Stock-Based Compensation

Compensation expense for stock-based awards is based on the fair values of the awards on the date of grant and is recognized on a straight-line basis over the vesting period of the entire award in the “Labor” line of the Consolidated Statements of Comprehensive Income (Loss). For the years ended December 31, 2017, 2016, and 2015, we recorded total stock-based compensation expense from continuing operations of $2.7 million, $2.7 million, and $5.4 million, respectively.

We granted equity awards to our Chief Financial Officer in 2017, Chief Operations Officer in 2016, and our Chief Executive Officer and Chief Marketing Officer in 2015 as a material inducement for acceptance of such positions. These option, restricted stock, and performance unit awards were not submitted for stockholder approval, and were separately listed with the NYSE.

In May 2013, our stockholders approved the 2013 Omnibus Incentive Plan ("2013 Plan"), pursuant to which we may issue up to 500,000 shares of stock-based awards to directors, employees, and consultants, as adjusted for the reverse stock split. The 2013 Plan replaced the stockholder-approved 2005 Omnibus Incentive Plan ("2005 Plan"), pursuant to which we issued equity securities to directors, officers, and key employees. No additional stock-based awards will be granted under the 2005 Plan, but awards previously granted under the 2005 Plan will remain outstanding in accordance with their respective terms. As of December 31, 2017, there were 0.1 million shares available for grant under the 2013 Plan.

Stock Options

Options granted under the 2013 Plan or as inducement awards have an exercise price equal to the market value of the common stock on the grant date. These options become exercisable in 25% increments on the first four anniversaries of their date of grant, and expire on the tenth anniversary of their date of grant. Options to purchase 0.1 million shares granted as inducement awards were outstanding at December 31, 2017, with exercise prices ranging from $10.00 to $42.60 per share.

Following the third quarter 2015 resignation of our former CEO, vesting was accelerated on his unvested stock options (pursuant to the terms of his employment agreement and inducement award), for which we recognized $0.5 million of accelerated expense in July 2015. These options were not exercised and subsequently expired.

Options under the 2005 Plan were granted at exercise prices equal to the market value of the common stock on the grant date. All such awards have met their respective vesting dates. Options to purchase 0.1 million shares were outstanding under the 2005 Plan as of December 31, 2017, with exercise prices ranging from $60.40 to $159.00 per share.

Options issued through March 2015 vest in full (to the extent not previously vested) upon a change in control, as defined in the applicable equity plan. Options granted to officers after April 2015 vest in full upon a change in control if such options are not assumed or replaced by a publicly-traded successor with an equivalent award (as defined in such officers’ change in control severance agreements). Additionally, 25% of the inducement options granted to the Chief Executive Officer will vest (if not previously vested) in the event her employment is terminated without cause, or if she terminates her employment for good reason (as such terms are defined in her employment agreement).

The following summarizes all stock option activity during the years ended December 31, 2017, 2016, and 2015:



In thousands	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (Thousands)
Options outstanding at December 31, 2014	446,365		$	114.99

Granted in 2015	197,318		57.26
Exercised in 2015	(3,500	)	60.40			$	67
Unvested options forfeited in 2015	(65,982	)	79.59
Vested options expired in 2015	(113,988	)	148.83
Options outstanding at December 31, 2015	460,213		$	87.36

Granted in 2016	15,037		26.15
Exercised in 2016	—		—			$	—
Unvested options forfeited in 2016	(57,014	)	75.74
Vested options expired in 2016	(47,689	)	160.61
Options outstanding at December 31, 2016	370,547		$	77.23

Granted in 2017	33,855		10.00
Exercised in 2017	—		—			$	—
Unvested options forfeited in 2017	(9,872	)	73.31
Vested options expired in 2017	(85,563	)	110.44
Options outstanding at December 31, 2017	308,967		$	60.80	5.86	$	—

Vested and expected to vest at December 31, 2017	308,967		$	60.80	5.86	$	—

Exercisable at December 31, 2017	201,594		$	75.42	4.66	$	—

The aggregate intrinsic value at year end in the table above represents the total pre-tax intrinsic value that would have been received by the option holders if all of the in-the-money options were exercised on December 31, 2017. The pre-tax intrinsic value is the difference between the closing price of our common stock on December 31, 2017 and the exercise price for each in-the-money option. This value fluctuates with the changes in the price of our common stock.

