Stock-Based Compensation

On November 16, 2017, the Company’s shareholders approved a long-term incentive award plan (the “Plan”). The Plan is administered by the Compensation Committee of the Company’s Board of Directors. Under the Plan, the Committee may grant an aggregate of 4,000,000 shares of Class A common stock in the form of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance compensation awards and stock bonus awards. Stock-based payments including the grant of stock options, RSUs, and RSAs are subject to service-based vesting requirements, and expense is recognized over the vesting period. Forfeitures are accounted for as they occur. During the three months ended March 31, 2018, 27,675 RSAs, 921,730 RSUs and 589,257 stock option awards were granted under the Plan.

Stock-based payments to employees include grants of stock options and RSUs, which are recognized in the financial statements based on their fair value.

RSUs and RSAs are valued based on the intrinsic value of the difference between the exercise price, if any, of the award and the fair market value of our common stock on the grant date. RSAs vest over a one-year period and RSUs vest over a four-year period.

Stock options vest in tranches over a period of four years and expire ten years from the grant date. The fair value of each stock option award on the grant date is estimated using the Black-Scholes option-pricing model with the following assumptions: expected dividend yield, expected stock price volatility, weighted-average risk-free interest rate and weighted-average expected term of the options. The volatility assumption used in the Black-Scholes option-pricing model is based on peer group volatility as the Company does not have a sufficient trading history as a stand-alone public company. Additionally, due to an insufficient history with respect to stock option activity and post-vesting cancellations, the expected term assumption is based on the simplified method under GAAP, which is based on the vesting period and contractual term for each tranche of awards. The mid-point between the weighted-average vesting term and the expiration date is used as the expected term under this method. The risk-free interest rate used in the Black-Scholes model is based on the implied US Treasury bill yield curve at the date of grant with a remaining term equal to the Company’s expected term assumption. The Company has never declared or paid a cash dividend on common shares.

As of March 31, 2018, none of the granted RSAs, RSUs or stock options had vested.

Restricted Stock Awards

The following table summarizes the Company’s RSA activity for the three months ended March 31, 2018:



	Number of Shares	Weighted-Average Grant Date Fair Value
Balance, December 31, 2017	—	$	—
Granted	27,675	13.60
Forfeited	—	—
Balance, March 31, 2018	27,675	$	13.60

Compensation expense for RSAs recognized in SG&A on the condensed consolidated statements of operations was $2.8 thousand for the three months ended March 31, 2018. At March 31, 2018, unrecognized compensation cost related to RSAs totaled $0.4 million and is expected to be recognized over a one-year period.

Restricted Stock Units

The following table summarizes the Company's RSU award activity for the three months ended March 31, 2018:



	Number of Shares	Weighted-Average Grant Date Fair Value
Balance, December 31, 2017	—	$	—
Granted	921,730	13.60
Forfeited	—	—
Balance, March 31, 2018	921,730	$	13.60

Compensation expense for RSUs recognized in SG&A on the condensed consolidated statements of operations was $92.7 thousand for the three months ended March 31, 2018, with associated tax benefits of $21.8 thousand. At March 31, 2018, unrecognized compensation cost related to restricted stock awards totaled $12.4 million and is expected to be recognized over a period of four years.

Stock Option Awards

The following table summarizes the Company's stock option activity for the three months ended March 31, 2018:



	Number of Options	Weighted-Average Exercise Price per Share ($)
Outstanding options, December 31, 2017	—	$	—
Granted	589,257	13.60
Exercised	—	—
Forfeited	—	—
Outstanding options, March 31, 2018	589,257	$	13.60
Fully vested and exercisable options, end of period	—	$	—

Compensation expense for stock option awards, recognized in SG&A on the condensed consolidated statements of operations, was $24.0 thousand with associated tax benefits of $5.6 thousand, for the three months ended March 31, 2018. At March 31, 2018, unrecognized compensation cost related to stock option awards totaled $3.2 million and is expected to be recognized over a period of four years.

The fair value of each option award at grant date was estimated using the Black-Scholes option-pricing model with the

following assumptions:



	March 31, 2018
Expected volatility	36		%
Expected dividend yield	—
Risk-free interest rate	2.73		%
Expected term (in years)	6.25
Exercise price	$	13.60
Weighted-average grant date fair value	$	5.51