Stock-Based Incentive Plan

We have granted option awards to purchase common stock (the "Stock Options"), restricted common stock awards ("Restricted Stock"), contingent restricted common stock awards ("Contingent Restricted Stock") and/or unrestricted fully vested common stock, to employees, directors, and consultants of the Company under the Evolution Petroleum Corporation Amended and Restated 2004 Stock Plan (the "Plan"). The Plan authorized the issuance of 6,500,000 shares of common stock. As of June 30, 2015, 542,529 shares remain available for grant.

Stock Options and Incentive Warrants

No Stock Options have been granted since August 2008 and all compensation costs attributable to Stock Options have been recognized in prior periods. No Incentive Warrants have been granted since February 2006, all compensation costs attributable to these awards have been recognized in prior periods and all remaining outstanding awards were exercised in November 2013.

The following summary presents information regarding outstanding Stock Options as of June 30, 2015, and the changes during the fiscal year:



	Number of Stock Options		Weighted Average Exercise Price		Aggregate Intrinsic Value(1)		Weighted Average Remaining Contractual Term (in years)
Stock Options outstanding at June 30, 2014	178,061		$	2.08
Granted	—		—
Exercised	(87,000	)	$	1.63
Canceled or forfeited	—		—
Expired	—		—
Stock Options outstanding at June 30, 2015	91,061		$	2.50	$	372,000	1.3
Vested or expected to vest at June 30, 2015	91,061		$	2.50	$	372,000	1.3
Exercisable at June 30, 2015	91,061		$	2.50	$	372,000	1.3


(1)	Based upon the difference between the market price of our common stock on the last trading date of the period ($6.59 as of June 30, 2015) and the Stock Option exercise price of in-the-money Stock Option.

For the year ended June 30, 2015, there were 87,000 Stock Options exercised with an aggregate intrinsic value of $501,810. For the year ended June 30, 2014, there were 4,644,759 Stock Options and Incentive Warrants exercised, with an aggregate intrinsic value of $47,504,114. For the year ended June 30, 2013, there were 550,000 Stock Options exercised with an aggregate intrinsic value of $5,233,480.

During the years ended June 30, 2015, 2014, and 2013, there were 0, 0, and 18,922 Stock Options that vested with a total grant date fair value of $0, $0, and $46,359, respectively.

Restricted Stock and Contingent Restricted Stock

Prior to fiscal 2015 all Restricted Stock grants contained a four-year vesting period period based solely on service. During fiscal 2015, the Company awarded grants of both Restricted Stock and Contingent Restricted Stock as part of its long-term incentive plan. Such grants, which expire after four years if unvested, contain service-based, performance-based and market-based vesting provisions. The common shares underlying the Restricted Stock grants were issued on the date of grant, whereas the Contingent Restricted Stock will be issued only upon the attainment of specified performance-based or market-based vesting provisions.

Market-based awards entitle employees to vest in a fixed number of shares when the three-year trailing total return on the Company’s common stock exceeds the corresponding total returns of various quartiles of companies comprising the SIG Exploration and Production Index (NASDAQ EPX) during defined measurement periods. The fair value and expected vesting period of these awards were determined using a Monte Carlo simulation based on the historical volatility of the Company's total return compared to the historical volatilities of the other companies in the index. Fair values for these market-based awards ranged from $4.26 to $8.40 with expected vesting periods of 3.30 to 2.55 years, based on the various quartiles of comparative market performance. Compensation expense for market-based awards is recognized over the expected vesting period using the straight-line method, so long as the award holder remains an employee of the Company. Total compensation expense is based on the fair value of the awards at the date of grant and is independent of vesting or expiration of the awards, except for termination of service.

The following table sets forth the Restricted Stock transactions for the year ended June 30, 2015:



	Number of Restricted Shares		Weighted Average Grant-Date Fair Value		Unamortized Compensation Expense at June 30, 2015 (1)		Weighted Average Remaining Amortization Period (Years)
Unvested at June 30, 2014	140,067		$	8.70	$	—
Service-based awards granted	100,910		9.53
Performance-based awards granted	76,642		10.05
Market-based awards granted	35,914		7.59
Vested	(91,306	)	8.40
Forfeited	—		—
Unvested at June 30, 2015	262,227		$	9.37	$	1,306,990	2.3


(1)	Excludes $770,252 of potential future compensation expense for performance-based awards for which vesting is not considered probable at this time for accounting purposes.

During the years ended June 30, 2015, 2014, and 2013, there were 91,306, 277,198, and 277,198 shares of Restricted Stock that vested with a total grant date fair value of $766,970, $1,796,243, and $1,427,570, respectively.

The following table summarizes Contingent Restricted Stock activity:



	Number of Restricted Stock Units	Weighted Average Grant-Date Fair Value		Unamortized Compensation Expense at June 30, 2015 (1)		Weighted Average Remaining Amortization Period (Years)
Unvested at July 1, 2014	—	—
Performance-based awards granted	38,325	$	10.05	$	—
Market-based awards granted	17,961	4.26		—
Unvested at June 30, 2015	56,286	$	8.20	$	57,004	2.5

(1) Excludes $385,166 of potential future compensation expense for performance-based awards for which vesting is not considered probable at this time for accounting purposes.

Stock-based Compensation Expense

For the years ended June 30, 2015, 2014, and 2013, we recognized stock-based compensation expense related to Restricted Stock, Contingent Restricted Stock grants, and Stock Option grants of $962,813, $1,728,687, and $1,531,745, respectively. For the year ended June 30, 2015, this expense includes $19,160 of cash dividends paid on unvested performance-based awards for which vesting is not considered probable at this time for accounting purposes. See Note 7 – Restructuring, for stock compensation included in Restructuring Charges recorded at December 31, 2014.