Stock-Based Compensation

The Plans

The Company currently has several stock and option plans, including the 2005 Directors’ Compensation Plan (the “2005 Plan”), the Amended and Restated 2007 Equity Incentive Plan, as amended (the “2007 Plan”), the Amended and Restated 2010 Non-Management Compensation and Incentive Plan, as amended (the “2010 Plan”) and the Profit Sharing Retirement Plan, which is a plan qualified under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) as described below. These plans allow the Company to issue stock-based awards, including common stock, restricted stock, stock options and other rights and benefits under the plans to employees, directors and non-employees.

The 2005 Plan - During 2005, the Company adopted the 2005 Plan, which authorized the issuance of shares of common stock and the grant of options to purchase shares of common stock to non-management directors. Under the 2005 Plan, the award of stock is limited to not more than 2,000 shares per individual per year, and the grant of options is limited to 10,000 per individual in total. The aggregate number of shares of common stock reserved for issuance under the 2005 Plan totals 180,000 shares (100,000 in the form of stock awards and 80,000 in the form of options). These stock options vest in three equal annual installments beginning one year after the grant date. The 2005 Plan terminated during 2015.

The 2007 Plan - During 2007, the Company adopted the 2007 Plan, as amended and restated on July 1, 2013 and amended on July 19, 2012 and February 12, 2014, with two additional amendments, approved by the Board on February 13, 2014 and

June 5, 2015. The 2007 Plan permits grants to employees, directors and non-employees of shares of common stock, restricted stock, stock options, cash awards and other rights and benefits under the plan. The maximum annual grant limit for a non-management director on an annual basis is 50,000 shares. The maximum awards available to be granted from the 2007 Plan on an annual basis to any other individual is 400,000 shares. The total number of shares authorized for issuance under the 2007 Plan is 3.6 million.

The Compensation Committee of the Board has also approved annual long-term incentive awards for executive officers under the 2007 Plan. The awards vest based on the grantee’s continuous service with the Company, performance measures or a combination of both. Each PSU represents a contingent right to receive shares of the Company’s common stock if the Company meets certain performance measures over the requisite period. Vesting of the PSU's, if at all, occurs no later than January 2 after the conclusion of the third year of the performance period, subject to the grantee’s continuous service and the achievement of certain pre-established performance goals. Amounts vested are measured as of December 31st, immediately prior to the end of the service period, unless the PSU's vest sooner at the target amount as a result of certain transactions pursuant to Section 11 of the 2007 Plan.

The number of shares of common stock a participant receives will be increased (up to 200 percent of target levels) or reduced (down to zero) based on the level of achievement of performance goals. The number of PSU's that may be earned by a participant is determined at the end of the performance period based on the relative placement of the Company’s total stockholder return (“TSR”) for that period with approximately 75% of the award based on the relative performance of the Company’s TSR performance compared to the respective TSRs of a specified group of peer companies and the remaining portion of the award based on the Company’s TSR performance compared to the Russell 3000 Index.

The 2010 Plan - During 2010, the Company adopted the 2010 Plan which permits grants of awards to employees, which may be shares, rights to purchase restricted stock, bonuses of restricted stock, or other rights or benefits under the plan. The Company reserved 600,000 shares of its common stock for these purposes. The Plan was amended and restated as of July 19, 2012 to make non-material changes to assure Internal Revenue Code Section 409A compliance.

The 401(k) Plan - In 2009, the Company revised its 401(k) Plan to allow the issuance of shares of its common stock to employees to satisfy its obligation to match employee contributions under the terms of the plan in lieu of matching contributions in cash. The Company reserved 600,000 shares of its common stock for this purpose. The value of common stock issued as matching contributions under the plan is determined based on the per share market value of the Company’s common stock generally on quarterly authorization dates. Activity related to the 401(k) Plan is included in Note 15.

Collectively, these plans are called the “Stock Plans.”

Expense

Restricted Stock - Restricted stock is typically granted with vesting terms of three or five years. The fair value of Restricted Stock Awards ("RSA's") is determined based on the closing price of the Company’s common stock on the authorization date of the grant multiplied by the number of shares subject to the stock award. Compensation expense for RSA's is generally recognized over the entire vesting period on a straight-line basis.

Stock Options - Stock options generally vest over three years and have a contractual limit of five years from the date of grant to exercise. The fair value of stock options granted is determined on the date of grant using the Black-Scholes option pricing model and the related expense is recognized on a straight-line basis over the entire vesting period. The following table indicates the weighted-average assumptions that were used related to the awards granted for the years ended December 31, 2016, 2015 and 2014, respectively:



	Years Ended December 31,
	2016		2015		2014
Stock options granted:
Risk-free interest rate	1.3	%	1.8	%	1.6	%
Dividend yield	—	%	—	%	—	%
Volatility	78.8	%	74.5	%	80.4	%
Expected term (in years)	2.6		5.0		5.0

The Company uses historical data to estimate inputs used in the Black-Scholes option pricing model.

