	5.38

SARs activity for the years ended December 31, 2016 was as follows:



	Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions) (c)
Outstanding, December 31, 2015	1,100,410		$	20.55	$	—
Granted	576,405		$	7.20
Forfeited/Expired	(140,942	)	$	17.58
Outstanding, December 31, 2016	1,535,873		$	15.81	$	3.4


(c)	Intrinsic value is defined as the difference between the current market value and the exercise price, for those SARs where the market price exceeds the exercise price.

No SARs were exercised in 2016 and 2015. The total intrinsic value of SARs exercised in 2014 was $0.2 million.

The following table summarizes information concerning outstanding and exercisable SARs at December 31, 2016:



	SARs Outstanding					SARs Exercisable
Range of exercisable prices	Vested	Non-vested	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Life in Years	Number Exercisable	Weighted-Average Exercise Price per Share
$7.00 - $12.25	—	538,862	$	7.21	9.36	—	$	—
$16.53 - $22.70	274,632	414,447	$	18.44	7.56	274,632	$	18.53
$23.03 - $26.92	246,717	61,215	$	25.00	7.41	246,717	$	25.18
	521,349	1,014,524	$	15.81	7.81	521,349	$	21.68

Total compensation expense related to SARs was $1.7 million, $1.2 million and $1.0 million for the years ended December 31, 2016, 2015 and 2014, respectively. At December 31, 2016, outstanding SARs have a weighted-average remaining contractual life of 7.81 years and $3.4 million of intrinsic value. Vested and currently exercisable SARs have a weighted-average remaining contractual life of 7.50 years and no aggregate intrinsic value as the exercise price for all vested and exercisable SARs exceeds the current market value. At December 31, 2016, total unrecognized compensation expense related to non-vested SARs was $2.5 million, which is expected to be recognized over a weighted average period of 1.7 years.

Weighted-average grant date fair value of non-vested SARs for the years ended December 31, 2016 was as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Non-vested shares, December 31, 2015	852,099		$	5.04
Granted	576,405		$	3.02
Vested	(328,965	)	$	5.40
Forfeited	(85,015	)	$	4.28
Non-vested shares, December 31, 2016	1,014,524		$	3.84

Performance Share Units

Beginning in 2014, the Company granted PSUs to officers and certain key employees that may be earned based on the Company's total shareholder return over the three-year performance period. PSUs are paid out at the end of each performance period based on the Company’s performance, which is measured by determining the percentile rank of the total shareholder return of the Company's common stock in relation to the total shareholder return of a specific peer group of companies. For PSUs issued in 2014 and 2015, the peer group of companies utilized was the S&P Midcap 400 Index. For PSUs issued in 2016, the peer group of companies utilized is the S&P 600 Industrial Index. The payment of PSUs following the performance period will be based in accordance with the scale set forth in the PSU agreements, and may range from 0% to 200% of the initial grant. PSUs do not have an option for cash payment.

During the year ended December 31, 2014, the Company granted 15,700 shares in April, 82,526 shares in May, 11,487 shares in July, 26,550 shares in August, 4,980 shares in September and 3,906 shares in November under the 2013 Plan. During the year ended December 31, 2015, the Company granted 237,063 shares in May under the 2013 Plan. During the year ended December 31, 2016, the Company granted 527,249 shares in May and 9,524 shares in November under the 2013 plan. The fair value of PSUs granted was estimated on the grant date using a Monte Carlo pricing model with the following assumptions:



	Risk-free Interest rate		Dividend Yield		Expected Life (Years)	Volatility		Fair Value of PSU
April 2014 Grant	0.75	%	—	%	2.73	34.3	%	$	18.00
May 2014 Grant (1st)	0.70	%	—	%	2.65	31.8	%	$	25.26
May 2014 Grant (2nd)	0.63	%	—	%	2.61	30.1	%	$	27.53
July 2014 Grant	0.74	%	—	%	2.42	26.9	%	$	22.31
August 2014 Grant	0.67	%	—	%	2.42	26.9	%	$	21.86
September 2014 Grant	0.72	%	—	%	2.29	25.7	%	$	15.26
November 2014 Grant	0.55	%	—	%	2.10	26.3	%	$	7.42
May 2015 Grant	0.83	%	—	%	2.65	28.5	%	$	14.48
May 2016 Grant	0.84	%	—	%	2.65	33.3	%	$	7.19
November 2016 Grant	0.96	%	—	%	2.14	35.2	%	$	17.84

Total compensation expense related to PSUs was $2.5 million, $1.4 million and $0.9 million for the years ended December 31, 2016, 2015 and 2014, respectively. At December 31, 2016, total unrecognized compensation expense related to non-vested PSUs was $3.3 million, which is expected to be recognized over a weighted average period of 1.7 years.

A summary of the Company's non-vested PSU activity during the years ending December 31, 2016 was as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Non-vested shares, December 31, 2015	315,212		$	16.94
Granted	536,773		$	7.38
Forfeited	(63,217	)	$	12.78
Cancellations (d)	(96,206	)	$	21.69
Non-vested shares, December 31, 2016	692,562		$	9.25


(d)	The measurement period for PSUs issued in 2014 ended on December 31, 2016. The Company's total shareholder return compared to the peer group of companies resulted in no shares being issued because no PSUs were earned.

Stock Options

The Company may grant incentive stock options and nonqualified stock options to officers, certain key employees and non-employee directors under the plans noted above. The stock options would generally vest three years from the grant date, which is the date the Board approved the grants, and expire no later than seven years after the grant date. The exercise price of the stock option would be fair value on the grant date. Upon exercise, a new share of Company common stock is issued for each stock option. Stock option activity for the years ended December 31, 2016 was as follows:



	Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions)(e)
Outstanding, December 31, 2015	90,000		$	31.75	$	—
Forfeited/Expired	(35,000	)	$	31.75	$	—
Outstanding, December 31, 2016	55,000		$	31.75	$	—


(e)	Intrinsic value is defined as the difference between the current market value and the exercise price, for those options where the market price exceeds the exercise price.

There was no compensation expense related to stock options in 2016 and 2015. Compensation expense related to stock options totaled less than $0.1 million in 2014. At December 31, 2016 and 2015, there was no unrecognized compensation expense related to non-vested stock options. There were no stock options exercised and no net cash proceeds from the exercise of stock options in 2016, 2015 and 2014.

The following table summarizes information concerning outstanding and exercisable options at December 31, 2016:



	Stock Options Outstanding					Stock Options Exercisable
Range of Exercisable Prices	Vested	Non-vested	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life in Years	Number Exercisable	Weighted Average Exercise Price Per Share
$31.75 - $31.75	55,000	—	$	31.75	1.1	55,000	$	31.75

During 2014, the Company issued 27,672 common shares to the Interim Chief Executive Officer as part of his compensation agreement. These shares vested immediately and were not subject to any holding period restrictions. The fair value of these other stock grants were based on the market price of the Company's stock at the grant date. Expense recognized in 2014 for these other stock grants totaled $0.7 million. In addition, 55,919 common shares were issued to other officers and key employees to settle previous fully-vested liability-based long-term incentive award programs.