The following table summarizes information about stock options outstanding at December 31, 2017:



Range of Exercise Prices				Number Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Life (Years)	Number Exercisable	Weighted-Average Exercise Price
$	0.00	-	29.99	48,892	$	14.97	9.39	3,759	$	26.15
$	30.00	-	54.99	96,866	38.39		7.73	48,433	38.39
$	55.00	-	79.99	94,903	70.27		3.96	85,785	69.57
$	80.00	-	104.99	30,941	88.28		5.34	26,253	89.35
$	105.00	-	129.99	22,900	119.73		2.23	22,900	119.73
$	130.00	-	159.99	14,465	151.51		0.70	14,465	151.51
				308,967	$	60.80	5.86	201,595	$	75.42

The fair value of each option grant is estimated on the date of grant using the Black-Scholes Option-Pricing Model based on the following weighted-average assumptions used for grants during 2017, 2016, and 2015:



	Year Ended December 31,
	2017		2016		2015
Expected term (in years)	6.25		6.25		6.24
Expected stock price volatility	53.70	%	44.80	%	40.60	%
Risk-free interest rate	2.16	%	1.48	%	1.58	%
Expected dividend yield	—	%	—	%	5.69	%

Expected term is estimated using the simplified method, which takes into account vesting and contractual term. The simplified method is being used to calculate expected term instead of historical experience due to a lack of relevant historical data resulting from changes in option vesting schedules and changes in the pool of employees receiving option grants. Expected stock price volatility is based on the historical volatility from traded shares of our stock over the expected term. The risk-free interest rate is based on the rate of a zero-coupon U.S. Treasury instrument with a remaining term approximately equal to the expected term. Expected dividend yield is based on historical stock price movement and anticipated future annual dividends over the expected term. Future annual dividends over the expected term are estimated to be nil.

The weighted-average fair value of options granted during 2017, 2016, and 2015 was $5.32, $11.66, and $13.60, respectively. As of December 31, 2017, there was $0.7 million of total unrecognized compensation cost related to unvested stock options. This cost is expected to be recognized over a weighted average period of approximately 2.18 years.

Cash Stock Appreciation Rights

In 2016 and 2017 the Board approved grants of cash settling stock appreciation rights under the 2013 Plan. Cash stock appreciation rights vest in 25% increments on the first four anniversaries of the date of grant. Cash stock appreciation rights settle solely in cash and are treated as a liability.

The following summarizes all cash stock appreciation rights during the year ended December 31, 2017:



	Number of Units	Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)
Cash stock appreciation rights outstanding at December 31, 2016	—	$	—

Granted in 2017	86,618	9.70
Exercised in 2017	—	—
Forfeited in 2017	—	—
Cash stock appreciation rights outstanding at December 31, 2017	86,618	$	9.70	9.48

Vested and expected to vest at December 31, 2017	86,618	$	9.70	9.48

Exercisable at December 31, 2017	—	$	—	0.00

The fair value of each option grant is estimated on the date of grant using the Black-Scholes Option-Pricing Model based on the following weighted-average assumptions used for grants during 2017:



	2017
Expected term (in years)	6.25
Expected stock price volatility	54.45	%
Risk-free interest rate	2.23	%
Expected dividend yield	—	%

Expected term is estimated using the simplified method, which takes into account vesting and contractual term. The simplified method is being used to calculate expected term instead of historical experience due to a lack of relevant historical data resulting from changes in cash stock appreciation right vesting schedules and changes in the pool of employees receiving cash stock appreciation right grants. Expected stock price volatility is based on the historical volatility from traded shares of our stock over the expected term. The risk-free interest rate is based on the rate of a zero-coupon U.S. Treasury instrument with a remaining term approximately equal to the expected term. Expected dividend yield is based on historical stock price movement and anticipated future annual dividends over the expected term. Future annual dividends over the expected term are estimated to be nil.