Risk-free interest rate - The risk-free interest rate for stock options granted during the period was determined by using a zero-coupon U.S. Treasury rate for the periods that coincided with the expected terms listed above.

Dividends - As historically no dividends have been paid, no dividend yield was included in the calculations.

Expected volatility - To calculate expected volatility, the historical volatility of the Company's common stock was used.

Expected term - The Company’s expected term of options was based upon historical exercise behavior and consideration of the options' vesting and contractual terms.

Stock Appreciation Rights - Stock Appreciation Rights ("SAR's") generally vest over three years and have a contractual limit of five years from the date of grant to exercise. The fair value of SAR's granted is determined on the date of grant using the Black-Scholes option pricing model and the related expense is recognized on a straight-line basis over the derived service period of the respective awards. During 2015, the Company granted a SAR award, and as settlement of the award was out of the control of the Company, the awards were classified as liability-based equity awards and were recorded at the estimated fair value at the grant and remeasured as a liability-based award as of each reporting period. This SAR award was converted to a stock option as of June 30, 2016 as discussed below. The following table indicates the weighted-average assumptions that were used related to the awards granted for the year ended December 31, 2015. No SAR's were granted during the year ended December 31, 2016.



	Year ended December 31,
	2015
SAR's granted:
Risk-free interest rate	1.8	%
Dividend yield	—	%
Volatility	74.5	%
Expected term (in years)	5.0

The Company uses historical data to estimate inputs used in the Black-Scholes option pricing model.

Risk-free interest rate - The risk-free interest rate for SAR's granted during the period was determined by using a zero-coupon U.S. Treasury rate for the periods that coincided with the expected terms listed above.

Dividends - As historically no dividends have been paid, no dividend yield was included in the calculations.

Expected volatility - To calculate expected volatility, the historical volatility of the Company's common stock was used.

Expected term - The Company’s expected term of SAR's was based upon consideration of the contractual term of the Company’s SAR's of 5 years.

PSU's - Compensation expense is recognized for PSU awards on a straight-line basis over a 3-year service period based on the estimated fair value at the date of grant using a Monte Carlo simulation model. The following table indicates the weighted-average assumptions that were used related to the awards granted for the years ended December 31, 2015 and 2014. No PSU's were granted during the year ended December 31, 2016.



	Years Ended December 31,
	2015		2014
PSUs granted:
Risk-free interest rate	1.0	%	0.8	%
Dividend yield	—	%	—	%
Volatility	64.3	%	74.5	%
Performance period (in years)	3.0		3.0

The Company uses historical data to estimate inputs used in the Monte Carlo pricing model.

Risk-free interest rate - The risk-free interest rate for PSU's granted during the period was determined by using a zero-coupon U.S. Treasury rate for the periods that coincided with the expected terms listed above.

Dividends - As historically no dividends have been paid, no dividend yield was included in the calculations.

Expected volatility - To calculate expected volatility, the historical volatility of the Company's common stock was used.

Performance period - The Company’s performance period is based upon the vesting term of the Company’s PSU awards.

The Company recorded the following compensation expense related to the Stock Plans:



	Years Ended December 31,
(in thousands)	2016		2015		2014
RSA expense	$	2,021	$	2,909	$	2,612
Stock option expense	285		658		117
SAR expense	106		742		—
PSU expense	456		2,895		1,983
Total stock-based compensation expense (1)	2,868		7,204		4,712

(1) Amounts for the years ended December 31, 2016, 2015 and 2014 do not reflect an income tax benefit as a result of a valuation allowance on the Company's deferred tax assets.

The Company recorded stock-based compensation expense related to awards to Directors in the General and administrative expense line and all other awards within the Payroll and benefit expense line in the Consolidated Statements of Operations.

During the years ended December 31, 2016, 2015 and 2014 the Company modified the terms of awards granted to 27, 37, and 17 employees, respectively, in connection with its restructuring plans and termination of the impacted employees discussed in Note 2. These modifications resulted in the accelerated vesting and incremental expense related to certain performance-based awards and restricted stock awards. As a result, during 2016, 2015 and 2014 the Company recognized incremental stock-based compensation of $0.4 million, $3.4 million and $1.0 million respectively, which was included in the Payroll and benefits line item in the Consolidated Statements of Operations.

