Shareholders’ Equity

Treasury shares

On December 11, 2014 we announced that our Supervisory Board authorized the purchase of up to 6,400,000 of our ordinary shares and during the year ended June 30, 2016 we purchased 2,159,613 shares under this program for a cost of $153,467. The authorization for the remaining shares under this program has expired and no shares remain available for purchase under this program as of June 30, 2016. On February 22, 2016, we announced that our Supervisory Board authorized the purchase of up to 6,300,000 of our ordinary shares. We have not repurchased any shares under this program through June 30, 2016.

During the third quarter of fiscal 2016, we issued 112,364 of our ordinary shares from our treasury account as part of the acquisition of WIRmachenDRUCK. Refer to Note 8 for additional details of the acquisition.

Share-based awards

The 2016 Performance Equity Plan became effective upon shareholder approval on May 27, 2016 and allows us to grant performance-based share units, or PSUs, entitling the recipient to receive Cimpress ordinary shares based upon continued service to Cimpress and the achievement of objective, predetermined levels of Cimpress' three-year moving average share price. We may grant PSUs under the plan to our employees, officers, directors (including members of the Management Board and Supervisory Board), consultants, and advisors. Subject to adjustment in the event of stock splits, stock dividends and other similar events, we may make awards under the plan for up to 8,000,000 of our ordinary shares. No awards have been issued under this plan at June 30, 2016.

The 2011 Equity Incentive Plan (the “2011 Plan”) became effective upon shareholder approval on June 30, 2011 and allows us to grant share options, share appreciation rights, restricted shares, restricted share units and other awards based on our ordinary shares to our employees, officers, non-employee directors, consultants and advisors. Among other terms, the 2011 Plan requires that the exercise price of any share option or share appreciation right granted under the 2011 Plan be at least 100% of the fair market value of the ordinary shares on the date of grant; limits the term of any share option or share appreciation right to a maximum period of 10 years; provides that shares underlying outstanding awards under the Amended and Restated 2005 Equity Incentive Plan that are canceled, forfeited, expired or otherwise terminated without having been issued in full will become available for the grant of new awards under the 2011 Plan; and prohibits the repricing of any share options or share appreciation rights without shareholder approval. In addition, the 2011 Plan provides that the number of ordinary shares available for issuance under the plan will be reduced by (i) 1.56 ordinary shares for each share subject to a restricted share or other share-based award with a per share or per unit purchase price lower than 100% of the fair market value of the ordinary shares on the date of grant and (ii) one ordinary share for each share subject to any other award under the 2011 Plan.

Our 2005 Non-Employee Directors’ Share Option Plan provides for non-employee directors to receive share option grants upon initial appointment as a director and annually thereafter in connection with our annual general meeting of shareholders if they are continuing to serve as a director at such time. We also have two additional plans with outstanding awards from which we will not grant any additional awards.

An aggregate of 10,356,264 ordinary shares are available for future awards under all of our share-based award plans as of June 30, 2016. A combination of new shares and treasury shares has historically been used in fulfillment of our share based awards.

Share options

We grant options to purchase ordinary shares at prices that are at least equal to the fair market value of the shares on the date the option is granted and have a contractual term of approximately eight to ten years. Options generally vest over 3 years for non-employee supervisory board directors and over 4 years for employees.

The fair value of each option award subject only to service period vesting is estimated on the date of grant using the Black-Scholes option pricing model and is recognized as expense on a straight-line basis over the requisite service period. Use of a valuation model requires management to make certain assumptions with respect to inputs. The expected volatility assumption is based upon historical volatility of our share price. The expected term assumption is based on the contractual and vesting term of the option and historical experience. The risk-free interest rate is based on the U.S. Treasury yield curve with a maturity equal to the expected life assumed at the grant date. We value share options with a market condition using a lattice model with compensation expense recorded on an accelerated basis over the requisite service period.

