Stock – Based Compensation

The Company expenses the fair value of grants of various stock-based compensation programs over the vesting period of the awards. Awards granted are recognized as compensation expense based on the grant-date fair value estimated in accordance with generally accepted accounting principles. Shares, options, weighted-average exercise prices, and weighted-average fair values are adjusted for a 1-to-10 reverse stock split that was effective June 26, 2015.

The table below summarizes certain data for the Company’s stock based compensation plans:



	Year Ended March 31,
	2015		2014		2013
Compensation expense for all stock based compensation plans	$	3,194	$	3,222	$	4,520
Tax (expense) benefits for stock-based compensation	$	—	$	—	$	—
Fair value of stock options vested	$	3,353	$	2,184	$	1,230

The Company’s shareholders approved the 2007 Incentive Plan (the “2007 Plan”) at its Annual Meeting of Shareholders on August 16, 2007 and amended the plan at its Annual Meeting of Shareholders on August 11, 2011 and August 6, 2009. The 2007 Plan is an omnibus plan that provides the flexibility to grant a variety of equity awards including stock options, stock appreciation rights, stock awards, stock units, performance awards and incentive awards to officers, directors and employees of the Company. A maximum of 1,390 shares may be granted under the plan as amended. However, the August 11, 2011 amendment requires that the shares available for grant be reduced by twice the number of shares issued for any awards other than options or stock appreciation rights. This has resulted in decreasing the shares available to grant by 240. Additionally, shares that are settled in cash, and shares underlying substitute awards, do not reduce the number of shares available for award. The total of such shares is 88. As of March 31, 2015, 1,791 equity awards have been granted, 635 equity awards have been cancelled and 280 vested under the 2007 Plan, leaving 83 shares available for future awards under the 2007 Plan. Total equity awards outstanding are 891 inclusive of 876 awards granted and outstanding under the 2007 plan and 15 awards granted under prior plans. Shares issued under both the 2007 plan and earlier plans are new shares which have been authorized and designated for award under the plans. Individual types of awards are discussed in greater detail below.

Stock Option Awards

Stock options allow for the purchase of common stock at a price determined at the time the option is granted. Stock options generally vest ratably over five years and generally expire after ten years. The fair value of these options is determined at grant date using the Black-Scholes valuation model and includes estimates of forfeiture based on historical experience. The fair value is then recognized as compensation expense ratably over the vesting term of the options. There were 335 stock options granted during fiscal year 2013. No stock options were granted during 2015 and 2014.

Assumptions used to determine the fair value of options issued in 2013 include the following:



	2013
Grant Price	$	34.50
Exercise Price	$	60.00
Expected Life in Years	6 to 6.5
Annualized Volatility	60.9		%
Annual Dividend Rate	0.00		%
Risk Free Rate	1.25		%
Fair Value	$	5,423

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (AS RESTATED) (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AS RESTATED) (continued)

Alliance One International, Inc. and Subsidiaries

(in thousands)

Note 11 - Stock - Based Compensation (continued)

Stock Option Awards (continued)

A summary of option activity for stock options follows:



Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at March 31, 2012	419		$	60.29
Granted	335		60.00
Forfeited	(41	)	53.82
Expired	(12	)	62.64
Outstanding at March 31, 2013	701		60.49
Forfeited	(3	)	57.12
Expired	(10	)	64.41
Outstanding at March 31, 2014	688		60.45
Forfeited	(18	)	61.49
Expired	(9	)	64.50
Outstanding at March 31, 2015	661		60.37		6.2	$	—
Vested and expected to vest at March 31, 2015	655		60.37		6.2	$	—
Exercisable at March 31, 2015	495		60.49		6.0	$	—

The intrinsic values in the table above represent the total pre-tax intrinsic value which is the difference between the Company’s closing stock price and the exercise price multiplied by the number of options. The expense related to stock option awards for 2015, 2014, and 2013 was $1,363, $1,366, and $3,203, respectively. There were no options exercised in 2015, 2014 and 2013.

The table below shows the movement in unvested options from March 31, 2014 to March 31, 2015.



	Shares		Weighted Average Grant Date Fair Value		Aggregate Grant Date Fair Value
Unvested March 31, 2014	362		$	16.85	$	6,103
Forfeited	(1	)	17.67		(18		)
Vested	(195	)	17.15		(3,353		)
Unvested March 31, 2015	166		16.49		$	2,732

As of March 31, 2015, there is $1,871 of unearned compensation, net of expected forfeitures, related to stock option awards which will vest over a weighted average remaining life of 1.7 years.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (AS RESTATED) (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AS RESTATED) (continued)

Alliance One International, Inc. and Subsidiaries

(in thousands)

Note 11 - Stock - Based Compensation (continued)

Restricted Stock

Restricted stock is common stock that is both nontransferable and forfeitable unless and until certain conditions are satisfied. The fair value of restricted shares is determined on grant date and is amortized over the vesting period which is generally three years.