The amount of unrecognized compensation cost as of December 31, 2016, and the expected weighted-average period over which the cost will be recognized is as follows:



	As of December 31, 2016
(in thousands)	Unrecognized Compensation Cost		Expected Weighted-Average Period of Recognition (in years)
RSA expense	$	1,335	0.98
Stock option expense	732		0.53
PSU expense	137		0.63
Total unrecognized stock-based compensation expense	$	2,204	0.81

Activity

Restricted Stock

A summary of the status and activity of non-vested RSA's is presented in the following table:



	For the Years Ended December 31.
	2016				2015				2014
(in thousands, except for share and per share amounts)	Shares		Weighted- Average Grant Date Fair Value		Shares		Weighted-Average Grant-Date Fair Value		Shares		Weighted-Average Grant-Date Fair Value
Non-vested at beginning of year	134,708		$	8.49	209,921		$	13.59	263,989		$	9.05
Granted	363,758		$	7.46	127,943		$	14.97	112,643		$	24.74
Vested	(175,956	)	$	11.96	(165,796	)	$	17.51	(118,364	)	$	15.75
Forfeited ⁽¹⁾	(25,163	)	$	15.58	(37,360	)	$	19.30	(48,347	)	$	9.49
Non-vested at end of year	297,347		$	8.03	134,708		$	8.49	209,921		$	13.59

(1) Included within the 2015 forfeited / canceled units are RSA's related to a former executive that were clawed back. The Company recognized $0.1 million within Other Income line item on the Consolidated Statement of Operations related to these awards.

The weighted-average grant-date fair value of RSA's granted or modified during the years ended December 31, 2016, 2015, and 2014 was $2.7 million, $1.9 million, and $2.8 million, respectively. The total fair value of RSA's vested during the years ended December 31, 2016, 2015 and 2014 was $2.1 million, $2.9 million and $1.9 million, respectively.

During the years ended December 31, 2016, 2015 and 2014, the Company accelerated the vesting and expense recognition of 42,852, 95,088 and 55,106 RSA's granted to 27, 37 and 17 employees, respectively, in accordance with severance agreements. As a result, during 2016, 2015 and 2014, the Company recognized incremental stock-based compensation of $0.3 million, $1.2 million and $1.0 million, respectively, which was included in the Payroll and benefits line item in the Consolidated Statements of Operations.

Stock Options

A summary of option activity under the Plans is presented below:



(in thousands, except for share and per share amounts)	Number of Options Outstanding and Exercisable		Weighted- Average Exercise Price		Aggregate Intrinsic Value		Weighted- Average Remaining Contractual Term (in years)
For the year ended December 31, 2014
Options outstanding, January 1, 2014	317,576		$	5.07
Options granted	30,000		$	20.67
Options exercised	(260,126	)	$	4.30
Options expired / forfeited	(13,250	)	$	6.90
Options outstanding, December 31, 2014	74,200		$	13.76	$	670	3.0
Options vested and exercisable as of December 31, 2014	34,199		$	8.44	$	491	1.6

For the year ended December 31, 2015
Options outstanding, January 1, 2015	74,200		$	13.76
Options granted	56,250		$	13.87
Options exercised	—		$	—
Options expired / forfeited	(24,200	)	$	7.59
Options outstanding, December 31, 2015	106,250		$	15.22	$	—	3.8
Options vested and exercisable as of December 31, 2015	82,915		$	14.04	$	—	3.9

For the year ended December 31, 2016
Options outstanding, January 1, 2016	106,250		$	15.22
Options granted ⁽¹⁾	546,196		$	11.10
Options exercised	—		$	—
Options expired / forfeited	(20,000	)	$	16.90
Options outstanding, December 31, 2016	632,446		$	11.61	$	183	4.0
Options vested and exercisable as of December 31, 2016	247,780		$	13.30	$	69	3.4

(1)

Included in options granted are 243,750 awards granted that were initially granted on a contingent basis and became exercisable as a result of the automatic expiration of the same number of Stock Appreciation Rights, as a result of stockholder approval of Amendment No. 4 of the 2007 Plan. See "Stock Appreciation Rights" section below for a discussion of the provisions of the exchange and incremental expense recognized.

The weighted-average grant-date fair value of options granted during the years ended December 31, 2016, 2015, and 2014 was $0.5 million, $0.8 million, and $0.6 million, respectively. The total intrinsic value of options exercised during the years ended December 31, 2016, 2015 and 2014 was zero, zero and $4.9 million, respectively. The total fair value of shares issued as a result of options exercised (measured as of the date of exercise) during the years ended December 31, 2016, 2015 and 2014 was zero, zero and $6.1 million, respectively.

Cash flows resulting from excess tax benefits, if any, are classified as part of cash flows from financing activities. Excess tax benefits are realized tax benefits from tax deductions for vested RSA's, settled PSU's and exercised options in excess of the deferred tax asset attributable to stock compensation costs for such equity awards. The Company recorded no excess tax benefits for the years ended December 31, 2016, 2015, and 2014.

