Stock Compensation Plans

The Company’s 2010 Stock Incentive Plan (the “2010 Plan”) was initially adopted in May 2010. The 2010 Plan provided for the issuance of stock options, restricted stock and unrestricted stock with respect to an aggregate of 2,000,000 shares of the Company’s common stock to employees, consultants and outside directors of the Company. On May 17, 2011, the 2010 Plan was amended to provide for the issuance of restricted stock units (“RSUs”) and on February 2, 2012, the 2010 Plan was amended to provide for the issuance of SSARs. Effective April 25, 2012 and May 23, 2017, the 2010 Plan was amended to increase the maximum number of shares of common stock available for issuance to an aggregate of 4,500,000 shares and 8,500,000 shares respectively. The vesting period for awards granted under the 2010 Plan, is determined by the Compensation Committee of the Board of Directors. The Compensation Committee also determines the expiration date of each equity award, however, stock options and SSARs may not be exercisable more than ten years after the date of grant as the maximum term of equity awards issued under the 2010 Plan is ten years.

For the years ended December 31, 2017, 2016 and 2015, the Company recorded stock-based compensation expense, including stock options, SSARs, RSUs and certain warrant amortization, of approximately $1.1 million, $0.8 million and $1.6 million, respectively.

Stock Options

Stock option awards provide holders the right to purchase shares of Common Stock at prices determined by the Compensation Committee and must have an exercise price equal to or in excess of the fair market value of the Company’s common stock at the date of grant.

The fair value of options granted is estimated at the date of grant. Expected volatility has been estimated using a combination of the historical volatility of the Company's common stock and the historical volatility of a group of comparable companies’ common stock, both using historical periods equivalent to the options’ expected lives. The expected dividend yield assumption is based on the Company’s intent not to issue a dividend in the foreseeable future. The risk-free interest rate assumption is based upon observed interest rates for securities with maturities approximating the options’ expected lives. The expected life was estimated based on historical experience and expectation of employee exercise behavior in the future giving consideration to the contractual terms of the award.

A summary of the Company’s stock option activity is as follows:



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Life (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2017	1,709,967		$	4.76
Granted	25,000		3.50
Exercised	(33,870	)	2.64
Canceled/Expired	(638,630	)	3.75
Outstanding at December 31, 2017	1,062,467		$	5.42	1.81	$	1,240
Vested and expected to vest at December 31, 2017	1,062,467		$	5.42	1.81	$	1,240
Exercisable at December 31, 2017	962,467		$	5.72	1.91	$	1,004

As of December 31, 2017, there is no remaining unrecognized stock-based compensation cost related to stock options expected to be recognized. The total fair value of vested stock options was approximately $73,000, $0 and $0 for the years ended December 31, 2017, 2016 and 2015, respectively.

The total intrinsic value of stock options exercised was approximately $65,000, $0 and $5,900 for the years ended December 31, 2017, 2016 and 2015, respectively. The intrinsic value represents the amount by which the market price of the underlying stock exceeds the exercise price of an option.

As of December 31, 2017 and 2016, 100,000 and 200,000, respectively, of the Company’s outstanding options were subject to specific performance conditions consisting of regulatory approval of our lead drug candidate.

Stock Appreciation Rights

SSARs provide holders the right to purchase shares of Common Stock at prices determined by the Compensation Committee and must have an exercise price equal to or in excess of the fair market value of the Company’s common stock at the date of grant. Upon exercise, the gain, or intrinsic value, is settled by the delivery of SIGA stock to the employee.

There were no SSARs granted during the years ended December 31, 2017 or 2016. During the year ended December 31, 2012, the Company granted 1.4 million shares of SSARs at a weighted average grant-date fair value of $0.68 per share. The exercise price of a SSAR is equal to the closing market price on the date of grant. The granted SSARs vested in equal annual installments over a period of three years and expire no later than seven years from the date of grant. Moreover, the appreciation of each SSAR was capped at a determined maximum value. At December 31, 2017 and 2016, due to the cap on value the maximum number of shares that could be issued in the future was 162,393 and 360,031, respectively.

The fair value of granted SSARs has been estimated utilizing a Monte Carlo method. The Monte Carlo method is a statistical simulation technique used to provide the grant-date fair value of an award. As the issued SSARs were capped at maximum values, such attribute was considered in the simulation.

The Company calculates the expected volatility using a combination of historical volatility of SIGA's common stock and the volatility of a group of comparable companies' common stock. The expected life from grant date was estimated based on the expectation of exercise behavior in consideration of the maximum value and contractual term of the SSARs. The dividend yield assumption is based on the Company’s intent not to issue a dividend in the foreseeable future. The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected life of the SSARs.

A summary of the Company’s SSAR activity is as follows:



	Number of SSARs		Weighted Average Exercise Price		Weighted Average Remaining Life (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2017	1,183,024		$	3.53
Granted	—		—
Exercised	(916,874	)	3.53
Canceled/Expired	—		—
Outstanding at December 31, 2017	266,150		$	3.53	1.09	$	351
Vested and expected to vest at December 31, 2017	266,150		$	3.53	1.09	$	351
Exercisable at December 31, 2017	266,150		$	3.53	1.09	$	351

The total intrinsic value of SSARs exercised was approximately $0.9 million for the year ended December 31, 2017. For the years ended December 31, 2016 and 2015 there were no SSARs exercised.

Restricted Stock Awards/Restricted Stock Units

RSUs awarded to employees vest in equal annual installments over a three-year period and RSUs awarded to directors of the Company vest over a one-year period. A summary of the Company’s RSU activity is as follows:



	Number of RSUs		Weighted Average Grant-Date Fair Value
Outstanding at January 1, 2017	1,455,689		$	2.36
Granted	289,648		3.51
Vested and released	(273,335	)	2.21
Canceled/Expired	—		—
Outstanding at December 31, 2017 (1)	1,472,002		$	2.61

(1) Included 394,118 restricted stock units that have vested but have not converted into common stock.

As of December 31, 2017, $1.1 million of total remaining unrecognized stock-based compensation cost related to RSUs is expected to be recognized over the weighted-average remaining requisite service period of 1.77 years. The weighted average fair value at the date of grant for restricted stock awards granted during the years ended December 31, 2017, 2016 and 2015 was $3.51, $2.24 and $2.00 per share, respectively. Based on the grant date, the total fair value of restricted stock and restricted stock units vested and released during the years ended December 31, 2017, 2016 and 2015 was approximately $0.6 million, $1.4 million and $1.8 million, respectively.