Restricted Stock	Shares		Weighted Average Grant Date Fair Value
Restricted at March 31, 2012	20	$	35.49
Granted	17		28.90
Vested	(20)		35.49
Restricted at March 31, 2013	17		28.90
Granted	20		38.00
Vested	(17)		28.90
Restricted at March 31, 2014	20		38.00
Granted	27		16.12
Vested	(47)		25.39
Restricted at March 31, 2015	—		—

As of March 31, 2015, there was no remaining unamortized deferred compensation. Expense recognized due to the vesting of restricted stock awards was $701, $658 and $502 for the years ended March 31, 2015, 2014 and 2013, respectively.

Restricted Stock Units

Restricted stock units differ from restricted stock in that zero shares are issued until restrictions lapse. Certain restricted stock units vest at the end of a three-year service period and others vest ratably over a three year period. The fair value of the restricted stock units is determined on the grant date and is amortized over the vesting period.



Restricted Stock Units	Shares			Weighted Average Grant Date Fair Value
Outstanding at March 31, 2012	59		$	45.14
Vested	(14	)		43.88
Forfeited	(2	)		43.72
Outstanding at March 31, 2013	43			45.59
Granted	64			38.50
Vested	(42	)		45.59
Forfeited	(2	)		38.50
Outstanding at March 31, 2014	63			38.50
Granted	22			27.20
Vested	(21	)		38.50
Forfeited	(6	)		38.50
Outstanding at March 31, 2015	58			34.18

As of March 31, 2015, there was $1,263 of remaining unamortized deferred compensation associated with these restricted stock units that will be expensed over the remaining service period through June 12, 2017. Expense recognized due to the vesting of these awards was $859, $1,100 and $815 during the years ended March 31, 2015, 2014 and 2013 respectively.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (AS RESTATED) (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AS RESTATED) (continued)

Alliance One International, Inc. and Subsidiaries

(in thousands)

Note 11 - Stock - Based Compensation (continued)

Performance-Based Restricted Stock Units

Restricted stock units vest at the end of either a two or three year performance period but the level of the award to vest is subject to similar performance criteria as the Performance Shares described above. The awards are also variable in that they range from zero to 200% of the plan’s target contingent on the performance level attained. The table below includes the maximum number of restricted stock units that may be earned under the plan.



Performance-Based Restricted Stock Units	Shares			Weighted Average Grant Date Fair Value
Outstanding as of March 31, 2012	122		$	45.41
Forfeited	(1	)		45.90
Shares not vesting due to performance	(121	)		45.40
Outstanding as of March 31, 2013	—			—
Granted	64			38.50
Forfeited	(2	)		38.50
Outstanding as of March 31, 2014	62			38.50
Granted	22			27.20
Forfeited	(1	)		38.50
Outstanding as of March 31, 2015	83			35.52

As of March 31, 2015, the Company anticipates that 12 performance-based restricted stock units will vest resulting in $190 to be expensed over the remaining service life through March 31, 2017. Expense recognized due to the expected vesting of these awards were $104 and $98 during the years ended March 31, 2015 and 2014, respectively. There was no expense recognized for the year ending March 31, 2013.

Cash-Settled Awards

Cash-settled awards differ from the Company's other awards in that no shares will be issued and the cumulative compensation expense is recognized as a liability rather than equity. Under both of our current Cash-Settled Awards, the fair value of the award is equal to the period-end closing price of one share. The liability recognized will be the product of the fair value multiplied ratably by the expired vesting term. The expense related to these awards is derived by appropriately adjusting the value of the liability. As a result, the expense will be variable as the value of the liability will increase or decrease subject to the period-end closing price.

Cash-Settled Restricted Stock Units

Cash-settled restricted stock units vest ratably over the first, second and third anniversaries of the date of award.



Cash-Settled Restricted Stock Units	Shares		Weighted Average Grant Date Fair Value
Outstanding as of March 31, 2014	—		—
Granted	46		26.96
Forfeited	(2	)	24.01
Outstanding as of March 31, 2015	44		27.06

As of March 31, 2015, there was $358 of remaining unamortized deferred compensation associated with these restricted stock units that will be expensed over the remaining service period through June 12, 2017. Expense recognized due to the vesting of these awards was $128 during the year ended March 31, 2015. There was no expense recognized in the years ending March 31, 2014 and 2013.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (AS RESTATED) (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (AS RESTATED) (continued)

Alliance One International, Inc. and Subsidiaries

(in thousands)

Note 11 - Stock - Based Compensation (continued)

Cash-Settled Performance-Based Restricted Stock Units

Cash-settled restricted stock units vest at the end of either a two or three year performance period but the level of the award to vest is subject to similar performance criteria as the Performance Shares described above. The awards are also variable in that they range from zero to 200% of the plan’s target contingent on the performance level attained. The table below includes the maximum number of restricted stock units that may be earned under the plan.



Cash-Settled Performance-Based Restricted Stock Units	Shares		Weighted Average Grant Date Fair Value
Outstanding as of March 31, 2014	—		—
Granted	46		26.96
Forfeited	(2	)	24.01
Outstanding as of March 31, 2015	44		27.06

As of March 31, 2015, the Company anticipates that 12 performance-based restricted stock units will vest resulting in $98 to be expensed over the remaining service period through March 31, 2017. Expense recognized due to the expected vesting of these awards was $39 during the year ended March 31, 2015. There was no expense recognized for the years ending March 31, 2014, and 2013.