Note 7 – Stock Incentive Plans and Share-Based Compensation

As of March 31, 2018, 861,460 shares of the Company’s common stock were available for grants of awards under the Company’s 2015 Incentive Award Plan (the “2015 Plan”), which includes the annual increase in the number of shares available for grant on January 1, 2018 of 1,056,505 shares.

The 2015 Plan provides that no stock option or stock appreciation right (even if vested) may be exercised prior to the earlier of August 1, 2018 or immediately prior to the consummation of a change in control of the Company that would result in an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended.

Stock Options

The following table summarizes the Company’s stock option activity:

	Stock Options
				Weighted-
				Average
	Shares			Exercise Price
Outstanding at January 1, 2018		4,375,929		$	10.73
Granted		—
Exercised/Vested		—
Cancelled		(10,000	)	$	13.50
Outstanding at March 31, 2018		4,365,929		$	10.72
Vested at March 31, 2018		2,217,753		$	8.63
Exercisable at March 31, 2018		388,040		$	4.33

Share-based compensation expense related to stock options was $1.5 million and $1.0 million for the three months ended March 31, 2018 and 2017, respectively. The Company’s unrecognized share-based compensation expense related to stock options was approximately $11.4 million as of March 31, 2018, which is expected to be recognized over a weighted-average period of 2.5 years.

Restricted Stock Units and Performance Stock Units

On March 14, 2018, the Compensation Committee of the Board of Directors of the Company approved a new long-term incentive structure for equity awards to be granted to the executive officers of the Company under the 2015 Plan. Under this new structure, commencing in the first quarter of 2018, the executive officers of the Company receive long-term equity awards in a combination of time-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”). The number of PSUs that will be eligible to vest will be determined based on the Company’s attainment of performance goals set by the Compensation Committee. Following the two-year performance period, the number of “vesting eligible” PSUs will then be subject to one additional year of time-based vesting. Share-based compensation costs related to RSU and PSU awards are calculated based on the market price on the date of the grant.

The following table summarizes the Company’s RSU and PSU activity:

	RSUs				PSUs
			Weighted-				Weighted-
			Average Grant				Average Grant
	Shares		Date Fair Value		Shares⁽¹⁾		Date Fair Value
Outstanding at January 1, 2018		—				62,791	$	27.87
Granted		205,351	$	28.72		108,957	$	28.72
Exercised/Vested		—				—
Cancelled		—				—
Outstanding at March 31, 2018		205,351	$	28.72		171,748	$	28.41

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(1)

The number of Shares listed for PSUs represents the “target” number of PSUs granted to each recipient eligible to vest if the Company meets its “target” performance goals for the applicable period. The actual number of PSUs eligible to vest will vary depending on whether or not the Company meets or exceeds the applicable threshold, target or maximum performance goals for the PSUs. With respect to 108,957 of the listed “target” number of PSUs, 200% of the “target” number of PSUs will be eligible to vest at “maximum” performance levels.

Outstanding PSUs as of December 31, 2017 were combined with the RSUs in the Company’s Annual Report on Form 10-K previously filed with the SEC.

Share-based compensation expense related to RSUs was $0.2 million and $0.4 million for the three months ended March 31, 2018 and 2017, respectively. Share-based compensation expense related to PSUs was $0.2 million for the three months ended March 31, 2018 and none during the three months ended March 31, 2017.

As of March 31, 2018, there was $5.7 million and $4.7 million of unamortized compensation expense related to unvested RSUs and PSUs, respectively, which is expected to be recognized over a weighted-average period of 2.0 years for RSUs and 3.2 years for PSUs.