19. Stock Options and Incentive Plans

We recognized no stock option expense during 2013, 2012 or 2011 and there are currently no remaining unvested options for which stock-option compensation costs will be recognized in future periods.

There have been no stock options granted since November 2002 and we have no stock option plan under which options may be granted. Options issued under previous plans and still outstanding were exercisable in five cumulative annual amounts beginning twelve months after date of grant. Option exercise prices were normally equal to and were not permitted to be less than the market value on the date of grant. Unexercised options generally terminate twenty years after the date of grant for all plans, and must be exercised within ten years of retirement.

Activity with respect to these plans is as follows:

	2013	2012	2011
Shares under option January 1	507,313	597,313	639,163
Options canceled	-	23,300	400
Options exercised	278,780	66,700	41,450
Shares under option at December 31	228,533	507,313	597,313
Options exercisable at December 31	228,533	507,313	597,313

The weighted average exercise price is as follows:

	2013	2012	2011
Shares under option January 1	$19.45	$19.54	$19.51
Options granted	-	-	-
Options canceled	-	21.23	20.54
Options exercised	19.87	19.65	19.03
Shares under option December 31	18.94	19.45	19.54
Options exercisable December 31	18.94	19.45	19.54

As of December 31, 2013, the aggregate intrinsic value of vested options was $3.9 million. The aggregate intrinsic value of options exercised was $3.1 million in 2013, $0.2 million in 2012, and $0.3 million in 2011.

Executive Management share-based compensation:

In 2011, shareholders approved the Albany International 2011 Incentive Plan, replacing the similar 2005 Incentive Plan approved by shareholders in 2005. Awards granted to date under these plans provide key members of management with incentive compensation based on achieving certain performance targets over a three year period. Such awards are paid out partly in cash and partly in shares of Class A Common Stock. In March 2013 we issued 40,255 shares and made cash payments totaling $1.1 million. In March 2012 we issued 6,727 shares and made cash payments totaling $0.2 million, and in March 2011, we issued 32,177 shares and made cash payments totaling $0.8 million. Shares that are expected to be paid out are included in the calculation of diluted earnings per share. If a person terminates employment prior to the award becoming fully vested, the person may forfeit all or a portion of the incentive compensation award. Expense associated with these awards is recognized over the vesting period, which includes the year for which performance targets are measured and may, if payment is made over three years, include the two subsequent years. In connection with this plan, we recognized expense of $2.4 million per year in 2013, 2012 and 2011.

In 2011, the Board of Directors modified the annual incentive plan for executive management whereby 40 percent of the earned incentive compensation is payable in the form of shares of Class A Common Stock. In March 2013, the Company issued 34,988 shares and made cash payments totaling $2.0 million as a result of performance in 2012. In March 2012, the Company issued 27,768 shares and made cash payments totaling $1.5 million as a result of performance in 2011. Expense recorded for this plan was $2.3 million in 2013, $3.4 million in 2012, and $2.7 million in 2011.

The grant date share price is determined when the awards are approved each year and that price is used for measuring the cost for the share-based portion of the award. Shares payable under these plans generally vest immediately prior to payment. Participants may elect to receive shares net of applicable income taxes, which is taken into consideration for the calculation of diluted earnings per share. As of December 31, 2013, there were 339,050 shares of Company stock authorized for the payment of awards under these plans. Information with respect to these plans is presented below:

	Number of shares		Weighted average grant date value per share	Year-end intrinsic value (000's)
Shares potentially payable at January 1, 2011	90,871		$22.40	$2,153
Forfeitures	-		-
Payments	(34,268	)	$22.40
Shares accrued based on 2011 performance	104,677		$24.62
Shares potentially payable at December 31, 2011	161,280		$23.74	$3,729
Forfeitures	-		-
Payments	(44,347	)	$24.62
Shares accrued based on 2012 performance	112,428		$27.15
Shares potentially payable at December 31, 2012	229,361		$24.13	$5,202
Forfeitures	-		-
Payments	(118,364	)	$23.05
Shares accrued based on 2013 performance	74,567		$31.62
Shares potentially payable at December 31, 2013	185,564		$27.51	$6,667

Other Management share-based compensation:

In 2003, the Company adopted a Restricted Stock Program under which certain key employees are awarded restricted stock units. Such units vest over a five-year period and are paid annually in cash based on current market prices of the Company's stock. The amount of compensation expense is subject to changes in the market price of the Company's stock. The amount of compensation cost attributable to such units is recorded in Selling, general and administrative expenses and was $2.5 million in 2013, $1.9 million in 2012, and $2.5 million in 2011. The Company has not awarded new restricted stock units since November 2010. However, awards up to that time will continue to vest until 2015.

In 2012, the Company adopted a Phantom Stock Plan that replaces the Restricted Stock Program. Awards under this program also vest over a five-year period and are paid annually in cash based on current market prices of the Company's stock. Under this program, employees may earn more or less than the target award based on the Company's results in the year of the award. Expense recognized for this plan amounted to $1.5 million in 2013 and $0.5 million in 2012.

In 2008, the Company granted restricted stock units to certain executives. Upon vesting, each restricted stock unit is payable in cash. These grants vested in 2011 and 2012. Expense recognized for these grants was $0.5 million in 2012 and $1.3 million in 2011. In 2012, the Company granted additional restricted stock units to two executives. The amount of compensation expense is subject to changes in the market price of the Company's stock and is recorded in Selling, general, and administrative expenses. These grants will vest various periods from 2015 to 2017. Expense recognized for these grants was $1.0 million in 2013 and $0.4 million in 2012.

The determination of compensation expense for other management share-based compensation plans is based on the number of outstanding share units, the end-of-period share price, and company performance. Share units payable under these plans generally vest immediately prior to payment. Information with respect to these plans is presented below:

	Number of shares		Weighted average value per share	Cash paid for share based liabilities(000's)
Share units potentially payable at January 1, 2011	643,232
Grants	13,037
Payments	(265,574	)	$21.57	$5,727
Forfeitures	(29,276	)
Share units potentially payable at December 31, 2011	361,419
Grants	220,090
Payments	(196,360	)	$21.43	$4,206
Forfeitures	(34,389	)
Share units potentially payable at December 31, 2012	350,760
Grants	104,554
Payments	(85,902	)	$32.71	$2,810
Forfeitures	(8,223	)
Share units potentially payable at December 31, 2013	361,189

The Company maintains a voluntary savings plan covering substantially all employees in the United States. The Plan, known as the ProsperityPlus Savings Plan, is a qualified plan under section 401(k) of the U.S. Internal Revenue Code. Under the plan, employees may make contributions of 1% to 15% of their wages, subject to contribution limitations specified in the Internal Revenue Code. The Company matches between 50% and 100% of each dollar contributed by employees up to a maximum of 5% of pretax income. Prior to February 2011, the Company match was in the form of Class A Common Stock, but the Company has made matching contributions in cash since that date. The investment of employee contributions to the plan is self-directed. The Company's cost of the plan amounted to $4.1 million in 2013, $3.8 million for 2012, and $3.7 million for 2011.

The Company's profit-sharing plan covers substantially all employees in the United States. After the close of each year, the Board of Directors determines the amount of the profit-sharing contribution. Company contributions to the plan are in the form of cash. The expense recorded for this plan was $1.6 million in 2013, $1.8 million in 2012, and $2.3 million in 2011.