8 .	EQUITY-BASED COMPENSATION

June

2015,

the Board adopted the Cable One, Inc.

2015

Omnibus Incentive Compensation Plan (the

“2015

Plan”), which became effective

July

2015.

The

2015

Plan is designed to promote the interests of the Company and its stockholders by providing the employees and directors of the Company with incentives and rewards to encourage them to continue in the service of the Company and with a proprietary interest in pursuing the long-term growth, profitability and financial success of the Company. Any of the directors, officers and employees of the Company and its affiliates are eligible to be granted

one

or more of the following types of awards under the

2015

Plan:

(1)

incentive stock options,

(2)

non-qualified stock options,

(3)

restricted stock awards,

(4)

stock appreciation rights (“SARs”),

(5)

restricted stock units (“RSUs”),

(6)

cash-based awards,

(7)

performance-based awards,

(8)

dividend equivalent rights and

(9)

other stock-based awards, including, without limitation, performance stock units and deferred stock units. The

2015

Plan includes the authority to grant awards that are intended to qualify as “qualified performance-based compensation” under Section

162(m)

of the Internal Revenue Code of

1986,

as amended. Unless the

2015

Plan is sooner terminated by the Board, no awards

may

be granted under the

2015

Plan after the

tenth

anniversary of its effective date.

The

2015

Plan provides that, subject to certain adjustments for certain corporate events, the maximum number of shares of Company common stock that

may

be issued under the

2015

Plan is equal to

600,000,

and no more than

400,000

may

be issued pursuant to incentive stock options.

March

31,

2017,

329,962

shares were available for issuance under the

2015

Plan.

Restricted Stock Awards.

The Company has granted restricted shares of Company common stock subject to service-based and performance-based vesting conditions under the

2015

Plan to employees of the Company. Restricted share awards generally cliff-vest on the

three

-year anniversary of the grant date or in

four

equal ratable installments beginning on the

first

anniversary of the grant date (generally subject to the holder’s continued employment with the Company through the applicable vesting date), except in the case of awards made to individuals (i) whose equity awards issued by GHC were forfeited in connection with the Company’s spin-off (the “spin-off”) from GHC (the “Replacement Shares”), which Replacement Shares vested on

December

12,

2016

(with certain exceptions as provided in the applicable award agreement), or (ii) who did not receive an equity award from GHC in

2015

in anticipation of the spin-off (the “Staking Shares”), which Staking Shares are scheduled to cliff-vest on

January

2018.

Performance-based restricted shares are or were subject to performance metrics related primarily to year-over-year or

three

-year cumulative growth in Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) less capital expenditures or year-over-year growth in Adjusted EBITDA and capital expenditures as a percentage of total revenues. Restricted shares are subject to the terms and conditions of the

2015

Plan and will otherwise be subject to the terms and conditions of the applicable award agreement.

The compensation arrangements for the Company

’s non-employee directors under the

2015

Plan as of

March

31,

2017

provided that each non-employee director is entitled to an annual retainer of

$150,000,

plus an additional annual retainer of

$15,000

for each non-employee director who serves as a committee chair or as lead independent director. Each such retainer will be provided in the form of RSUs. Such RSUs will generally be granted on the date of the Company’s annual stockholders’ meeting and will vest on the

first

anniversary of the grant date, subject to the director’s continued service through such vesting date. Settlement of such RSUs will be in the form of

one

share of the Company’s common stock and will follow vesting, unless the director has previously elected to defer such settlement until his or her separation from service from the Board. As of

March

31,

2017,

2,210

RSUs, including Dividend Equivalent Units (“DEUs”), were vested and deferred.

Restricted

shares, RSUs and DEUs are collectively referred to as “restricted stock.” A summary of restricted stock activities for the

three

months ended

March

31,

2017

is as follows:

				Weighted Average
				Grant Date
	Restricted			Fair Value
	Stock			Per Share
Unvested as of December 31, 2016		38,425		$	402.13
Granted		13,978		$	619.67
Shares granted due to performance achievement		5,006		$	433.66
Forfeited		(1,904	)	$	432.95
Vested		(284	)	$	380.50
Unvested as of March 31, 2017		55,221		$	459.16

Vested and unissued as of March 31, 2017		2,210		$	415.10

Compensation expense associated with unvested restricted stock is recognized on a straight-line basis over the vesting period. The expense recognized each period is dependent upon the Company

’s estimate of the number of shares that will ultimately vest. Equity-based compensation expense for restricted stock was

$1.7

million for the

three

months ended

March

31,

2017.

March

31,

2017,

there was

$11.0

million of unrecognized compensation expense related to restricted stock, which is expected to be recognized over a weighted average period of

1.4

years.

Stock Appreciation Rights.

The Company has granted SARs under the

2015

Plan to certain executives and other employees of the Company. The SARs are scheduled to vest in

four

equal ratable installments beginning on the

first

anniversary of the grant date (generally subject to the holder’s continued employment with the Company through the applicable vesting date). The SARs are subject to the terms and conditions of the

2015

Plan and will otherwise be subject to the terms and conditions of the applicable award agreement.

A summary of SAR activity is as follows:

	Stock Appreciation Rights			Weighted Average Exercise Price		Weighted Average Fair Value		Aggregate Intrinsic Value ( in thousands )		Weighted Average Remaining Contractual Term (in years)
Outstanding as of December 31, 201 6		136,000		$	426.80	$	88.07	$	26,510		8.7
Granted		20,000		$	619.66	$	138.01				9.8
Exercised		(5,625	)	$	422.31	$	87.22
Forfeited		(5,200	)	$	422.31	$	87.22
Outstanding as of March 31, 2017		145,175		$	453.71	$	95.01	$	24,790		8.6

Vested and exercisable as of March 31, 2017		25,550		$	422.31	$	87.22	$	5,165		8.4

The fair value of the SARs was measured based on the Black-Scholes model.

The inputs used in the model for the

three

months ended

March

31,

2017

were as follows:

	201 7
Expected volatility		20.93	%
Risk-free interest rate		2.15	%
Expected term (in years)		6.25
Expected dividend yield		0.96	%

Compensation expense associated with unvested SARs is recognized on a straight-line basis over the vesting period. The expense recognized each period is dependent upon our estimate of the number of

SARs that will ultimately vest. Equity-based compensation expense for the SARs was

$0.7

million for the

three

months ended

March

31,

2017.

March

31,

2017,

there was

$9.7

million of unrecognized compensation expense related to the SARs, which is expected to be recognized over a weighted average period of

1.3

years.

Compensation Expense

Total equity-based compensation expense recognized was

$2.4

million and

$3.0

million for the

three

months ended

March

31,

2017

and

2016,

respectively and was included in Selling, general and administrative expenses within the Condensed Consolidated Statements of Operations and Comprehensive Income. The Company has recorded an income tax benefit of

$3.5

million related to the equity-based awards granted through

March

31,

2017.

The deferred tax asset related to all outstanding equity-based awards was

$5.7

million as of

March

31,

2017.