Stock-Based Compensation

Blyth, Inc. Amended and Restated 2003 Omnibus Incentive Plan

As of September 30, 2014, the Company had one active stock-based compensation plan, the Second Amended and Restated Omnibus Incentive Plan (“2003 Plan”), available to grant future awards. There were 2,040,897 shares authorized for grant as of September 30, 2014, and approximately 1,570,776 shares available for grant under the 2003 Plan. The Company’s policy is to issue new shares of common stock for all stock options exercised and restricted stock grants.

The Board of Directors and the stockholders of the Company have approved the adoption and subsequent amendments of the 2003 Plan. The 2003 Plan provides for grants of incentive and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, dividend equivalents and other stock unit awards to officers and employees. The 2003 Plan also provides for grants of nonqualified stock options to directors of the Company who are not, and who have not been during the immediately preceding 12-month period, officers or employees of the Company or any of its subsidiaries. Restricted stock and restricted stock units (“RSUs”) are granted to certain employees to incent performance and retention. RSUs issued under these plans provide that shares awarded may not be sold or otherwise transferred until restrictions have lapsed. The release of RSUs on each of the vesting dates is contingent upon continued active employment by the employee until the vesting dates.

Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest during the period. Stock-based compensation expense recognized in the Company’s Consolidated Statements of Earnings (Loss) for the three and nine months ended September 30, 2014 and 2013 included compensation expense for restricted stock, RSUs and stock-based awards granted subsequent to January 31, 2006 based on the grant date fair value estimated in accordance with the provisions of ASC 718, “Compensation—Stock Compensation” (“ASC 718”). The Company recognizes these compensation costs net of a forfeiture rate for only those awards expected to vest, on a straight-line basis over the requisite service period of the award, which is over periods of 3 years for stock options; 2 to 5 years for employee restricted stock and RSUs; and 1 to 2 years for non-employee restricted stock and RSUs. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Transactions related to restricted stock and RSUs are summarized as follows:



	Shares		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (In thousands)
Nonvested restricted stock and RSUs at December 31, 2013	100,740		$	24.25	$	1,096
Granted	136,949		9.49
Vested	(69,701	)	26.64
Forfeited	(103	)	37.55
Nonvested restricted stock and RSUs at September 30, 2014	167,885		$	11.21	$	1,363
Total restricted stock and RSUs at September 30, 2014	239,757		$	17.87	$	1,947

Compensation expense related to restricted stock and RSUs for the three months ended September 30, 2014 and 2013 was approximately $0.3 million and total recognized tax benefit was approximately $0.1 million. Compensation expense related to restricted stock and RSUs for the nine months ended September 30, 2014 and 2013 was approximately $1.1 million and $1.4 million, respectively. The total recognized tax benefit for the nine months ended September 30, 2014 and 2013 was approximately $0.4 million and $0.5 million, respectively.

As of September 30, 2014, there was $0.8 million of unearned compensation expense related to non-vested restricted stock and RSU awards. This cost is expected to be recognized over a weighted average period of 1.9 years. The total unrecognized stock-based compensation cost to be recognized in future periods as of September 30, 2014 does not consider the effect of stock-based awards that may be issued in subsequent periods.

Authorized unissued shares may be used under the stock-based compensation plans. The Company intends to issue shares of its common stock to meet the stock requirements of its awards in the future.