On August 27, 2015, the Board of Directors of the Company approved the Golden Entertainment, Inc. 2015 Incentive Award Plan (the “2015 Plan”), which was approved by the Company’s shareholders at the Company’s 2016 annual meeting. The 2015 Plan authorizes the issuance of stock options, restricted stock, restricted stock units, dividend equivalents, stock payment awards, stock appreciation rights, performance bonus awards and other incentive awards. The 2015 Plan authorizes the grant of awards to employees, non-employee directors and consultants of the Company and its subsidiaries. Options generally have a ten-year term. Except as provided in any employment agreement between the Company and the employee, if an employee is terminated (voluntarily or involuntarily), any unvested options as of the date of termination will be forfeited.

The maximum number of shares of the Company’s common stock for which grants may be made under the 2015 Plan is 2.25 million shares, plus an annual increase on January 1^st of each year during the ten-year term of the 2015 Plan equal to the lesser of 1.8 million shares, 4% of the total shares of the Company’s common stock outstanding (on an as-converted basis) and such smaller amount as may be determined by the Board of Directors in its sole discretion. The annual increase on January 1, 2018 was 1,056,505 shares. In addition, the maximum aggregate number of shares of common stock that may be subject to awards granted to any one participant during a calendar year is 2.0 million shares. As of December 31, 2018, a total of 870,689 shares of the Company’s common stock remained available for grants of awards under the 2015 Plan.

In connection with the Special Dividend discussed in Note 4, Acquisitions, and in accordance with the Company’s equity incentive plans approved by the Company’s shareholders, equitable anti-dilutive adjustments were made to the exercise prices of outstanding stock options to purchase shares of Company common stock, in order to preserve the value of such stock options following the Special Dividend. Accordingly, effective as of the close of business on July 14, 2016, the exercise price of each outstanding stock option granted prior to the Record Date under the 2015 Plan, the 2007 Lakes Stock Option and Compensation Plan and the 1998 Stock Option and Compensation Plan (collectively, the “Adjusted Options”) was reduced by $1.71 per share. The weighted-average exercise price of the Adjusted Options presented in the table below have been adjusted accordingly. The Adjusted Options had a weighted-average exercise price of $7.04 per share after giving effect to such anti-dilutive adjustments. The Adjusted Options have varying remaining terms, which were not affected by the adjustments. The Company measured the incremental compensation cost as the excess of the fair value of the Adjusted Options immediately following such anti-dilutive adjustments over the fair value of the Adjusted Options immediately prior to such anti-dilutive adjustments. Of the 2,337,643 Adjusted Options, 1,908,070 were unvested and 429,573 were vested at the time of the adjustment. The incremental fair value related to the unvested Adjusted Options resulting from the anti-dilutive adjustments was estimated to be $1.7 million, which will be recorded over the remaining vesting period of such Adjusted Options. The incremental fair value related to the vested Adjusted Options resulting from the anti-dilutive adjustments, determined using the Black-Scholes option pricing model, was $0.7 million and was recorded as share-based compensation expense during the third quarter of 2016.

				Weighted-
				Average				Aggregate
	Stock			Remaining		Weighted-		Intrinsic
	Options			Term		Average		Value
	Outstanding			(in years)		Exercise Price		(in thousands)
Outstanding at January 1, 2018		4,375,929			7.9	$	10.73
Granted		—				$	—
Exercised		(813,228	)			$	7.38
Cancelled		(117,635	)			$	12.15
Expired		(20,311	)			$	7.34
Outstanding at December 31, 2018		3,424,755			7.4	$	11.49	$	17,603
Exercisable at December 31, 2018		2,193,274			7.2	$	10.63	$	12,811

The total intrinsic value of stock options exercised during the years ended December 31, 2018, 2017 and 2016 was $16.1 million, $0.1 million and $1.8 million, respectively. The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2017 and 2016 was, $7.30 and $4.80 per share, respectively. There were no stock options granted during the year ended December 31, 2018.

The total amount of cash received from stock options exercised during the year ended December 31, 2018 was $1.3 million.

The Company uses the Black-Scholes option pricing model to estimate the fair value and compensation cost associated with employee incentive stock options, which requires the consideration of historical employee exercise behavior data and the use of a number of assumptions including volatility of the Company’s stock price, the weighted-average risk-free interest rate and the weighted-average expected life of the options. The Company’s determination of fair value of share-based option awards on the date of grant using the Black-Scholes option pricing model is affected by the following assumptions regarding complex and subjective variables. Any changes in these assumptions may materially affect the estimated fair value of the share-based award.

The following assumptions were used to estimate the fair value of stock options granted:

	Year Ended December 31,
	2017		2016
Expected dividend yield		—		—
Risk-free interest rate	2.21 – 2.47%		1.43 – 2.40%
Expected term (in years)		10		10
Expected volatility	29.07 – 34.43%		24.03 – 26.95%

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 RSUs and PSUs. The number of PSUs that will be eligible to vest with respect to these PSU awards 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 Company periodically reviews the estimates of performance against the defined criteria to assess the expected payout of each outstanding PSU grant and adjusts the stock compensation expense accordingly.

	RSUs
						Total
				Weighted-		Fair Value
				Average		of Shares
				Grant Date		Vested
	Shares			Fair Value		(in thousands)
Outstanding at January 1, 2016		—
Granted		141,296		$	12.57
Outstanding at December 31, 2016		141,296		$	12.57
Granted		—
Vested		(111,660	)	$	12.57	$	2,556
Cancelled		(29,636	)	$	12.57
Outstanding at December 31, 2017		—
Granted		241,542		$	29.09
Vested		—				$	—
Cancelled		(9,243	)	$	28.72
Outstanding at December 31, 2018		232,299		$	29.10

	PSUs
					Total
			Weighted-		Fair Value
			Average		of Shares
			Grant Date		Vested
	Shares⁽¹⁾		Fair Value		(in thousands)
Outstanding at January 1, 2017		—
Granted		62,791	$	27.87
Vested		—			$	—
Cancelled		—
Outstanding at December 31, 2017		62,791	$	27.87
Granted		108,957	$	28.72
Vested		—			$	—
Cancelled		—
Outstanding at December 31, 2018		171,748	$	28.41

__________________

⁽¹⁾

The number of shares listed for PSUs granted during 2017 represents the actual number of PSUs granted to each recipient eligible to vest if the Company meets its performance goals for the applicable period. The number of shares listed for PSUs granted during 2018 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 with respect to PSUs granted in 2018 will vary depending on whether or not the Company meets or exceeds the applicable threshold, target or maximum performance goals for the PSUs, with 200% of the “target” number of PSUs eligible to vest at “maximum” performance levels.

	Year Ended December 31,
(In thousands)	2018		2017		2016
Stock options	$	5,191	$	5,135	$	3,717
RSUs		3,383		3,554		161
PSUs		1,067		65		—
Total share-based compensation costs	$	9,641	$	8,754	$	3,878

As of December 31, 2018, the Company’s unrecognized share-based compensation expenses related to stock options, RSUs and PSUs was approximately $7.1 million, $3.4 million and $3.0 million, respectively, which are expected to be recognized over a weighted-average period of 2.0 years, 2.0 years, and 2.5 years, respectively.