Equity Compensation
 12 Months Ended
Dec. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Equity Compensation
Equity Compensation

The company’s Common Shares have a $.25 stated value. The Common Shares and the Class B Common Shares generally have identical rights, terms and conditions and vote together as a single class on most issues, except that the Class B Common Shares have ten votes per share, carry a 10% lower cash dividend rate and, in general, can only be transferred to family members or for estate planning purposes. Holders of Class B Common Shares are entitled to convert their shares into Common Shares at any time on a share-for-share basis.

On May 16, 2013 shareholders of the company approved the Invacare Corporation 2013 Equity Compensation Plan (the “2013 Plan”), which was adopted on March 27, 2013 by the company's Board of Directors (the “Board”). The Board adopted the 2013 Plan to replace the company's prior equity plan, the Invacare Corporation Amended and Restated 2003 Performance Plan (the “2003 Plan”), which expired on May 21, 2013. Due to its expiration, no new awards may be granted under the 2003 Plan; however, awards granted prior to its expiration will remain outstanding until they are exercised, vest, terminate or expire in accordance with their terms.
The 2013 Plan uses a fungible share-counting method, under which each common share underlying an award of stock options or stock appreciation rights ("SAR") will count against the number of total shares available under the 2013 Plan as one share; and each common share underlying any award other than a stock option or a SAR will count against the number of total shares available under the 2013 Plan as two shares. Shares underlying awards made under the 2003 Plan that are canceled or forfeited may be added back to the 2013 Plan for use in future awards. Any common shares that are added back to the 2013 Plan as the result of the cancellation or forfeiture of an award granted under the 2013 Plan will be added back in the same manner such shares were originally counted against the total number of shares available under the 2013 Plan. Each common share that is added back to the 2013 Plan due to a cancellation or forfeiture of an award granted under the 2003 Plan will be added back as one common share.
The Compensation and Management Development Committee of the Board (the “Compensation Committee”), in its discretion, may grant an award under the 2013 Plan to any director or employee of the company or an affiliate. As of December 31, 2016, 6,785,702 common shares were available for issuance under the 2013 Plan in connection with the following types of awards with respect to shares of the company's common shares: incentive stock options, nonqualified stock options, SARs, restricted stock, restricted stock units, unrestricted stock and performance shares. The Compensation Committee also may grant performance units that are payable in cash. The Compensation Committee has the authority to determine which participants will receive awards, the amount of the awards and the other terms and conditions of the awards. 

The 2013 Plan provides that shares granted come from the company’s authorized but unissued common shares or treasury shares. In addition, the company’s stock-based compensation plans allow employee participants to exchange shares for minimum withholding taxes, which results in the company acquiring treasury shares. Under these provisions, the company acquired approximately 32,000 treasury shares for $331,000 in 2016, 7,000 shares for $134,000 in 2015 and 29,000 shares for $471,000 in 2014.

The amounts of equity-based compensation expense recognized as part of selling, general and administrative expenses in All Other in business segment reporting was as follows (in thousands):
 
2016
 
2015
 
2014
Non-qualified stock options
$
745

 
$
1,228

 
$
3,356

Restricted stock and restricted stock units
5,039

 
2,785

 
2,270

Performance shares and performance share units
1,110

 
—

 
—

Total stock-based compensation expense
$
6,894

 
$
4,013

 
$
5,626



As of December 31, 2016, unrecognized compensation expense related to equity-based compensation arrangements granted under the company's 2013 Plan and previous plans, which is related to non-vested options and shares, was as follows (in thousands):
 
2016
 
2015
 
2014
Non-qualified stock options
$
175

 
$
1,059

 
$
2,600

Restricted stock and restricted stock units
8,740

 
9,476

 
4,461

Performance shares and performance share units
3,134

 
—

 
—

Total stock-based compensation expense
$
12,049

 
$
10,535

 
$
7,061



Total unrecognized compensation cost will be adjusted for future changes in actual and estimated forfeitures and for updated vesting assumptions for the performance share awards (see "Performance Shares and Performance Share Units" below). No tax benefit for share-based compensation was realized during 2016, 2015 and 2014 as a result of a valuation allowance against deferred tax assets. In accordance with ASC 718, any tax benefits resulting from tax deductions in excess of the compensation expense recognized is classified as a component of financing cash flows.

