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| Capital Transactions |
Capital Transactions
Dividends
The declaration of future dividends is subject to the discretion of the Company’s Board of Directors and will depend upon various factors, including the Company’s earnings, financial condition, restrictions imposed by any indebtedness that may be outstanding, cash requirements, future prospects and other factors deemed relevant by its Board of Directors.
On February 25, 2016, the Company announced a cash dividend of $0.10 per common share in an aggregate amount of $1.9 million, which was paid on March 22, 2016 to shareholders of record as of March 11, 2016.
Share Repurchase Program
In November 2014, the Board of Directors authorized a $20.0 million share repurchase program beginning January 1, 2015. Such purchases may be made in the open market, through block trades, in privately negotiated transactions or otherwise. The timing and amount of any shares repurchased will be determined based on the Company’s evaluation of market conditions and other factors and the program may be discontinued or suspended at any time. At March 31, 2016, the remaining balance available for repurchases under the program was $13.4 million. There were no repurchases of common shares by the Company during the three months ended March 31, 2016.
Share-Based Compensation
During the year ended December 31, 2012, the Company’s shareholders adopted and approved the Nature’s Sunshine Products, Inc. 2012 Stock Incentive Plan (the “2012 Incentive Plan”). The 2012 Incentive Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance awards, stock awards and other stock-based awards. The Compensation Committee of the Board of Directors has authority and discretion to determine the type of award, as well as the amount, terms and conditions of each award under the 2012 Incentive Plan, subject to the limitations of the 2012 Incentive Plan. A total of 1,500,000 shares of the Company’s common stock were originally authorized for the granting of awards under the 2012 Incentive Plan. During the three-month period ended March 31, 2015, the Company’s shareholders approved an amendment to the 2012 Incentive Plan, to increase the number of shares of Common Stock reserved for issuance by 1,500,000 shares. The number of shares available for awards, as well as the terms of outstanding awards, are subject to adjustment as provided in the 2012 Incentive Plan for stock splits, stock dividends, recapitalizations and other similar events.
The Company also maintains a stock incentive plan, which was approved by shareholders in 2009 (the “2009 Incentive Plan”). The 2009 Incentive Plan also provided for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance awards, stock awards and other stock-based awards. Under the 2012 Incentive Plan, any shares subject to award, or awards forfeited or reacquired by the Company issued under the 2009 Incentive Plan are available for award up to a maximum of 400,000 shares.
Stock Options
The Company’s outstanding stock options include time-based stock options, which vest over differing periods ranging from the date of issuance up to 48 months from the option grant date; performance-based stock options, which have already vested upon achieving operating income margins of six, eight and ten percent as reported in four of five consecutive quarters over the term of the options; performance-based stock options, which vest upon achieving cumulative annual net sales revenue growth targets over a rolling two-year period, subject to the Company maintaining at least an eight percent operating income margin during the applicable period; and performance-based stock options, which vest upon achieving annual net sales targets over a rolling one-year period.
Stock option activity for the three-month period ended March 31, 2016, is as follows (amounts in thousands, except per share information):
Share-based compensation expense from time-based stock options for the three-month periods ended March 31, 2016 and 2015, was approximately $0.3 million and $0.6 million, respectively. As of March 31, 2016 and December 31, 2015, the unrecognized share-based compensation expense related to the grants described above was $0.8 million and $1.1 million, respectively. As of March 31, 2016, the remaining compensation cost is expected to be recognized over the weighted-average period of approximately 1.5 years.
The Company has not recognized any share-based compensation expense related to the net sales revenue performance-based stock options for the three-month periods ended March 31, 2016 and 2015. Should the Company attain all of the net sales revenue metrics related to the net sales revenue performance-based stock option grants, the Company would recognize up to $0.4 million of potential share-based compensation expense.
At March 31, 2016, the aggregate intrinsic value of outstanding stock options to purchase 1,608,000 shares of common stock, exercisable stock options to purchase 1,143,000 shares of common stock and stock options to purchase 384,000 shares of common stock that are expected to vest was $0.7 million, $0.7 million and $0.0 million, respectively. At December 31, 2015, the aggregate intrinsic value of outstanding options to purchase 1,683,000 shares of common stock, the exercisable options to purchase 958,000 shares of common stock, and options to purchase 588,000 shares of common stock expected to vest was $0.9 million, $0.9 million and $0.0 million, respectively.
