Note 15 – Equity and Stock-Based Compensation

Former Executive Stock-Based Compensation

As part of his compensation package, Mr. James J. Cotter, Sr., our now deceased former Chairman of the Board and Chief Executive Officer, was granted restricted Class A Non-voting Common Stock (“Class A Stock”) for 2014. Mr. Cotter, Sr.’s stock compensation was granted fully vested with a five-year restriction on sale and the applicable compensation expense was recorded in the year of grant. The 2014 stock grants were issued in the first quarter of 2015.

Employee and Director Stock Option Plan

The Company may grant stock options and other share-based payment awards of our Class A Stock to eligible employees, directors, and consultants under the 2010 Stock Incentive Plan (the “Plan”). The aggregate total number of shares of the Class A Nonvoting Common Stock authorized for issuance under the Plan is 1,250,000. As of March 31, 2016, we had 663,800 shares remaining for future issuances.

Since the adoption of the Plan in 2010, the Company has granted awards primarily in the form of stock options. In the 1st quarter of 2016, the Company started to award restricted stock units (“RSUs”) to directors and certain officers. Stock options are generally granted at exercise prices equal to the grant-date market prices and typically expire no later than five years from the grant date. In contrast to a stock option where the grantee buys the Company’s share at an exercise price determined on grant date, an RSU entitles the grantee to receive one share for every RSU based on a vesting plan. At the discretion of our Compensation and Stock Options Committee, the vesting period of stock options and RSUs ranges from zero to four years. At the time the options are exercised or RSUs vest, at the discretion of management, we will issue treasury shares or make a new issuance of shares to the option or RSU holder.

Stock Options

We estimate the grant-date fair value of our stock options using the Black-Scholes option-valuation model, which takes into account assumptions such as the dividend yield, the risk-free interest rate, the expected stock price volatility, and the expected life of the options. We expense the estimated grant-date fair values of options over the vesting period on a straight-line basis. Based on our historical experience and the relative market price to strike price of the options, we have not hereto estimated any forfeitures of vested or unvested options.

For the three months ended March 31, 2016 and 2015, respectively, the weighted average assumptions used in the option-valuation model were as follows:


	Three Months Ended March 31
	2016			2015
Stock option exercise price	$	11.83	$	12.34
Risk-free interest rate		1.24%		1.77%
Expected dividend yield		--		--
Expected option life in years		3.75		5.00
Expected volatility		24.94%		31.80%
Weighted average fair value	$	2.48	$	3.83

We recorded compensation expense of $98,000 and $57,000 for the three months ended March 31, 2016 and 2015 respectively. At March 31, 2016, the total unrecognized estimated compensation cost related to non-vested stock options was $830,000, which we expect to recognize over a weighted average vesting period of 2.19 years. No stock options were exercised during the three months ended March 31, 2016. The intrinsic, unrealized value of all options outstanding, vested and expected to vest, at March 31, 2016 was $1.8 million, of which 63.6% are currently exercisable.

The following table summarizes the information of options outstanding and exercisable as of March 31, 2016 and December 31, 2015:


	Options Outstanding							Exercisable Options
	Number of Options		Weighted Average Exercise Price				Weighted Average Remaining Years of Contractual Life	Number of Options		Weighted Average Exercise Price				Weighted Average Remaining Years of Contractual Life
(Shares in thousands)	Class A	Class B	Class A		Class B		Class A & B	Class A	Class B	Class A		Class B		Class A & B
Balance - December 31, 2014	568	185	$	6.88	$	9.90	2.40	348	185	$	6.82	$	9.90	3.63
Granted	112	--		13.30		--		101	--		--		--
Exercised	(185)	(185)		6.09		9.90		(185)	(185)		--		--
Forfeited	(8)	--		6.23		--		(8)	--		--		--
Balance - December 31, 2015	487	--	$	7.64	$	--	2.89	256	--	$	7.64	$	--	2.14
Granted	142	-		11.83		-		10	-		-		-
Exercised	-	-		-		-		-	-		-		-
Forfeited	(2)	-		$6.23		-		-	-		-		-
Balance - March 31, 2016	627	--	$	9.40		-	3.17	266	--	$	7.78	$	--	2.04

Restricted Stock Units

We estimate the grant-date fair values of our RSUs using the Company’s stock price at grant-date and record such fair values as compensation expense over the vesting period on a straight-line basis. In March 2016, RSU awards of 62,528 units were granted to directors and certain members of management, which remained unvested as of March 31, 2016. These RSU awards vest 25% at the end of each year for 4 years (in the case of executives) and vest 100% at the end of one year (in the case of directors). We recognized compensation expense of $31,000 during the three months ended March 31, 2016. The total unrecognized compensation cost related to these unvested RSUs was $717,000 as of March 31, 2016.

Common Stock Buyback

On May 16, 2014, the Company's board of directors authorized management, at its discretion, to spend up to an aggregate of $10.0 million to acquire shares of Reading’s Common Stock. This approved stock repurchase plan supersedes and effectively cancelled the program that was approved by the board on May 14, 2004, which allowed management to purchase up to 350,000 shares of Reading’s Common Stock.

The repurchase program allows Reading to repurchase its shares in accordance with the requirements of the SEC on the open market, in block trades and in privately negotiated transactions, depending on market conditions and other factors. All purchases are subject to the availability of shares at prices that are acceptable to Reading, and accordingly, no assurances can be given as to the timing or number of shares that may ultimately be acquired pursuant to this authorization.

Under this approved buyback program, the Company has repurchased $7.2 million worth of common stock at an average price of $12.92 per share. This leaves $2.8 million available for repurchase as of March 31, 2016.