STOCKHOLDERS’ EQUITY

Dividends

On April 10, 2015, a special dividend of $2.00 per share of the Company’s Common Stock, representing an aggregate of $48.2 million, was paid to stockholders of record as of March 27, 2015. On January 6, 2014, a special dividend of $2.00 per share of the Company’s Common Stock, representing an aggregate of $46.7 million, was paid to stockholders of record as of December 20, 2013. In connection with these special dividends, holders of deferred stock units, restricted stock and stock awards were credited with deferred stock units, restricted stock or stock equal to $2.00 per special dividend for each deferred stock unit, share of restricted stock or stock award, representing $1.8 million in total for each of the 2015 and 2014 special dividends. In connection with each of these special cash dividends, the exercise price of all outstanding stock options was reduced by $2.00 per share. These reductions in exercise price were made pursuant to the terms of the outstanding awards, resulting in no incremental stock-based compensation expense.

In 2016, the Company initiated the payment of regular quarterly dividends. The table below summarizes the regular quarterly dividends declared and paid during the year ended December 31, 2016:



(In thousands, except per share data)	Per Share		Record Date	Payment Date	Total Paid
First Quarter 2016	$	0.30	04/01/16	04/15/16	$	7,344
Second Quarter 2016	0.30		06/06/16	06/17/16	7,363
Third Quarter 2016	0.30		08/19/16	09/02/16	7,371
Fourth Quarter 2016	0.50		11/28/16	12/09/16	12,359
Total 2016	$	1.40			$	34,437

Stock-Based Awards

Pursuant to the LCI Industries Equity Award and Incentive Plan, as Amended and Restated (the “Equity Plan”), which was approved by stockholders in May 2011, the Company may grant to its directors, employees, and other eligible persons Common Stock-based awards, such as stock options, restricted stock and deferred stock units. All such awards granted under the Equity Plan must be approved by the Compensation Committee of LCII’s Board of Directors (the “Committee”). The Committee determines the period for which all such awards may be exercisable, but in no event may such an award be exercisable more than 10 years from the date of grant. The number of shares available under the Equity Plan, and the exercise price of all such awards granted under the Equity Plan, are subject to adjustments by the Committee to reflect stock splits, dividends, recapitalization, mergers, or other major corporate actions.

At the Annual Meeting of Stockholders held on May 22, 2014, stockholders approved an amendment to the Equity Plan to increase the number of shares of common stock available for issuance pursuant to awards by 1,678,632 shares.

The number of shares available for granting awards was 1,049,752, 1,305,440 and 1,389,506 at December 31, 2016, 2015 and 2014, respectively.

Stock-based compensation resulted in charges to operations as follows for the years ended December 31:



(In thousands)	2016		2015		2014
Stock options	$	444	$	974	$	1,412
Deferred stock units	7,830		7,023		4,343
Restricted stock	1,770		1,031		910
Stock awards	5,376		5,015		4,152
Stock-based compensation expense	$	15,420	$	14,043	$	10,817

Stock-based compensation expense is recorded in the Consolidated Statements of Income in the same line as cash compensation to those employees is recorded, primarily in selling, general and administrative expenses. In addition, for the years ended December 31, 2016, 2015 and 2014, the Company issued deferred stock units to certain executive officers in lieu of cash for a portion of prior year incentive compensation, in accordance with their compensation arrangements, of $0.3 million, $2.0 million and $2.0 million, respectively. In February 2017, the Company issued deferred stock units valued at $6.9 million, to certain officers in lieu of cash for a portion of their 2016 incentive compensation in accordance with their compensation arrangements.

Stock Options

The Equity Plan provides for the grant of stock options that qualify as incentive stock options under Section 422 of the Internal Revenue Code, and non-qualified stock options. The exercise price for stock options granted under the Equity Plan must be at least equal to 100 percent of the fair market value of the shares subject to such stock option on the date of grant. The exercise price may be paid in cash or in shares of the Company’s Common Stock which have been held for a minimum of six months. Historically, upon exercise of stock options, new shares have been issued instead of using treasury shares.

Outstanding stock options expire six years from the date of grant, and either vest ratably over the service period of five years for employees or, for certain executive officers, based on achievement of specified performance conditions. As a result of the Company’s executive succession and corporate relocation, the vesting of certain stock options was accelerated pursuant to contractual obligations with certain employees whose employment terminated as a result of the relocation to Indiana. Transactions in stock options under the Equity Plan are summarized as follows:



	Number of Option Shares		Weighted Average Exercise Price
Outstanding at December 31, 2013	723,661		$	15.46
Exercised	(258,530	)	$	12.89
Forfeited	(11,800	)	$	16.93
Reduction for special cash dividend	—		$	(2.00	)
Outstanding at December 31, 2014	453,331		$	16.89
Exercised	(214,601	)	$	14.48
Forfeited	(26,700	)	$	14.30
Reduction for special cash dividend	—		$	(2.00	)
Outstanding at December 31, 2015	212,030		$	15.38
Exercised	(183,600	)	$	15.10
Forfeited	(1,550	)	$	17.17
Outstanding at December 31, 2016 ^(a)	26,880		$	17.17
Exercisable at December 31, 2016 ^(a)	26,880		$	17.17


(a)	The aggregate intrinsic value for option shares outstanding and option shares exercisable is $2.4 million. The weighted average remaining term for option shares outstanding and option shares exercisable is 0.9 years.

