Share-Based Compensation

Effective May 17, 2017, the Company established the 2017 Plan, which permitted the grant of stock options, restricted stock, RSUs, performance shares and other awards to the Company’s officers, employees, non-employee directors and consultants and advisors. The 2017 Plan permitted that the number of authorized shares of common stock reserved for issuance under the plan total 3,650,000 shares.

The 2017 Plan was administered by the Compensation and Human Resources Committee, which is comprised of two or more independent members of the Board of Directors. Under the 2017 Plan, the maximum number of shares that could be granted to any participant other than a non-employee director in any calendar year was 1.5 million shares, and the maximum number of shares that could be paid to any non-employee director in any calendar year was 200,000 shares determined as of the date of payout. The aggregate value of all compensation paid to a non-employee director in any calendar year could not exceed $500,000. Each contractual term of an option granted was fixed by the Compensation Committee, and except for limited circumstances, the term could not exceed ten years from the grant date. Restricted stock, RSUs and performance share awards had a vesting period as defined by the applicable award agreement.

At December 31, 2017, there were 3,018,054 shares underlying the 2017 Plan that were authorized, but not yet granted. On the WIMC Effective Date, all outstanding options and non-vested awards were canceled in connection with the Company's emergence from bankruptcy. Accordingly, the Company was required to recognize the entire amount of any previously unrecognized compensation cost, which totaled $0.4 million at February 9, 2018.

The Company reserved 3,193,750 shares of the Successor common stock issued on the WIMC Effective Date for issuance under the 2018 Plan. At December 31, 2018, there were 2,034,539 shares underlying the 2018 Plan that were 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)
Predecessor
Outstanding at January 1, 2017	3,906,997		$	17.34	5.74	$	1,809
Forfeited or expired	(374,196	)	13.03
Outstanding at December 31, 2017	3,532,801		17.79		4.63	—
Canceled ⁽¹⁾	(3,532,801	)	17.79
Outstanding at February 9, 2018	—

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(1)	On the WIMC Effective Date, all outstanding options were canceled in connection with the Company's emergence from bankruptcy.

There were no options granted during the period from February 10, 2018 through December 31, 2018, the period from January 1, 2018 through February 9, 2018 and the year ended December 31, 2017. The total fair value of options that vested during the year ended December 31, 2017 was $0.6 million.

Non-Vested Share Activity

The Company’s non-vested share-based awards consist of RSUs and PSUs. The grant-date fair values of share-based awards granted during the period from February 10, 2018 through December 31, 2018 and the year ended December 31, 2017 were $5.5 million and $1.1 million, respectively. There were no non-vested share-based awards granted during the period from January 1, 2018 through February 9, 2018.

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)
Predecessor
Outstanding at January 1, 2017	1,410,210		$	16.71	4.68	$	6,698
Granted	845,422		1.28
Vested and settled	(1,062,068	)	4.60			709
Forfeited	(198,790	)	13.97
Canceled⁽¹⁾	(316,175	)	34.25
Outstanding at December 31, 2017	678,599		9.07		5.42	572
Canceled⁽²⁾	(678,599	)	9.07
Outstanding at February 9, 2018	—


Successor
Granted	1,184,352		4.67
Vested and settled	(251,632	)	5.50			692
Forfeited	(130,866	)	5.33
Outstanding at December 31, 2018	801,854		4.30		9.55	80
Non-vested shares expected to vest as of December 31, 2018	801,854		4.30		9.55	80

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(1)	Consists of the cancellation of performance shares granted in 2014 that vested December 31, 2016; however, no shares were ultimately awarded since the target performance criteria were not met.


(2)	On the WIMC Effective Date, all outstanding non-vested awards were canceled in connection with the Company's emergence from bankruptcy.

The total fair values of shares that vested and settled during the period from February 10, 2018 through December 31, 2018 and the year ended December 31, 2017 were $1.4 million and $4.9 million, respectively. There were no non-vested share-based awards that vested and settled during the period from January 1, 2018 through February 9, 2018.

On May 2, 2018, the Company granted 251,632 immediately vesting RSUs to non-employee directors, which included 37,746 RSUs being accounted for as liability-classified awards in accordance with GAAP and requires them to be marked-to-market each period. The weighted-average grant date fair value of $5.50 for these awards was based on the closing market price of the Company's stock on the grant date. The RSUs granted during the year ended December 31, 2017 include 653,398 immediately vesting RSUs granted to the Company's non-employee directors.

