Share-Based Payments

Under its 2002 Stock Award and Incentive Plan (“the Plan”), which incorporated its Third Amended and Restated 1995 Stock Option Plan, the Company has reserved shares of its common stock for issuance upon the exercise of options granted under the Plan, as well as for the awarding of other securities. Under the Plan, employees (including officers), non-employee directors and independent consultants may be granted options to purchase shares of common stock, restricted stock units and other securities (see Note 15). The vesting of these share-based awards may vary, but typically vest over a requisite service period or based on performance criteria, with a maximum vesting period of 4 years. Restricted shares typically vest in the same manner, with the exception of certain awards vesting over one to two years. Share-based compensation expense is recognized on a straight-line basis over the requisite service period. Compensation expense for performance-awards is measured based on the amount of shares ultimately expected to vest, estimated at each reporting date based on management expectations regarding the relevant performance criteria. As of December 31, 2018, 1,157,210 shares were available for future grant. Additional shares may become available to the extent that options or shares of restricted stock presently outstanding under the Plan terminate or expire.

Restricted Stock

Under the Plan, share-based compensation payments may include the issuance of shares of restricted stock. Restricted stock award grants are based upon employment contracts, which vary by individual and year, and are subject to vesting conditions. Non-employee directors each receive grants of restricted stock at a value of $100,000 annually which vest after one year – this amount is prorated if a director is appointed within the year. In addition, at the discretion of Management and approval of the Board, non-executive employees also may receive restricted stock awards, which occurs approximately once per year.

The following table summarizes the restricted stock award activity, annually, for the years ended December 31, 2016, 2017 and 2018:



	Restricted Stock Awards (RSA)
	Number of Shares		Weighted Average Grant Date Fair Value
Outstanding, December 31, 2015	411,409		$	6.61
Awarded	648,351		7.00
Released	(255,307	)	6.68
Forfeited	(608,000	)	6.88
Outstanding, December 31, 2016	196,453		7.01
Awarded	981,208		5.15
Released	(187,224	)	7.05
Forfeited	(9,229	)	6.32
Outstanding, December 31, 2017	981,208		4.12
Awarded	2,164,374		1.88
Released	(194,800	)	5.14
Forfeited	—		—
Outstanding, December 31, 2018	2,950,782		2.41

As of December 31, 2018, there was $2.9 million of total unrecognized compensation cost related to non-vested restricted stock, which is expected to be recognized over a weighted-average period of 2.39 years.

Restricted Stock Units

Under the Plan, share-based compensation payments may include the issuance of Restricted Stock Units (RSUs) to employees, which occurs approximately once per year and are subject to vesting conditions. RSUs are valued at the market price of the shares underlying the award on the date of grant.

The following table summarizes the RSU award activity, annually for the years ended December 31, 2017 and 2018:



	Restricted Stock Units (RSUs)
	Number of Shares		Weighted Average Grant Date Fair Value
Outstanding, December 31, 2016	—		$	—
Awarded	1,001,206		4.68
Released	—		—
Forfeited	(42,014	)	4.68
Outstanding, December 31, 2017	959,192		4.68
Awarded	357,143		1.96
Released	(125,290	)	5.15
Forfeited	(138,879	)	4.56
Outstanding, December 31, 2018	1,052,166		3.72

As of December 31, 2018, there was $1.9 million of total unrecognized compensation cost related to non-vested restricted stock units, which is expected to be recognized over a weighted-average period of 1.82 years.

Share-Based Compensation Expense

The following table summarizes the total share-based compensation expense and related tax benefits recognized (in thousands):



	Year Ended December 31,
	2016		2017		2018
Share-based compensation expense	$	1,621	$	3,112	$	2,434

Stock Options

There has been no stock option activity since December 31, 2015.

Non-Employee Stock Warrants

In 2012, the Company granted 1,500,000 stock warrants with an exercise price of $16.28 per share and a five year term to a third party as partial consideration for the exclusive right to use certain recognition technology in connection with the Company’s toy products. All warrants vested upon grant and expired unexercised on September 12, 2017.

The Company measured the fair value of the warrants granted on the measurement date. The fair value of the 2012 stock warrant was capitalized as an intangible asset and had been amortized to expense in the consolidated statements of operations as the related product net sales were recognized.