During 2015, approximately $0.5 million of stock-based compensation expense was recognized as a result of granting an executive officer stock options which were immediately vested, with an exercise price of $13.87 per option.

SAR's

A summary of SAR activity under the Plans is presented below:



(in thousands, except for share and per share amounts)	Number of SAR's Outstanding and Exercisable		Weighted- Average Exercise Price		Aggregate Intrinsic Value		Weighted- Average Remaining Contractual Term (in years)
For the year ended December 31, 2015
SAR's outstanding as of January 1, 2015	—		$	—
Granted	243,750		$	13.87
Exercised	—		$	—
Expired / forfeited	—		$	—
SAR's outstanding as of December 31, 2015	243,750		$	13.87	$	—	4.5
SAR's vested and exercisable as of December 31, 2015	43,750		$	13.87	$	—	—

For the year ended December 31, 2016
SAR's outstanding as of January 1, 2016	243,750		$	13.87
Granted	—		$	—
Exercised	—		$	—
Expired / forfeited	(243,750	)	$	13.87
SAR's outstanding as of December 31, 2016	—		$	—	$	—	—
SAR's vested and exercisable as of December 31, 2016	—		$	—	$	—	—

In June 2016, the Company's stockholders approved Amendment No. 4 to the 2007 Plan, which triggered an automatic expiration of the Stock Appreciation Rights and an equal number of stock options being exercisable and no longer granted on a contingent basis. Upon approval, all existing SAR's expired under this provision. The Company recorded incremental expense of $0.1 million to stock-based compensation related to the change in fair value of the SAR's prior to the reclassification date. Upon reclassification, the impact to Additional paid-in capital was a $0.9 million increase. The Company had no SAR's outstanding as of December 31, 2016.

PSU's

A summary of the status and activity of non-vested PSU's is presented in the following table:



	For the Years Ended December 31.
	2016				2015				2014
(in thousands, except for share and per share amounts)	Units		Weighted-Average Grant-Date Fair Value		Units		Weighted-Average Grant-Date Fair Value		Units		Weighted-Average Grant-Date Fair Value
Non-vested at beginning of year	169,334		$	26.38	142,357		$	30.65	89,578		$	26.04
Granted ⁽¹⁾	—		$	—	69,218		$	20.10	57,547		$	37.45
Vested ⁽¹⁾	(119,818	)	$	26.87	(13,763	)	$	30.52	—		$	—
Forfeited / Canceled ^{(1) (2)}	—		$	—	(28,478	)	$	30.44	(4,768	)	$	26.04
Non-vested at end of year	49,516		$	25.20	169,334		$	26.38	142,357		$	30.65

(1) The number of units shown in the table above are based on target performance. The final number of shares of common stock issued may vary depending on the achievement of market conditions established within the awards, which could result in the actual number of shares issued ranging from zero to a maximum of two times the number of units shown in the above table.

(2) Included within the 2015 forfeited / canceled units are PSU's related to a former executive that were clawed back. The Company recognized $0.2 million within Other Income line item on the Consolidated Statement of Operations related to these awards.

The weighted-average grant date fair value of PSU's granted during the years ended December 31, 2016, 2015, and 2014 was zero, $1.4 million, and $2.2 million, respectively. The PSU's granted will remain unvested until the third anniversary date of their issuance, at which time the actual number of vested shares will be determined based upon the actual price performances of the Company’s common stock relative to a broad stock index and a peer group performance index.

During the years ended December 31, 2016, 2015, and 2014, the Company modified and accelerated certain PSU's that were granted to former executive officers in 2013, 2014, and 2015. The Company recorded incremental expense of $0.1 million, $2.1 million, and $0.2 million in the Payroll and benefits line item in the Consolidated Statement of Operations.

The following table shows the PSUs that were settled by issuing the Company's common stock relative to a peer group performance index and broad stock index.



	Year of Grant	Net Number of Issued Shares upon Vesting	Shares Withheld to Settle Tax Withholding Obligations	TSR Multiple Range		Russell 3000 Multiple
	Year of Grant	Net Number of Issued Shares upon Vesting	Shares Withheld to Settle Tax Withholding Obligations	Low	High	Low	High
For the year ended December 31, 2016
	2013	38,706	1,572	0.63	1.00	—	—
	2014	11,487	—	0.63	0.63	—	—
	2015	13,529	—	0.50	0.50	—	—
For the year ended December 31, 2015
	2013	8,768	3,954	1.75	1.75	2.00	2.00
	2014	2,506	1,145	0.63	0.75	—	0.75

Other Matters

Cash received from the exercise of stock options for the years ended December 31, 2016, 2015 and 2014 was zero, zero, and $0.2 million, respectively. There were no other cash receipts during these years from the exercise of other share-based compensation arrangements.