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.

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



	Year Ended March 31,
	2016		2015		2014
Compensation expense for all stock based compensation plans	$	2,874	$	3,194	$	3,222
Tax (expense) benefits for stock-based compensation	$	—	$	—	$	—
Fair value of stock options vested	$	2,043	$	3,353	$	2,184

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 issued 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 288. Additionally, shares that are settled in cash, and shares

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Alliance One International, Inc. and Subsidiaries

(in thousands)

Note 11 - Stock-Based Compensation (continued)

Stock Option Awards (continued)

underlying substitute awards, do not reduce the number of shares available for award. The total of such shares is 85. As of March 31, 2016, 1,903 equity awards have been granted, 886 equity awards have been cancelled and 342 vested under the 2007 Plan, leaving 171 shares available for future awards under the 2007 Plan. Total equity awards outstanding are 683 inclusive of 674 awards granted and outstanding under the 2007 plan and 8 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. No stock options were granted during 2016, 2015 and 2014.

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, 2013	701		$	60.49
Granted	—		—
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
Forfeited	(9	)	66.21
Expired	(182	)	59.23
Outstanding at March 31, 2016	470		60.70		5.18	$	—
Vested and expected to vest at March 31, 2016	469		60.70		5.18	$	—
Exercisable at March 31, 2016	433		60.76		5.11	$	—

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 2016, 2015, and 2014 was $1,097, $1,363, and $1,366, respectively. There were no options exercised in 2016, 2015 and 2014.

The table below shows the movement in unvested options from March 31, 2015 to March 31, 2016.



	Shares		Weighted Average Grant Date Fair Value		Aggregate Grant Date Fair Value
Unvested March 31, 2015	166		$	16.49	$	2,732
Forfeited	(5	)	17.78		(91		)
Vested	(123	)	16.65		(2,042		)
Unvested March 31, 2016	38		15.80		$	599

As of March 31, 2016, there is $463 of unearned compensation, net of expected forfeitures, related to stock option awards which will vest over a weighted average remaining life of 1.0 year.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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, 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	—		—
Granted	23		18.42
Vested	(23)		18.42
Restricted at March 31, 2016	—		—

As of March 31, 2016, there was no remaining unamortized deferred compensation. Expense recognized due to the vesting of restricted stock awards was $417, $701 and $658 for the years ended March 31, 2016, 2015 and 2014, 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 ratably over a three-year period and others vest 50% in the first year and 25% in each of the second and third years. 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, 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
Granted	58			14.73
Vested	(25	)		35.16
Forfeited	(2	)		38.50
Outstanding at March 31, 2016	89			21.28

As of March 31, 2016, there was $666 of remaining unamortized deferred compensation associated with these restricted stock units that will be expensed over the remaining service period through February 23, 2019. Expense recognized due to the vesting of these awards was $1,113, $859 and $1,100 during the years ended March 31, 2016, 2015 and 2014 respectively.

On August 13, 2015, the Company's shareholders approved an exchange offer that would allow certain employees to surrender options and receive restricted stock units in exchange for these options. The offer was made on September 14, 2015 and applied only to grants made during years 2012 and 2013 that had an exercise price of $60.00 following the reverse stock split on June 26, 2015. The exchange offer was consummated as of October 13, 2015 with no changes in the timing or material amount of expense recognized for stock based compensation.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Alliance One International, Inc. and Subsidiaries

(in thousands)

Note 11 - Stock-Based Compensation (continued)

Performance-Based Restricted Stock Units

Performance-based restricted stock units may vest at the end of either a two- or three-year performance period but the level of the awards to be earned at the end of the performance period is contingent upon attainment of specific business performance goals. If certain minimum performance levels are not attained, no compensation will be earned. The awards are variable in that compensation could 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, 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
Granted	30			10.11
Forfeited	(61	)		38.50
Outstanding as of March 31, 2016	52			17.33

As of March 31, 2016, the Company anticipates that no performance-based restricted stock units will vest resulting in $0 to be expensed over the remaining service life through February 23, 2019. Expense recognized due to the expected vesting of these awards were $(202), $104, and $98 during the years ended March 31, 2016, 2015 and 2014, respectively.

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, 2015	44		27.06
Granted	1		19.65
Vested	(14	)	27.06
Forfeited	(2	)	27.20
Outstanding as of March 31, 2016	29		26.85

As of March 31, 2016, there was $323 of remaining unamortized deferred compensation associated with these restricted stock units that will be expensed over the remaining service period through October 13, 2018. Expense recognized due to the vesting of these awards was $488 and $128 during the years ended March 31, 2016 and 2015, respectively. There was no expense recognized in the year ending March 31, 2014.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (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 a three year performance period but the level of the award to vest is subject to similar performance criteria as the Performance-Based Restricted Stock Units 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, 2015	44		27.06
Granted	—		—
Forfeited	(2	)	27.20
Outstanding as of March 31, 2016	42		27.10

As of March 31, 2016, the Company anticipates that no performance-based restricted stock units will vest resulting in $0 to be expensed over the remaining service period through June 16, 2017. Expense recognized due to the expected vesting of these awards was $(39) and $39 during the years ended March 31, 2016 and 2015. There was no expense recognized for the year ending March 31, 2014.