Stock Options

Generally, non-qualified stock option awards typically have a term of ten years and were granted with an exercise price per share equal to the fair market value of the company’s Common Shares on the date of grant. The company expects the compensation expense to be recognized over a weighted-average period of approximately 2 years.

The following table summarizes information about stock option activity for the three years ended 2016, 2015 and 2014:  
 
2016
 
Weighted
Average
Exercise
Price
 
2015
 
Weighted
Average
Exercise
Price
 
2014
 
Weighted
Average
Exercise
Price
Options outstanding at January 1
2,942,783

 
$
21.22

 
3,600,132

 
$
22.74

 
4,533,782

 
$
23.86

Granted
—

 
—

 
—

 
—

 
8,977

 
16.71

Exercised
(1,250
)
 
13.82

 
(172,218
)
 
13.95

 
(33,810
)
 
14.16

Canceled
(398,801
)
 
21.47

 
(485,131
)
 
34.98

 
(908,817
)
 
28.57

Options outstanding at December 31
2,542,732

 
$
21.19

 
2,942,783

 
$
21.22

 
3,600,132

 
$
22.74

Options exercise price range at December 31
$ 13.37 to

 
 
 
$ 13.37 to

 
 
 
$ 13.37 to

 
 
 
$
33.36

 
 
 
$
33.36

 
 
 
$
47.80

 
 
Options exercisable at December 31
2,513,614

 
 
 
2,656,983

 
 
 
2,954,082

 
 
Shares available for grant at December 31*
3,891,121

 
 
 
2,659,562

 
 
 
3,654,426

 
 

 ________________________
 *
Shares available for grant as of December 31, 2016 reduced by net restricted stock and restricted stock unit and performance share and performance share unit award activity of 1,767,756 shares and 1,117,848 shares, respectively.
The following table summarizes information about stock options outstanding at December 31, 2016:
 
Options Outstanding
 
Options Exercisable
Exercise Prices
Number
Outstanding
At 12/31/16
 
Weighted Average
Remaining
Contractual Life Years
 
Weighted Average
Exercise Price
 
Number
Exercisable
At 12/31/16
 
Weighted Average
Exercise Price
$ 13.37 – $20.00
686,671

 
5.7
 
$
14.13

 
657,553

 
$
14.07

$ 20.01 – $25.00
1,099,977

 
2.8
 
22.57

 
1,099,977

 
22.57

$ 25.01 – $30.00
751,588

 
2.6
 
25.55

 
751,588

 
25.55

$ 30.01 – $33.36
4,496

 
4.4
 
33.36

 
4,496

 
33.36

Total
2,542,732

 
3.5
 
$
21.19

 
2,513,614

 
$
21.39



Pursuant to the Plans, the Committee has established that grants may not be exercised within one year from the date granted and options must be exercised within ten years from the date granted. The company has not issued stock options since 2014. However, for the stock options issued in 2014 and prior, 25% of such options vested one year following the issuance and provided a four-year vesting period whereby options vest equally in 25% installments in each year. Options granted with graded vesting were accounted for as single options. 

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for awards granted in 2014 as no options were granted in 2016 or 2015:
 
 
2014
Expected dividend yield
 
0.3
%
Expected stock price volatility
 
36.8
%
Risk-free interest rate
 
1.76
%
Expected life in years
 
6.1

Forfeiture percentage
 
13.0
%


Expected dividend yields was based on historical dividends. Expected stock price volatility percentage was calculated at each date of grant based on historical stock prices for a period of time commensurate with the expected life of the option. The assumed expected life and forfeiture percentage were based on the company's historical analysis of option history.