The fair value of each cash stock appreciation right is estimated on the date of grant using the Black-Scholes Option-Pricing Model and is revalued at the end of each period. Changes in fair value are recorded to the income statement as changes to expense. As of December 31, 2017, there was $0.4 million of total unrecognized compensation cost related to unvested cash stock appreciation right grants. This cost is expected to be recognized over a weighted average period of approximately 3.48 years. Changes in our stock price, the volatility of our stock price, and the risk-free rate of interest will result in adjustments to compensation expense and the corresponding liability over the applicable service period

Unvested Shares

Unvested shares granted as inducement awards or under the 2013 Plan vest in three equal increments on the first three anniversaries of their date of grant. Unvested shares settle solely in common stock and are treated as equity. Outstanding unvested shares granted to officers as inducement awards or under the 2013 Plan vest in full (to the extent not previously vested) upon a change in control if such unvested shares are not assumed or replaced by a publicly-traded successor with an equivalent award (as such terms are defined in such officers’ change-in-control severance agreements).

Following the third quarter 2015 resignation of our former CEO, vesting was accelerated on his unvested shares (pursuant to the terms of his employment agreement and inducement award), for which we recognized $1.2 million of accelerated expense in July 2015.

The following summarizes all unvested share activity during 2017, 2016, and 2015:



	Number of Shares		Weighted- Average Grant Date Fair Value
Unvested shares outstanding at December 31, 2014	79,007		$	80.89

Granted in 2015	83,626		63.80
Vested in 2015	(50,507	)	82.27
Forfeited in 2015	(15,911	)	78.39
Unvested shares outstanding at December 31, 2015	96,215		$	65.69

Granted in 2016	74,192		26.32
Vested in 2016	(36,492	)	66.96
Forfeited in 2016	(39,372	)	57.79
Unvested shares outstanding at December 31, 2016	94,543		$	37.59

Granted in 2017	160,962		9.81
Vested in 2017	(40,979	)	41.39
Forfeited in 2017	(13,304	)	27.84
Unvested shares outstanding at December 31, 2017	201,222		$	15.23

The fair value of each unvested share is estimated on the date of grant as the closing market price of our common stock on the date of grant. As of December 31, 2017, there was $2.1 million of total unrecognized compensation cost related to unvested shares. This cost is expected to be recognized over a weighted average period of approximately 1.94 years.

Phantom Stock Units

In 2016 and 2017 the Board approved grants of phantom stock units under the 2013 Plan. Phantom stock units vest in 25% increments on the first four anniversaries of the date of grant. Phantom stock units settle solely in cash and are treated as a liability. Grants of phantom stock units made to officers under the 2013 Plan vest in full (to the extent not previously vested) upon a change in control if they are not assumed or replaced by a publicly-traded successor with an equivalent award (as such terms are defined in such officers’ change-in-control severance agreements).

The following summarizes all phantom stock unit activity during 2017:



	Number of Units		Weighted- Average Grant Date Fair Value
Phantom stock units outstanding at December 31, 2015	—		$	—

Granted in 2016	78,140		26.90
Vested in 2016	—		—
Forfeited in 2016	(24,976	)	26.90
Phantom stock units outstanding at December 31, 2016	53,164		$	26.90

Granted in 2017	56,000		9.70
Vested in 2017	(12,483	)	26.90
Forfeited in 2017	(14,644	)	22.63
Phantom stock units outstanding at December 31, 2017	82,037		$	15.92

The fair value of each phantom stock unit is estimated on the date of grant as the closing market price of our common stock on the date of grant. Changes in our stock price will result in adjustments to compensation expense and the corresponding liability over the applicable service period. As of December 31, 2017, there was $0.7 million of total unrecognized compensation cost related to phantom stock units. This cost is expected to be recognized over a weighted average period of approximately 3.06 years.

