Share-Based Compensation

The Company established the 2011 Plan, which permits the grant of stock options, restricted stock, RSUs, performance-shares and other stock-based awards to the Company’s officers, directors, employees, and other persons expected to provide significant services to the Company and its subsidiaries through May 10, 2021. A total of 6,550,000 shares were originally authorized to be granted under the 2011 Plan at December 31, 2012, some of which were previously granted under incentive plans that were in effect prior to the 2011 Plan. In May 2013, the 2011 Plan was amended to increase the authorized shares by 2,265,000 shares. On June 9, 2016, the 2011 Plan was further amended and restated to increase the authorized shares thereunder by 2,000,000 shares, resulting in a total of 10,815,000 shares of common stock authorized for issuance under the amended and restated 2011 Plan.

The 2011 Plan is administered by the Compensation Committee, which is comprised of two or more independent members of the Board of Directors. Under the 2011 Plan, the maximum number of shares for which options or stock appreciation rights may be granted to any participant in any calendar year is 2.0 million shares, and the maximum number of shares that may be paid to any participant in any calendar year in the form of RSUs, performance shares or other stock-based awards, in each case that are performance-based compensation, is 2.0 million shares determined as of the date of payout. Each contractual term of an option granted is fixed by the Compensation Committee, and except for limited circumstances, the term cannot exceed ten years from the grant date. Restricted stock, RSUs and performance-share awards have a vesting period as defined by the applicable award agreement.

At December 31, 2016, there were 2,204,362 shares underlying the 2011 Plan that are authorized, but not yet granted. The Company issues new shares of stock upon the exercise of stock options and the vesting of restricted stock, RSUs and performance shares. Awards of stock options, restricted stock, and RSUs granted in recent years generally vest over a three or four year period and are based on service. Awards of performance shares granted in recent years generally vest over a three year performance period and are based on service and a market-based or company-based performance condition.

Stock Options

The following table summarizes the activity for stock options granted by the Company:



	Shares		Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in $000s)
Outstanding at January 1, 2014	2,726,553		$	23.51	7.22	$	32,785
Granted	67,507		29.11
Exercised	(303,449	)	18.12			3,468
Forfeited or expired	(126,883	)	31.24
Outstanding at December 31, 2014	2,363,728		23.95		6.34	1,223
Granted	789,210		16.39
Exercised	(15,458	)	12.88			150
Forfeited or expired	(127,247	)	27.66
Outstanding at December 31, 2015	3,010,233		21.87		5.56	443
Granted	1,272,293		5.69
Exercised	(64,220	)	2.89			200
Forfeited or expired	(311,309	)	16.51
Outstanding at December 31, 2016	3,906,997		17.34		5.74	1,809

Exercisable at December 31, 2016	2,471,233		22.69		4.42	119
Options expected to vest as of December 31, 2016	1,355,723		8.14		7.95	1,577

The grant-date fair values of stock options granted to employees and directors of the Company during the years ended December 31, 2016, 2015 and 2014 were $1.8 million, $5.1 million and $0.7 million, respectively. The weighted-average grant-date fair values of stock options granted during the years ended December 31, 2016, 2015 and 2014 were $1.42, $6.49 and $10.05, respectively. The total amount of cash received by the Company from the exercise of stock options was $0.2 million for the years ended December 31, 2016 and 2015 and $5.5 million for the year ended December 31, 2014. The total fair values of options that vested during the years ended December 31, 2016, 2015 and 2014 were $10.4 million, $1.7 million and $5.7 million, respectively.

Method and Assumptions Used to Estimate Fair Values of Options

The weighted-average assumptions the Company used to value options are shown below.



	For the Years Ended December 31,
	2016		2015		2014
Risk-free interest rate	0.99	%	1.07	%	1.17	%
Dividend yield	—	%	—	%	—	%
Expected life (years)	4.84		4.00		4.00
Volatility	56.96	%	50.00	%	42.56	%
Forfeiture rate	5.85	%	3.50	%	2.20	%

The risk-free interest rate is based on the U.S. Treasury yield in effect at the grant date with a term equal to the expected life of the option. The expected life of the options represents the period of time the options are expected to be outstanding. The dividend yield is based on the Company’s estimated annual dividend payout at the grant date. Volatility is based on the Company’s historical data and the forfeiture rate is based on historical termination experience.

Non-Vested Share Activity

The Company’s non-vested share-based awards consist of RSUs and performance shares. The grant-date fair values of share-based awards granted during the years ended December 31, 2016, 2015 and 2014 were $3.7 million, $18.4 million and $24.0 million, respectively.

