14.

STOCK-BASED COMPENSATION

The Company has one stock-based compensation plan, the 2014 Stock Incentive Plan (Plan), approved by the Company’s stockholders in April 2014. The Plan amended and restated in its entirety the Trex Company, Inc. 2005 Stock Incentive Plan. The Plan was subsequently amended and restated by the Company’s Board of Directors in May 2014 and May 2018. The Plan is administered by the Compensation Committee of the Company’s Board of Directors. Stock-based compensation is granted to officers, directors and certain key employees in accordance with the provisions of the Plan. The Plan provides for grants of stock options, restricted stock, restricted stock units, stock appreciation rights (SARs), and unrestricted stock. The total aggregate number of shares of the Company’s common stock that may be issued under the Plan is 6,420,000, and as of March 31 2018, the total number of shares available for future issuance are 2,626,664.

The following table summarizes the Company’s stock-based compensation grants for the three months ended March 31, 2018:


	Stock Awards Granted		Weighted-Average Grant Price Per Share
Time-based restricted stock units		12,708	$	112.42
Performance-based restricted stock units (a)		39,511	$	70.42
Stock appreciation rights		10,630	$	112.42

(a)

Includes 14,851 of target performance-based restricted stock unit awards granted during the three months ended March 31, 2018, and adjustments of 5,396, 13,583 and 5,681 grants due to the actual performance level achieved for restricted stock and restricted stock units awarded in 2015, 2016, and 2017, respectively.

The fair value of each SAR is estimated on the date of grant using a Black-Scholes option-pricing formula. For SARs issued in the three months ended March 31, 2018 and 2017 the data and assumptions shown in the following table were used:


	Three Months Ended March 31, 2018			Three Months Ended March 31, 2017
Weighted-average fair value of grants	$	44.17		$	27.81
Dividend yield		0	%		0	%
Average risk-free interest rate		2.7	%		2.0	%
Expected term (years)		5			5
Expected volatility		40.4	%		42.0	%

The Company recognizes stock-based compensation expense ratably over the period from the grant date to the earlier of: (1) the vesting date of the award, or (2) the date the grantee is eligible to retire without forfeiting the award. For performance-based restricted stock and performance-based restricted stock units, expense is recognized ratably over the performance and vesting period of each tranche based on management’s judgment of the ultimate award that is likely to be paid out based on the achievement of the predetermined performance measures. The following table summarizes the Company’s stock-based compensation expense (in thousands):


	Three Months Ended March 31,
	2018		2017
Stock appreciation rights	$	202	$	167
Time-based restricted stock and restricted stock units		822		737
Performance-based restricted stock and restricted stock units		1,249		1,039
Employee stock purchase plan		33		22

Total stock-based compensation	$	2,306	$	1,965

Total unrecognized compensation cost related to unvested awards as of March 31, 2018 was $6.3 million. The cost of these unvested awards is being recognized over the requisite vesting period of each award.