Performance Stock Units

Under the 2013 Plan and grants of inducement awards, performance stock units are a form of share-based award similar to unvested shares, except that the number of shares ultimately issued is based on our performance against specific performance goals over a roughly three-year period. At the end of the performance period, the number of shares of stock issued will be determined in accordance with the specified performance target(s) in a range between 0% and 100%. Performance stock units vest solely in common stock and are treated as equity. Upon a change in control, performance stock units granted to officers vest on a pro-rated basis (based on time elapsed from the grant) to the extent not previously settled if they are not assumed or replaced by a publicly-traded successor with an equivalent award (as such terms are defined in such officers' change-in-control severance agreements).

The following summarizes all performance stock unit activity during 2017, 2016, and 2015:



	Number of Units		Weighted- Average Grant-Date Fair Value
Performance stock units outstanding at December 31, 2014	60,363		$	76.07

Granted in 2015	66,982		43.02
Settled in 2015	—		—
Forfeited in 2015	(57,211	)	75.40
Performance stock units outstanding at December 31, 2015	70,134		$	45.05

Granted in 2016	47,300		19.00
Settled in 2016	—		—
Forfeited in 2016	(33,004	)	57.59
Performance stock units outstanding at December 31, 2016	84,430		$	25.56

Granted in 2017	89,124		9.95
Settled in 2017	—		—
Forfeited in 2017	(10,494	)	47.90
Performance stock units outstanding at December 31, 2017	163,060		$	15.59

The fair value of each performance stock unit is estimated on the date of grant as the closing market price of our common stock on the date of grant, minus the present value of anticipated dividend payments. Periodic compensation expense is based on the current estimate of future performance against specific performance goals over a three-year period and is adjusted up or down based on those estimates. As of December 31, 2017, there was $1.3 million of total unrecognized compensation cost related to performance stock units. This cost is expected to be recognized over a weighted average period of approximately 1.73 years. Future annual dividends over the expected term are estimated to be nil.

Cash Performance Stock Units

In 2016 and 2017, the Board of Directors approved grants of cash performance stock units under the 2013 Plan. Cash performance stock units are a form of share-based award similar to phantom stock units, except that the number of units ultimately issued is based on our performance against specific performance goals measured after a three-year period. At the end of the performance period, the number of units vesting will be determined in accordance with specified performance target(s) in a range between 0% and 100%. Cash performance stock units settle solely in cash and are treated as a liability. Upon a change in control, cash performance stock units granted to officers vest on a pro-rated basis (based on time elapsed from the grant) to the extent not previously settled if they are not assumed or replaced by a publicly-traded successor with an equivalent award (as such terms are defined in such officers’ change-in-control severance agreements).

The following summarizes all performance stock unit activity during 2017:



	Number of Shares		Weighted- Average Grant-Date Fair Value
Cash performance stock units outstanding at December 31, 2015	—		$	—

Granted in 2016	51,209		26.90
Settled in 2016	—		—
Forfeited in 2016	(6,812	)	26.90
Cash performance stock units outstanding at December 31, 2016	44,397		$	26.90

Granted in 2017	109,887		10.10
Settled in 2017	—		—
Forfeited in 2017	(3,778	)	26.90
Cash performance stock units outstanding at December 31, 2017	150,506		$	14.63

The fair value of each cash performance stock unit is estimated on the date of grant as the closing market price of our common stock on the date of grant, minus the present value of anticipated dividend payments. Periodic compensation expense is based on the current estimate of future performance against specific performance goals over a three-year period and is adjusted up or down based on those estimates. As of December 31, 2017, there was $0.9 million of total unrecognized compensation cost related to performance stock units. This cost is expected to be recognized over a weighted average period of approximately 2.13 years. Future annual dividends over the expected term are estimated to be nil.