The following table summarizes the activity for non-vested awards granted by the Company:



	Shares		Weighted-Average Grant-Date Fair Value Per Share		Weighted-Average Contractual Term (in years)	Aggregate Intrinsic Value (in $000s)
Outstanding at January 1, 2014	308,426		$	25.65	1.90	$	10,906
Granted	738,164		32.46
Vested and settled	(30,898	)	29.45			910
Forfeited	(94,133	)	8.48
Outstanding at December 31,2014	921,559		30.42		1.84	15,215
Granted	1,046,362		17.62
Vested and settled	(303,166	)	24.31			4,132
Forfeited	(165,610	)	23.96
Outstanding at December 31, 2015	1,499,145		23.42		1.88	21,318
Granted⁽¹⁾	1,128,522		3.28
Vested and settled	(894,900	)	8.88			4,217
Forfeited	(322,557	)	22.64
Outstanding at December 31, 2016	1,410,210		16.71		4.68	6,698
Non-vested shares expected to vest as of December 31, 2016	1,287,348		16.46		4.88	6,115

__________


(1)	Excludes 192,024 performance shares legally granted on November 3, 2016 that have not met the grant date requirements in accordance with GAAP, as the performance target condition had not been determined at December 31, 2016. The performance target for these performance shares is based on the 2017 Annual Business Plan as approved by the Board, which was approved subsequent to the year end.

The total fair values of shares that vested and settled during the years ended December 31, 2016, 2015 and 2014, were $7.9 million, $7.4 million and $0.9 million, respectively. The RSUs granted include immediately vesting RSUs granted to the Company's non-employee directors and former Chief Executive Officer, President and Vice Chairman of the Board of Directors, Denmar J. Dixon, detailed further below, and 500,000 RSUs granted to the Company's former Interim Chief Executive Officer and President and current chairman of the Board of Directors, George M. Awad, and 175,438 RSUs granted to the Company's newly appointed Chief Executive Officer and President, Anthony N. Renzi, that vest ratably in annual installments over three years subject to a service condition.

Method and Assumptions Used to Estimate Fair Values of Performance-Share Awards

The weighted-average assumptions the Company used to value performance-share awards are shown below. As discussed above, the table excludes the 192,024 performance shares legally granted in 2016 that have not met the grant-date requirements as required by GAAP as the performance target condition had not been determined at December 31, 2016.



	For the Years Ended December 31,
	2015			2014
Risk-free interest rate	0.75		%	0.82		%
Simulation period (years)	2.72			2.76
Volatility	52.30		%	46.58		%
Beginning TSR price	$	16.57		$	28.09
Forfeiture rate	3.50		%	2.20		%

The risk-free interest rate is based on the U.S. Treasury yield in effect at the grant date with a term equal to the simulation period used in the Monte-Carlo simulation model. The simulation period is equal to the performance period associated with the performance shares. Volatility is based on the Company’s historical data. Beginning TSR price is equal to the average closing price for the last twenty trading days immediately prior to the first day of the performance period. The forfeiture rate is based on historical termination experience. The performance shares vest December 31, 2016 and 2017, and the shares ultimately awarded will be based upon the performance percentage, which can range from 0% to 200% of the target performance award grant. The performance shares ultimately awarded upon vesting are based on the percentile rank of the Company’s TSR relative to the distribution of the TSRs of peer group companies. There were zero shares awarded for the performance shares that vested December 31, 2016.

Share-Based Compensation Expense

Share-based compensation expense recognized by the Company is net of actual forfeitures as well as estimated forfeitures, which are estimated based on historical termination behavior. Share-based compensation expense of $6.6 million, $20.9 million and $14.5 million for the years ended December 31, 2016, 2015 and 2014, respectively, is included in salaries and benefits expense on the consolidated statements of comprehensive loss. The tax benefit recognized related to share-based compensation expense for the years ended December 31, 2016, 2015 and 2014 was $2.5 million, $8.0 million and $5.5 million, respectively. For unvested stock options and shares, the Company had $1.3 million and $3.2 million, respectively, of total unrecognized compensation cost at December 31, 2016, which is expected to be recognized over a weighted-average period of 1.4 years and 0.9 years, respectively.

On October 2, 2015, the Company and Mark J. O'Brien, the Company’s former Chief Executive Officer, entered into a retirement agreement effective October 10, 2015 pursuant to which the vesting dates of certain RSUs and stock options previously awarded to Mr. O'Brien were accelerated to October 10, 2015. Mr. O'Brien is also entitled to be paid the full amount of shares earned based on performance with regard to his currently outstanding awards of performance shares as if Mr. O'Brien remained an employee of the Company through the date on which the amount of the payout under such performance shares is determined. The retention of the performance shares was considered a Type III modification for share-based compensation, and, as a result, the Company reversed all expense previously recorded for these retained awards and recorded the new compensation expense over the new requisite service period. The compensation benefit resulting from these modifications was $1.3 million.

On June 8, 2016, the Company and Denmar J. Dixon, the Company’s former Chief Executive Officer, President and Vice Chairman of the Board of Directors, entered into a separation agreement effective June 30, 2016, pursuant to which all RSUs, performance shares and stock options previously awarded to Mr. Dixon will remain outstanding and continue to vest as though Mr. Dixon remained employed by the Company through each applicable vesting date. In addition, Mr. Dixon received 125,000 RSUs that immediately vested on June 30, 2016. The weighted-average grant-date fair value of $2.85 for these RSUs was based upon the average of the high and low market prices of the Company's stock on their date of grant. The retention of the performance shares was considered a Type III modification for share-based compensation, and, as a result, the Company reversed all expense previously recorded for these retained awards and recorded the new compensation expense over the new requisite service period. The total incremental compensation benefit resulting from these modifications was $1.0 million.