Weighted-average values used for option grants in fiscal 2016, 2015 and 2014 were as follows:



	Year Ended June 30,
	2016			2015			2014
Risk-free interest rate	1.84		%	1.67		%	1.56		%
Expected dividend yield	—		%	—		%	—		%
Expected term (years)	6.00			6.00			5.75
Expected volatility	47		%	50		%	56		%
Weighted average fair value of options granted	$	38.18		$	35.84		$	28.14

A summary of our share option activity and related information for the year ended June 30, 2016 is as follows:



	Shares Pursuant to Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding at the beginning of the period	2,913,392		$	45.09	4.3
Granted	9,163		81.52
Exercised	(120,353	)	39.09
Forfeited/cancelled	(142,211	)	50.14
Outstanding at the end of the period	2,659,991		$	45.21	3.3	$	125,734
Vested or expected to vest at the end of the period	2,659,991		$	45.21	3.3	$	125,734
Exercisable at the end of the period	2,018,383		$	43.47	3.1	$	98,929

The intrinsic value in the table above represents the total pre-tax amount, net of exercise price, which would have been received if all option holders exercised in-the-money options on June 30, 2016. The total intrinsic value of options exercised during the fiscal years ended June 30, 2016, 2015 and 2014 was $5,494, $61,531, and $14,860, respectively.

Restricted share units

The fair value of RSU grants is equal to the fair market value of our ordinary shares on the date of grant and is recognized as expense on a straight-line basis over the requisite service period, RSUs generally vest over 2 years for non-employee supervisory board directors and over 4 years for employees. For awards with a performance condition, we recognize compensation cost on an accelerated basis over the requisite service period when achievement of the performance condition is deemed probable. As of June 30, 2016, we had 187,000 RSUs outstanding that vest based on the achievement of various performance targets through fiscal 2020. The performance criteria for 140,000 of these RSUs are currently deemed not probable of achievement. Future changes in our probability conclusions could result in volatility of our share-based compensation expense as the awards have a maximum compensation of $10,584.

A summary of our unvested RSU activity and related information for the fiscal year ended June 30, 2016 is as follows:



	RSUs		Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value
Unvested at the beginning of the period	767,280		$	50.19
Granted	367,520		75.63
Vested and distributed	(272,470	)	50.51
Forfeited	(262,255	)	45.28
Unvested at the end of the period	600,075		$	67.77	$	55,495

The weighted average fair value of RSUs granted during the fiscal years ended June 30, 2016, 2015 and 2014 was $75.63, $63.28 and $48.06, respectively. The total intrinsic value of RSUs vested during the fiscal years ended June 30, 2016, 2015 and 2014 was $21,810, $19,846 and $20,629, respectively.

Restricted share awards

As part of our acquisition of Tradeprint during the first quarter of fiscal 2016, we issued 65,050 of restricted ordinary shares. Subject to continued employment with the company on each vesting date, 25% will vest on August 1, 2016 and 75% will vest on August 1, 2017. Cimpress also awarded an aggregate of 18,557 restricted shares to several members of Tradeprint’s senior management team. Subject to the recipient’s continued employment with the company on each vesting date, 25% of such recipient’s shares will vest on each of August 1, 2016, August 1, 2017, August 1, 2018 and August 1, 2019. The fair value of the RSAs was determined based on our share price on the date of grant and will be recognized as share-based compensation expense over the applicable vesting period.

A summary of our RSA activity and related information for the fiscal year ended June 30, 2016 is as follows:



	RSAs		Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value
Unvested at the beginning of the period	—		$	—
Granted	83,607		68.32
Vested and distributed	—		—
Forfeited	(1,974	)	64.53
Unvested at the end of the period	81,633		$	68.41	$	7,549

Share-based compensation

Total share-based compensation costs were $23,828, $24,075 and $27,786 for the years ended June 30, 2016, 2015 and 2014, respectively. During fiscal 2016, we adopted a new accounting standard and elected to recognize the impact of forfeitures as they occur, which were previously estimated and recognized as reduction to share-based compensation. Refer to Note 2 for additional discussion relating to our adoption of the new standard. See Notes 8 and 16 for information related to liability-based awards issued in conjunction with our acquisition of Pixartprinting and our capital investment in our variable interest entity Printi LLC. Share-based compensation costs capitalized as part of software and website development costs were $832, $477 and $254 for the years ended June 30, 2016, 2015 and 2014, respectively.

As of June 30, 2016, there was $36,724 of total unrecognized compensation cost related to non-vested, share-based compensation arrangements. This cost is expected to be recognized over a weighted average period of 2.2 years.