NOTE 9. STOCK-BASED COMPENSATION

On May 21, 2014, we adopted the 2014 Equity Incentive Plan (the “2014 Plan”). The purposes of the 2014 Plan are to attract and retain the best available personnel, to provide additional incentives to employees, directors and consultants and to promote the success of the Company’s business. The 2014 Plan is an “omnibus plan” under which stock options, stock appreciation rights, performance awards, dividend equivalents, restricted stock, and restricted stock units can be awarded to employees, directors and consultants of the Company. The 2014 Plan serves as the successor to our 1993 Employee Stock Option Plan, 1993 Executive Long-Term Incentive Plan and 1993 Directors’ Stock Option Plan (which plan terminated on June 13, 2013) (the “Predecessor Plans”). The 2014 Plan became effective as of May 21, 2014 and the remaining two Predecessor Plans terminated on that date (except with respect to awards previously granted under the Predecessor Plans that remain outstanding).

The share reserve under the 2014 Plan includes 1,000,000 new shares and the shares available for grant or subject to outstanding awards under the Predecessor Plans, for an aggregate amount of up to 2,453,506 common shares as of December 31, 2015. By its terms, the 2014 Plan will expire in May 2024 after which no options may be granted unless the 2014 Plan is amended or replaced.

Pursuant to the terms of the 2014 Plan, either the Board or a committee designated by the Board is authorized to administer the plan. The administrator has the authority, in its discretion, to select employees, consultants and directors to whom awards under the 2014 Plan may be granted from time to time, to determine whether and to what extent awards are granted, to determine the number of shares or the amount of other consideration to be covered by each award (subject to certain limitations), to approve award agreements for use under the 2014 Plan, to determine the terms and conditions of any award (including the vesting schedule applicable to the award), to amend the terms of any outstanding award granted under the 2014 Plan (subject to certain limitations), to construe and interpret the terms of the 2014 Plan and awards granted, and to take such other action not inconsistent with the terms of the 2014 Plan as the administrator deems appropriate.

A summary of the stock option activity as of and for the year ended December 31, 2015 is presented below:

			Weighted Average
Options	Shares		Exercise Price		Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at beginning of period	2,002,203		$	13.73	—	—
Granted	492,957		18.94		—	—
Exercised	(389,905	)	10.00		—	—
Forfeited	(66,668	)	14.81		—	—
Expired	—		—		—	—

Outstanding at end of period	2,038,587		$	15.66	7.1 yrs.	$	15,080,254

Exercisable at end of period	798,583		$	14.08	4.8 yrs.	$	7,592,610

A summary of the status of the Company’s nonvested shares as of, and for the year ended, December 31, 2015 is presented below:

Nonvested Shares	Shares		Weighted-Average Grant Date Fair Value
Nonvested at January 1, 2015	1,173,143		$	3.91
Granted	492,957		5.87
Vested	(359,428	)	2.90
Forfeited	(66,668	)	4.05

Nonvested at December 31, 2015	1,240,004		$	4.97

Expense Measurement and Recognition:

The Company recognizes stock-based compensation for all current award grants and for the unvested portion of previous award grants based on grant date fair values. Unrecognized costs related to all stock-based awards outstanding at December 31, 2015 totaled approximately $4.2 million and is expected to be recognized over a weighted average period of 2.6 years.

The Company uses historical data and projections to estimate expected employee, executive and director behaviors related to option exercises and forfeitures.

The Company estimates the fair value of each stock option award on the grant date using the Black-Scholes valuation model incorporating the assumptions noted in the following table. Option valuation models require the input of highly subjective assumptions, and changes in assumptions used can materially affect the fair value estimate. Option valuation assumptions for options granted during each year were as follows (in thousands, except per share amounts and percentages):

	Years ended December 31,
	2015			2014			2013
Expected volatility	39.10		%	34.95		%	37.03		%
Expected dividends	—			—			—
Expected life (in years)
Directors’ plan	3.97			3.59			3.32
Executives plan	4.28			4.31			4.48
Employees plan	3.97			3.59			3.32
Weighted average risk free rate	1.14		%	1.06		%	0.85		%

Weighted average grant date fair value per share of options granted	$	5.90		$	4.02		$	5.38
Total fair value of shares vested	$	1,041		$	913		$	1,123
Total intrinsic value of options exercised	$	4,321		$	8,921		$	2,737
Cash received for all stock option exercises	$	3,900		$	12,595		$	3,438
Tax benefit realized from stock awards exercised	$	1,512		$	3,122		$	958

The risk-free interest rate is based on the U.S. treasury security rate in effect as of the date of grant. The expected lives of options are based on historical data of the Company. The Company has determined that an implied volatility is more reflective of market conditions and a better indicator of expected volatility as compared to the Company’s experience.

Reported stock-based compensation expense was classified as follows (in thousands):

	For the years ended December 31,
	2015			2014			2013
Casino	$	58		$	45		$	20
Food and beverage	85			68			33
Hotel	21			11			3
Selling, general and administrative	1,380			1,102			1,164

Total stock-based compensation, before taxes	1,544			1,226			1,220
Tax benefit	(540		)	(429		)	(427		)

Total stock-based compensation, net of tax	$	1,004		$	797		$	793