STOCK-BASED COMPENSATION

The Company’s 2014 Equity Incentive Plan authorizes the issuance stock options, stock appreciation rights, restricted stock units, restricted stock, performance awards, dividend equivalent rights and other stock based awards, as well as cash-based awards to employees, officers, directors and other individuals providing services to the Company or its affiliates. The plan authorizes the issuance of up to 1,000,000 shares of Class A Common Stock. As of December 31, 2016, there were approximately 414,000 shares available for future awards, including approximately 63,000 shares associated with awards which terminated or were cancelled without being exercised.

A summary of stock-based compensation costs follows (in millions):



	Year Ended December 31,
	2016		2015

Total stock-based compensation costs:
Restricted stock units	$	0.2	$	0.2
Stock options	0.3		0.2
Expense included in selling, general and administrative expense	$	0.5	$	0.4

Total recognized tax benefit	$	—	$	—

The total recognized tax benefit is reported at the federal statutory rate net of the tax valuation allowance.

As of December 31, 2016, there was $0.7 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock-based payments granted, of which $0.7 million relates to stock options and less than $0.1 million relates to restricted stock units. That cost is expected to be recognized over a weighted-average period of 1.8 years.

Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized over the requisite service period, on a straight-line basis the over the vesting period.

Restricted Stock Units

Non-employee, independent directors are granted restricted stock units as part of their compensation for serving on the Board of Directors. Settlement of these restricted stock units is made in shares of Class A Common Stock only upon the director’s retirement or other end of service. The restricted stock units vest over one year; however, vesting is accelerated upon (1) the director attaining eligibility for retirement, (2) termination of the director’s service by reason of death or disability, or (3) a change in control. As of December 31, 2016, approximately 103,300 shares of restricted stock units could potentially become Class A Common Stock once vested and settled.

The fair value of restricted stock units is determined based on the closing price of Class A Common Stock on the grant date. Compensation cost for restricted stock units is amortized to expense on a straight-line basis over the vesting period.

Stock Options

The intrinsic value of an option, if any, represents the excess of the fair value of the common stock over the exercise price. The fair value of stock option awards is estimated using the Black-Scholes option pricing model, which includes a number of assumptions including Centrus’ estimates of stock price volatility, employee stock option exercise behaviors, future dividend payments, and risk-free interest rates.

The expected term of options granted is the estimated period of time from the beginning of the vesting period to the date of expected exercise or other settlement, based on historical exercises and post-vesting terminations. Centrus has estimated the expected term using the simplified method described in SEC Staff Accounting Bulletin No. 107/110, Share-Based Payment, due to the lack of historical exercise and post-vesting termination information available for the Company since its reorganization. Future stock price volatility is estimated based on the Company’s historical volatility. The risk-free interest rate for the expected option term is based on the U.S. Treasury yield curve in effect at the time of grant. No cash dividends are expected in the foreseeable future and, therefore, an expected dividend yield of zero is used in the option valuation model. Historical data are used to estimate pre-vesting option forfeitures at the time of grant. Estimates for option forfeitures are revised in subsequent periods if actual forfeitures differ from those estimates. Compensation expense is recognized for stock option awards that are expected to vest.

Assumptions used in the Black-Scholes option pricing model to value option grants follow:



	Year Ended December 31,
	2016	2015

Risk-free interest rate	1.91%	1.91%
Expected volatility	75%	75%
Expected option life (years)	6	6
Weighted-average grant date fair value	$1.77	$2.62
Options granted (in thousands)	15	437

Stock options vest and become exercisable in equal annual installments over a three or four year period and expire ten years from the date of grant. A summary of stock option activity follows:



	Stock Options (thousands)	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life in Years	Aggregate Intrinsic Value (millions)

Outstanding at December 31, 2015	475	$4.09	9.3	$—
Granted	15	$2.68
Exercised	—	—
Forfeited/Cancelled	(7)	$5.62
Outstanding at December 31, 2016	483	$4.02	8.4	$1.1
Exercisable at December 31, 2016	141	$4.12	8.3	$0.3

Stock options outstanding and options exercisable at December 31, 2016, follow:



Stock Exercise Price	Options Outstanding (thousands)	Weighted Average Remaining Contractual Life in Years	Options Exercisable (thousands)

$5.62	30	7.9	20.0
$4.37	300	8.2	75.0
$3.90	23	8.6	8.0
$3.93	15	8.6	5.0
$2.71	50	8.8	16.0
$2.75	50	8.8	17.0
$2.68	15	9.5	—