The Company’s 2016 Incentive Compensation Plan (the “2016 Plan”) was approved by stockholders in May 2016. Under the 2016 Plan, Perdoceo may grant to eligible participants awards of stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock, performance units, annual incentive awards, and substitute awards, which generally may be settled in cash or shares of our common stock. Any shares of our common stock that are subject to awards of stock options or stock appreciation rights payable in shares will be counted as 1.0 share for each share issued for purposes of the aggregate share limit and any shares of our common stock that are subject to any other form of award payable in shares will be counted as 1.35 shares for each share issued for purposes of the aggregate share limit. As of December 31, 2020, there were approximately 1.3 million shares of common stock available for future share-based awards under the 2016 Plan, which is net of (i) 0.6 million shares issuable upon exercise of outstanding options and (ii) 2.9 million shares underlying restricted stock units, which will be settled in shares of our common stock if the vesting conditions are met and thus reduce the common stock available for future share-based awards under the 2016 Plan by the amount vested. These shares have been multiplied by the applicable factor under the 2016 Plan to determine the remaining shares available as of December 31, 2020. Additionally, as of December 31, 2020 under the Company’s previous 2008 Incentive Compensation Plan, there were approximately 0.6 million shares issuable upon exercise of outstanding options and 0.1 million shares underlying outstanding deferred stock units, which will be settled in shares of our common stock if the vesting conditions are met. The vesting of all types of equity awards is subject to possible acceleration in certain circumstances. If a plan participant terminates employment for any reason other than by death or disability during the vesting period, the right to unvested equity awards is generally forfeited.

As of December 31, 2020, we estimate that compensation expense of approximately $20.0 million will be recognized over the next four years for all unvested share-based awards that have been granted to participants, which includes stock options and restricted stock units to be settled in shares of stock and excludes any estimates of forfeitures. This amount includes expenses associated with all performance-based restricted stock unit awards as the Company currently believes it is probable that it will achieve the performance conditions.

Stock Options. The exercise price of stock options granted under each of the plans is equal to the fair market value of our common stock on the date of grant. Employee stock options generally become exercisable 25% per year over a four-year service period beginning on the date of grant and expire ten years from the date of grant. Non-employee directors’ stock options expire ten years from the date of grant and generally become 100% exercisable after the first anniversary of the grant date. Grants of stock options are generally only subject to the service conditions discussed previously.

Stock option activity during the years ended December 31, 2020, 2019 and 2018 under our plans was as follows:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2017		2,868,053		$	9.86
Granted		336,768			14.10
Exercised		(161,072	)		8.46			$	987
Forfeited		-			-
Cancelled		(225,316	)		20.58
Outstanding as of December 31, 2018		2,818,433		$	9.59
Granted		41,958			21.29
Exercised		(258,621	)		5.76			$	2,902
Forfeited		(8,017	)		15.39
Cancelled		(156,144	)		22.99
Outstanding as of December 31, 2019		2,437,609		$	9.32
Granted		-			-
Exercised		(1,040,304	)		5.18			$	7,615
Forfeited		(8,719	)		11.79
Cancelled		(161,512	)		30.25
Outstanding as of December 31, 2020		1,227,074		$	10.07		4.90	$	5,150
Exercisable as of December 31, 2020		1,037,202		$	9.70		4.54	$	4,894

The following table summarizes information with respect to all outstanding and exercisable stock options under all of our plans as of December 31, 2020:

				Options Outstanding						Options Exercisable
Range of Exercise Prices				Number of Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)		Number Exercisable		Weighted Average Exercise Price
$	2.82	$	3.93		170,656	$	3.51		3.62		170,656	$	3.51
$	4.07	$	4.49		142,764	$	4.32		5.05		142,764	$	4.32
$	5.00	$	5.96		179,199	$	5.82		4.47		179,199	$	5.82
$	6.51	$	8.30		198,556	$	7.65		4.49		139,466	$	7.37
$	9.69	$	13.15		72,794	$	9.94		6.42		72,794	$	9.94
$	13.80	$	13.80		236,452	$	13.80		7.18		105,670	$	13.80
$	15.39	$	15.39		56,119	$	15.39		7.41		56,119	$	15.39
$	21.29	$	21.29		41,958	$	21.29		8.61		41,958	$	21.29
$	21.80	$	21.80		48,576	$	21.80		0.20		48,576	$	21.80
$	22.13	$	22.13		80,000	$	22.13		0.38		80,000	$	22.13
					1,227,074	$	10.07		4.90		1,037,202	$	9.70

Restricted Stock Units to be Settled in Stock. Restricted stock units to be settled in shares of stock which are not “performance-based” generally vest 25% per year over a four-year service period. Restricted stock units which are “performance-based” are subject to performance or market conditions that, even if the requisite service period is met, may reduce the number of restricted stock units that vest at the end of the requisite service period or result in all units being forfeited. The performance-based restricted stock units generally vest three years after the grant date.