Additional information for the exercise of stock options is as follows for the years ended December 31:



(In thousands)	2016		2015		2014
Intrinsic value of stock options exercised	$	13,204	$	9,424	$	7,860
Cash receipts from stock options exercised	$	2,772	$	3,280	$	3,333
Income tax benefits from stock option exercises	$	4,435	$	2,885	$	3,660
Grant date fair value of stock options vested	$	506	$	1,055	$	1,561

Deferred and Restricted Stock Units

The Equity Plan provides for the grant or issuance of deferred stock units (“DSUs”) and restricted stock units (“RSUs”) to directors, employees and other eligible persons. Recipients of DSUs and RSUs are entitled to receive shares at the end of a specified vesting or deferral period. Holders of DSUs and RSUs receive dividends granted to holders of the Common Stock, payable in additional DSUs and RSUs, and are subject to the same vesting criteria as the original grant.

DSUs vest (i) ratably over the service period, (ii) at a specified future date, or (iii) for certain officers, based on achievement of specified performance conditions. RSUs vest (i) ratably over the service period or (ii) at a specified future date. As a result of the Company’s executive succession and corporate relocation, the vesting of certain deferred stock units was accelerated pursuant to contractual obligations with certain employees whose employment terminated. In addition, DSUs are issued in lieu of cash compensation. Transactions in DSUs and RSUs under the Equity Plan are summarized as follows:



	Number of Shares		Weighted Average Price
Outstanding at December 31, 2013	692,961		$	30.26
Issued	56,212		$	46.08
Granted	187,490		$	46.94
Dividend equivalents	27,532		$	50.45
Forfeited	(38,855	)	$	29.83
Exercised	(187,052	)	$	29.90
Outstanding at December 31, 2014	738,288		$	36.96
Issued	54,982		$	47.51
Granted	90,184		$	60.22
Dividend equivalents	20,922		$	59.94
Forfeited	(23,604	)	$	44.78
Exercised	(353,259	)	$	32.62
Outstanding at December 31, 2015	527,513		$	44.94
Issued	10,742		$	72.01
Granted	173,097		$	54.67
Dividend equivalents	9,075		$	87.01
Forfeited	(10,893	)	$	48.98
Exercised	(203,087	)	$	43.55
Outstanding at December 31, 2016	506,447		$	50.00

As of December 31, 2016, there was $14.4 million of total unrecognized compensation costs related to DSUs and RSUs, which is expected to be recognized over a weighted average remaining period of 1.5 years.

Restricted Stock

The Equity Plan provides for the grant of restricted stock to directors, employees and other eligible persons. The restriction period is established by the Committee, but may not be less than one year. Holders of restricted stock have all the rights of a stockholder of the Company, including the right to vote and the right to receive dividends granted to holders of the Common Stock, payable in additional shares of restricted stock, and subject to the same vesting criteria as the original grant. Shares of restricted stock are not transferable during the restriction period. Restricted stock grants, which were all made to directors, were as follows (in thousands except share and per share amounts):



	2016		2015		2014
Granted	17,439		20,558		19,439
Weighted average stock price	$	74.55	$	59.60	$	46.82
Fair value of stock granted	$	1,300	$	1,220	$	910

As of December 31, 2016, there was $0.5 million of total unrecognized compensation costs related to restricted stock, which is expected to be recognized over a weighted average remaining period of 0.4 years.

Stock Awards

In accordance with the employment agreements for various officers of the Company, such officers are entitled to receive an annual long-term award consisting of the right to earn shares of common stock. These shares are earned during the subsequent three year period based on growth in the Company’s earnings per diluted share. Transactions in stock awards under the Equity Plan are summarized as follows:



	Number of Shares		Stock Price
Outstanding at December 31, 2013	193,602		$	30.84
Granted	103,500		$	51.20
Dividend equivalents	7,675		$	50.45
Exercised	(31,959	)	$	26.88
Outstanding at December 31, 2014	272,818		$	39.03
Granted	96,010		$	60.29
Dividend equivalents	8,992		$	59.94
Forfeited	(16,534	)	$	60.29
Exercised	(98,830	)	$	29.70
Outstanding at December 31, 2015	262,456		$	49.36
Granted	86,918		$	54.47
Dividend equivalents	3,811		$	88.04
Forfeited	(10,832	)	$	53.95
Exercised	(109,731	)	$	39.94
Outstanding at December 31, 2016	232,622		$	55.60

As of December 31, 2016, there was $7.6 million of total unrecognized compensation costs related to outstanding stock awards, which is expected to be recognized over a weighted average remaining period of 1.4 years.

Weighted Average Common Shares Outstanding

The following reconciliation details the denominator used in the computation of basic and diluted earnings per share for the years ended December 31:



(In thousands)	2016	2015	2014
Weighted average shares outstanding for basic earnings per share	24,631	24,295	23,911
Common stock equivalents pertaining to stock-based awards	302	355	423
Weighted average shares outstanding for diluted earnings per share	24,933	24,650	24,334

The weighted average diluted shares outstanding for the years ended December 31, 2016, 2015 and 2014, exclude the effect of 184,277, 255,547 and 293,860 shares of common stock, respectively, subject to stock-based awards. Such shares were excluded from total diluted shares because they were anti-dilutive or the specified performance conditions that those shares were subject to were not yet achieved.