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

There were 192,024 performance shares legally granted in 2016 that had not met the grant-date requirements as required by GAAP at December 31, 2016. These performance shares subsequently met the GAAP grant-date requirements during the first quarter of 2017. The fair value of these performance shares was based on the average of the high and low market prices of the Company's common stock on the date of the grant. Subsequently, the Company determined that the performance targets for these performance shares would not be achieved and therefore no related expense was recorded during the year ended December 31, 2017. There were no other performance-share awards granted during the year ended December 31, 2017. There were no shares of common stock issued for the performance shares that vested during the year ended December 31, 2017 as target performance criteria were not met.

During the second quarter of 2018, the Company announced the appointment of Thomas F. Marano as Chief Executive Officer and Ritesh Chaturbedi as Chief Operating Officer. In connection with his appointment as Chief Executive Officer, Mr. Marano received PSUs on July 18, 2018 with the number of shares earned to be determined based upon the average closing price of the Company's stock for the 20 trading days immediately prior to April 18, 2019. The number of shares earned under the applicable award agreement will be determined by the Compensation Committee in accordance with the stock performance ranges detailed within the applicable award agreement up to a maximum number of 500,000 shares. Subject to Mr. Marano's continued service with the Company on each applicable vesting date, fifty percent of the earned shares will vest on April 18, 2019 while the remaining earned shares will vest one year later.

Mr. Chaturbedi was granted PSUs on July 18, 2018 with the number of shares earned to be determined based upon the average closing price of the Company's stock for the 20 trading days immediately prior to and including December 31, 2020. The number of shares earned under the applicable award agreement will be determined by the Compensation Committee in accordance with the stock performance ranges detailed within the applicable award agreement up to a maximum number of 20,000 shares. Subject to Mr. Chaturbedi's continued service with the Company, fifty percent of the earned shares will vest on December 31, 2020 and the remaining shares will vest one year later.

The Company and Mr. Chaturbedi entered into a termination letter agreement dated January 14, 2019, pursuant to which Mr. Chaturbedi's employment with the Company was terminated on January 11, 2019. In addition, as per the Tier I PSU agreement described above, Mr. Chaturbedi's Tier I PSU awards shall become vested on the termination date and paid out per the performance vesting requirements outlined in the award agreement. Furthermore, the PSUs granted to Mr. Chaturbedi in connection with his employment agreement were canceled per the agreement on his termination date as the awards were out-of-the-money.

Total expected compensation expense for the awards granted to Mr. Marano and Mr. Chaturbedi was calculated using a Monte Carlo valuation technique, which considers the probability of all of the possible outcomes of the performance target.

During July 2018, the Company granted Tier I or Tier II PSUs to certain employees. Tier I awards totaled 315,882 target PSUs and contain a performance condition based on the achievement of liquidity measures in addition to a service component. The Tier II awards totaled 336,636 target PSUs and contain performance conditions based on the achievement of liquidity measures plus individual performance goals in addition to a service component. For the Tier II awards, the liquidity measure accounts for 60% of the target PSUs while the remaining 40% of the target PSUs are attributable to the individual goals metric, subject to the service component. The measurement date for the liquidity and individual performance goals is December 31, 2018, with an ongoing liquidity requirement for the Tier I awards and the liquidity portion of the Tier II awards. The Tier I and Tier II PSUs vest in equal installments on March 15, 2019, March 15, 2020 and March 15, 2021. The number of shares that ultimately vest will be based on the performance percentages, which can range from 0% to 165% of target for the PSUs relating to the liquidity performance metric and 0% to 100% of target for the PSUs relating to the individual performance metric. The weighted-average grant date fair value of both the Tier I and Tier II PSUs of $5.33 was based on the closing market price of the Company's stock on the grant date. Each PSU has one share of Company common stock underlying such PSU.

In connection with the DHCP Bankruptcy Petitions filed by the Company during February 2019, the Company terminated the outstanding Tier 1 and Tier II PSUs prior to the first vesting date of such awards on March 15, 2019. In addition, the Company also anticipates that the remaining outstanding share-based compensation awards will also be terminated in connection the DHCP Bankruptcy Proceedings. Refer to Note 31 for additional information regarding the DHCP Bankruptcy Proceedings.

Share-Based Compensation Expense

Share-based compensation expense recognized by the Company is net of actual forfeitures as well as estimated forfeitures. Share-based compensation expense of $2.5 million, $0.5 million and $2.2 million for the period from February 10, 2018 through December 31, 2018, the period from January 1, 2018 through February 9, 2018 and the year ended December 31, 2017, respectively, is included in salaries and benefits expense on the consolidated statements of comprehensive income (loss). The tax benefit recognized related to share-based compensation expense was $0.5 million, $0.1 million and $0.8 million for the period from February 10, 2018 through December 31, 2018, the period from January 1, 2018 through February 9, 2018 and the year ended December 31, 2017, respectively. For unvested shares, the Company has $2.1 million of total unrecognized compensation cost at December 31, 2018, which is expected to be recognized over a weighted-average period of 1.1 years.