For the three-month periods ended March 31, 2016 and 2015, the Company issued 25,000 and 227,000 shares of common stock upon the exercise of stock options at an average exercise price of $2.35, and $7.63 per share, respectively. The aggregate intrinsic values of options exercised during the three-month periods ended March 31, 2016 and 2015 was $0.2 million, and $1.3 million, respectively. For the three-month periods ended March 31, 2016 and 2015, the Company recognized $0.1 million and $0.6 million of tax benefits from the exercise of stock options during the period, respectively.
Restricted Stock Units
The Company’s outstanding restricted stock units ("RSUs") include time-based RSUs, which vest over differing periods ranging from 12 months up to 48 months from the RSU grant date. RSUs granted to the Board of Directors contain a restriction period in which the shares are not issued until two years after vesting. At March 31, 2016 and December 31, 2015, there were 59,000 and 60,000 vested RSUs granted to the Board of Directors that had a restriction period.
RSU activity for the three-month period ended March 31, 2016, is as follows (amounts in thousands, except per share information):
During the three-month period ended March 31, 2016, the Company granted 167,000 RSUs under the 2012 Incentive Plan to the Company’s Board of Directors, executive officers and other employees, which are composed of both time-based RSUs and net sales and operating income and earnings-per-share performance-based RSUs. The time-based RSUs were issued with a weighted-average grant date fair value of $9.08 per share and vest in annual installments over a three-year period from the grant date. The net sales and operating income and earnings-per-share performance-based RSUs were issued with a weighted-average grant date fair value of $8.16 per share and vest upon achieving both (i) net sales and operating income targets over a three-year period from the grant date and (ii) earnings-per-share targets over a six-year period from the grant date.
RSUs are valued at market value on the date of grant, which is the grant date share price discounted for expected dividend payments during the vesting period.
Share-based compensation expense from RSUs for the three-month periods ended March 31, 2016 and 2015, was approximately $0.6 million and $0.8 million, respectively. As of March 31, 2016 and December 31, 2015, the unrecognized share-based compensation expense related to the grants described above was $2.8 million and $2.5 million, respectively. As of March 31, 2016, the remaining compensation expense is expected to be recognized over the weighted average period of approximately 1.8 years.
The Company has not recognized any share-based compensation expense related to the net sales revenue and earnings-per-share performance-based RSUs for the three-month periods ended March 31, 2016 and 2015. Should the Company attain all of the net sales revenue metrics related to the net sales revenue performance-based stock option grants, the Company would recognize up to $3.3 million of potential share-based compensation expense.
The number of shares issued upon vesting of RSUs granted pursuant to the Company's share-based compensation plans is net of the minimum statutory withholding requirements that the Company pays on behalf of its employees, which was 20,000 shares for the three-month period ended March 31, 2016. Although shares withheld are not issued, they are treated as common share repurchases for accounting purposes, as they reduce the number of shares that would have been issued upon vesting. These shares do not count against the authorized capacity under the repurchase program described above.
Stock Appreciation Rights
The Company’s outstanding stock appreciation rights ("SARs") are time-based SARs, which vest over differing periods ranging from 12 months up to 48 months from the SAR grant date. The SARs have a strike price equal to the fair market value of one share of common stock on the grant date. Subsequent to vesting, the employee has the option to exercise the SAR and will receive the intrinsic value of the SAR as income on the exercise date. SARs do not entitle a participant to receive or purchase shares and are settled in cash. SARs will not reduce the number of shares of common stock available for issuance under the Company’s Stock Incentive Plans.
SAR activity for the three-month period ended March 31, 2016, is as follows (amounts in thousands, except per share information):
Share-based compensation expense from SARs for the three-month period ended March 31, 2016 and 2015, was approximately $1,000 and $3,000, respectively. As of March 31, 2016 and December 31, 2015, the unrecognized share-based compensation expense related to the grants described above was $17,000 and $32,000, respectively. As of March 31, 2016, the remaining compensation expense is expected to be recognized over the weighted average period of approximately 1.9 years.
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