The following table summarizes information with respect to all outstanding restricted stock units to be settled in shares of stock under our plans during the years ended December 31, 2020, 2019 and 2018:

	Restricted Stock to be Settled in Shares of Stock
	Units			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2017		1,453,823		$	5.32
Granted		1,397,644			12.91
Vested		(709,132	)		4.97
Forfeited		(124,858	)		7.14
Outstanding as of December 31, 2018 ⁽¹⁾		2,017,477		$	12.70
Granted		427,488			21.31
Vested		(500,818	)		6.14
Forfeited		(22,955	)		11.42
Outstanding as of December 31, 2019		1,921,192		$	16.34
Granted		534,471			15.45
Vested		(242,515	)		11.02
Forfeited		(67,098	)		17.18
Outstanding as of December 31, 2020		2,146,050		$	16.70

Deferred Stock Units to be Settled in Stock. Perdoceo granted deferred stock units to our non-employee directors prior to 2017. The deferred stock units are to be settled in shares of stock. Settlement of the deferred stock units and delivery of the underlying shares of stock to the plan participants does not occur until he or she ceases to provide services to the Company in the capacity of a director, employee or consultant.

The following table summarizes information with respect to all deferred stock units during the years ended December 31, 2020, 2019 and 2018:

	Deferred Stock Units to be Settled in Shares			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2017 ⁽¹⁾		76,023		$	4.44
Granted		-			-
Vested		-			-
Forfeited		-			-
Outstanding as of December 31, 2018 ⁽¹⁾		76,023		$	4.44
Granted		-			-
Vested ⁽²⁾		(2,928	)		5.56
Forfeited		-			-
Outstanding as of December 31, 2019 ⁽¹⁾		73,095		$	4.39
Granted		-			-
Vested		-			-
Forfeited		-			-
Outstanding as of December 31, 2020⁽¹⁾		73,095		$	4.39

Restricted Stock Units to be Settled in Cash. Restricted stock units to be settled in cash generally vest 25% per year over a four-year service period beginning on the date of grant. Cash-settled restricted stock units are recorded as liabilities as the expense is recognized and the fair value for these awards is determined at each period end date with changes in fair value recorded in our statement of income in the current period. Cash-settled restricted stock units are settled with a cash payment for each unit vested equal to the closing price on the vesting date. Cash-settled restricted stock units are not included in common shares reserved for issuance or available for issuance under the 2016 Plan.

The following table summarizes information with respect to all cash-settled restricted stock units for the years ended December 31, 2020, 2019 and 2018:

	Restricted Stock Units to be Settled in Cash
Outstanding as of December 31, 2017		471,728
Granted		-
Vested		(214,192	)
Forfeited		(44,742	)
Outstanding as of December 31, 2018		212,794
Granted		-
Vested		(129,116	)
Forfeited		(2,170	)
Outstanding as of December 31, 2019		81,508
Granted		-
Vested		(81,508	)
Forfeited		-
Outstanding as of December 31, 2020		-

Upon vesting, based on the conditions set forth in the award agreements, these units were settled in cash. We valued these units in accordance with the guidance set forth by FASB ASC Topic 718 – Compensation-Stock Compensation and recognized benefit of approximately $0.2 million for the year ended December 31, 2020 and expense of $2.3 million and $2.2 million for the years ended December 31, 2019 and 2018, respectively, for all cash-settled restricted stock units.

Stock-Based Compensation Expense. Total stock-based compensation expense for the years ended December 31, 2020, 2019 and 2018 for all types of awards was as follows (dollars in thousands):

	December 31,
Award Type	2020			2019		2018
Stock options	$	1,134		$	1,690	$	1,956
Restricted stock units settled in stock		12,227			7,569		3,641
Restricted stock units settled in cash		(240	)		2,301		2,197
Total stock-based compensation expense	$	13,121		$	11,560	$	7,794

We recognize the value of share-based compensation as expense in our consolidated statements of income during the vesting periods of the underlying share-based awards using the straight-line method. FASB ASC Topic 718 allows companies to estimate forfeitures of share-based awards at the time of grant and revise such estimates in subsequent periods if actual forfeitures differ from original projections.

The fair value of stock option awards was estimated on the date of grant using the Black-Scholes-Merton option pricing model. During 2020, Perdoceo did not grant any stock options. Our determination of the fair value of each stock option is affected by our stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the expected life of the awards and actual and projected stock option exercise behavior. The weighted average fair value per share of stock option awards granted during the years ended December 31, 2019 and 2018, and assumptions used to value stock options are as follows:

	For the Year Ended December 31,
	2020 ⁽¹⁾	2019			2018
Dividend yield	NA		-			-
Risk-free interest rate	NA		1.6	%		2.6	%
Weighted average volatility	NA		62.6	%		56.1	%
Expected life (in years)	NA		8.0			5.0
Weighted average grant date fair value per share of options granted	NA	$	13.78		$	7.09

Volatility is calculated based on the actual historical daily prices of our common stock over the same time period as the expected term of the stock option award.

The expected life of each stock option award is estimated based primarily on our actual historical director and employee exercise behavior and forfeiture rates.

The fair value of each share of restricted stock and restricted stock units to be settled in stock is equal to the fair market value of our common stock as of the date of grant, which is the closing price per share of our common stock on NASDAQ.