The weighted-average fair value of options granted during 2014 was $6.23. The weighted-average remaining contractual life of options outstanding at December 31, 2016, 2015 and 2014 was 3.5, 4.3 and 5.0 years, respectively. The weighted-average contractual life of options exercisable at December 31, 2016 was 3.5 years. The total intrinsic value of stock awards exercised in 2016, 2015 and 2014 was $2,000, $1,107,000 and $101,000, respectively. As of December 31, 2016, the intrinsic value of all options outstanding and of all options exercisable was $0 and $0, respectively.

The exercise of stock awards in 2016, 2015 and 2014 resulted in cash received by the company totaling $17,000, $2,402,000 and $480,000 for each period, respectively with no tax benefits for any period. The total fair value of awards vested during 2016, 2015 and 2014 was $953,000, $1,867,000 and $3,436,000, respectively.

Restricted Stock and Restricted Stock Units

The following table summarizes information about restricted shares and restricted share units (primarily for non-U.S. recipients):
 
2016
Weighted Average Fair Value
 
2015
Weighted Average Fair Value
 
2014
Weighted Average Fair Value
Stock / Units unvested at January 1
641,505

$
18.89

 
312,423

$
17.91

 
264,878

$
16.69

Granted
486,711

12.62

 
480,839

19.09

 
218,276

19.36

Vested
(139,298
)
17.86

 
(56,976
)
16.47

 
(93,140
)
17.62

Canceled
(110,562
)
16.60

 
(94,781
)
18.11

 
(77,591
)
17.58

Stock / Units unvested at December 31
878,356

$
15.87

 
641,505

$
18.89

 
312,423

$
17.91

 
 
 
 
 
 
 
 
 


The restricted stock awards generally vest ratably over the three years after the award date, except for those awards granted in 2014, which vest after a three-year period. Unearned restricted stock compensation, determined as the market value of the shares at the date of grant, is being amortized on a straight-line basis over the vesting period.

Performance Shares and Performance Share Units

The following table summarizes information about performance shares and performance share units (for non-U.S. recipients):
 
2016
 
Weighted Average Fair Value
 
2015
 
Weighted Average Fair Value
 
2014
 
Weighted Average Fair Value
Shares / Units unvested at January 1
198,401

 
$
19.50

 
121,644

 
$
20.05

 
—

 
$
—

Granted
234,402

 
12.82

 
114,257

 
18.95

 
152,800

 
20.05

Vested
—

 
—

 
—

 
—

 
—

 
—

Canceled
(123,335
)
 
19.14

 
(37,500
)
 
19.62

 
(31,156
)
 
20.05

Shares / Units unvested at December 31
309,468

 
$
14.58

 
198,401

 
$
19.50

 
121,644

 
$
20.05

 
 
 
 
 
 
 
 
 
 
 
 


During 2016, 2015 and 2014, the performance shares and performance share units (for non-U.S. recipients) were granted as performance awards with a 3-year performance period with payouts based on achievement of certain performance goals. The awards are classified as equity awards as they will be settled in common shares upon vesting. The number of shares earned will be determined at the end of the performance period based on achievement of performance criteria for the periods established by the Compensation Committee at the time of grant. Recipients will be entitled to receive a number of common shares equal to the number of performance shares that vest based upon the levels of achievement which may range between 0% and 150% of the target number of shares with the target being 100% of the initial grant.

The fair value of the performance awards is based on the stock price on the date of grant discounted for the estimated value of dividends foregone as the awards are not eligible for dividends except to the extent vested. The company assesses the probability that the performance targets will be met with expense recognized whenever it is probable that at least the minimum performance criteria will be achieved. Depending upon the company's assessment of the probability of achievement of the goals, the company may not recognize any expense associated with performance awards in a given period, may reverse prior expense recorded or record additional expense to make up for expense not recorded in a prior period. Performance award compensation expense is generally expected to be recognized over 3 years. No performance award expense has been recognized for the 2015 awards as achievement of the performance goals for those awards is not deemed probable. In addition, no expense was recognized for the 2014 awards as the performance goals for the 2014 performance awards were not met and thus those awards were forfeited without any shares earned on December 31, 2016.