9. Equity-Based Compensation

As of June 30, 2013, equity-based compensation awards may be granted to ICG employees, directors and consultants under ICG’s 2005 Omnibus Equity Compensation Plan, as such has been amended from time to time (the “Plan”). Generally, the grants vest over a period from one to four years and expire eight to ten years after the grant date. Most companies in which ICG holds equity ownership interests also maintain their own equity incentive/compensation plans.

ICG issues the following types of equity-based compensation to its employees and non-employee directors: (1) stock appreciation rights (SARs), (2) stock options, (3) restricted stock and (4) deferred stock units (DSUs). The following table summarizes the equity-based compensation recognized in the respective periods; that equity-based compensation is included in operating expenses, primarily in the line item “General and administrative” on ICG’s Consolidated Statements of Operations (in thousands, except weighted average years):

	Three Months Ended June 30,				Six Months Ended June 30,				Unrecognized Equity-Based Compensation as of June 30, 2013
	2013		2012		2013		2012		Unrecognized Equity-Based Compensation as of June 30, 2013

SARs	$	601	$	618	$	1,202	$	1,226	$	2,791	1.9
Restricted Stock		1,237		713		2,426		1,396		7,814	2.2
DSUs		96		87		186		246		255	0.7
Equity-Based Compensation		1,934		1,418		3,814		2,868		10,860
Equity-Based Compensation for Consolidated Core Companies		390		321		792		509		4,537	3.0
Equity-Based Compensation	$	2,324	$	1,739	$	4,606	$	3,377	$	15,397

SARs

Each SAR represents the right of the holder to receive, upon exercise of that SAR, shares of ICG Common Stock equal to the amount by which the fair market value of a share of that Common Stock on the date of exercise of the SAR exceeds the base price of the SAR. The base price is determined by the NASDAQ closing price of ICG’s Common Stock on the date of grant (or the closing price on the next trading day if there are no trades in ICG’s stock on the date of grant). The fair value of each SAR is estimated on the grant date using the Black-Scholes option-pricing model. SARs generally vest over four years, with 25% vesting on the first anniversary of the grant date, and the remaining 75% vesting ratably each month over the subsequent 36 months. Activity with respect to SARs during the three and six months ended June 30, 2013 and 2012 was as follows:

	Three Months Ended June 30,
	2013									2012
	Number of SARs		Weighted Average Base Price			Weighted Average Fair Value			Number of SARs			Weighted Average Base Price			Weighted Average Fair Value
Granted		—		$	—		$	—			259,625		$	9.25		$	4.90
Exercised (1)		28,864		$	7.40		$	4.44			—		$	—		$	—
Forfeited		5,346		$	9.95		$	5.39			1,598		$	10.54		$	5.83

(1) The exercise of SARs listed in this table resulted in the issuance of 6,999 shares of ICG’s Common Stock during the three months ended June 30, 2013.

	Six Months Ended June 30,
	2013						2012
	Number of SARs		Weighted Average Base Price		Weighted Average Fair Value		Number of SARs		Weighted Average Base Price		Weighted Average Fair Value
Granted		—	$	—	$	—		259,625	$	9.25	$	4.90
Exercised (1)		155,488	$	8.78	$	5.27		—	$	—	$	—
Forfeited		5,346	$	9.95	$	5.39		1,598	$	10.54	$	5.83

(1) The exercise of SARs listed in this table resulted in the issuance of 44,232 shares of ICG’s Common Stock during the six months ended June 30, 2013.

There were 4,177,416 and 4,338,250 SARs outstanding as of June 30, 2013 and December 31, 2012, respectively. The aggregate intrinsic value of the SARs outstanding as of June 30, 2013 and December 31, 2012 were $15.2 million and $16.0 million, respectively.

Stock Options

The fair value of each stock option is estimated on the grant date using the Black-Scholes option-pricing model. Stock options generally vest ratably over four years: 25% vest on the first anniversary of the grant date, and the remaining 75% vest ratably each month over the subsequent 36 months.

Activity with respect to stock options during the three and six months ended June 30, 2013 and 2012 was as follows:

	Three Months Ended June 30,
	2013								2012
	Number of Stock Options			Weighted Average Base Price			Weighted Average Fair Value		Number of Stock Options		Weighted Average Base Price		Weighted Average Fair Value
Exercised		—	$		—	$		—		3,700	$	6.63	$	5.08
Expired		—	$		—	$		—		600	$	7.60	$	5.75
Forfeited		—	$		—	$		—		21	$	8.41	$	4.96

	Six Months Ended June 30,
	2013								2012
	Number of Stock Options			Weighted Average Base Price			Weighted Average Fair Value		Number of Stock Options		Weighted Average Base Price		Weighted Average Fair Value
Exercised		—	$		—	$		—		30,500	$	8.26	$	6.30
Expired		—	$		—	$		—		8,000	$	10.69	$	8.25
Forfeited		—	$		—	$		—		21	$	8.41	$	4.96

There were 1,750 stock options outstanding as of both June 30, 2013 and December 31, 2012; the aggregate intrinsic value of the stock options outstanding as of both June 30, 2013 and December 31, 2012 was less than $0.1 million.

SARs and Stock Options Fair Value Assumptions

ICG estimates the grant date fair value of SARs and stock options using the Black-Scholes option-pricing model, which requires the input of highly subjective assumptions. Those assumptions include estimating the expected life of the award and estimating volatility of ICG’s stock price over the expected term. Expected volatility approximates the historical volatility of ICG’s Common Stock over the period commensurate with the expected term of the award. The expected term calculation is based on an average of the award vesting term and the life of the award. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for an instrument with a maturity that is commensurate with the expected term of the award. Changes in the above assumptions, the estimated forfeitures and/or the requisite service period can materially affect the amount of equity-based compensation recognized in ICG’s Consolidated Statements of Operations.

The following assumptions were used to determine the fair value of SARs granted to employees and a non-management director by ICG during the three- and six-month periods ended June 30, 2013 and 2012:

	Three and Six Months Ended June 30,
	2013			2012
Expected volatility		—	%		56	%
Average expected life of SAR (in years)		—			6.25
Risk-free interest rate		—	%		0.92	%
Dividend yield		—	%		0	%

Restricted Stock

ICG periodically issues shares of restricted stock to its employees and non-management directors. Recipients of restricted stock do not pay cash consideration for the shares and have the right to vote all shares subject to the grant and receive all dividends with respect to the shares, whether or not the shares have vested. As of June 30, 2013, issued and unvested shares of restricted stock granted to ICG’s employees vest as follows: (1) 53,622 shares of restricted stock vest 25% each year over a four-year period, (2) 60,042 shares of restricted stock vest 12.5% on the nine-month anniversary of the grant date, and the remaining 87.5% every six months subsequent to the first vesting date and (3) 130,440 shares of restricted stock vest upon the achievement of certain performance goals, as discussed below. Additionally, as of June 30, 2013, 962,500 shares of restricted stock granted to ICG’s Chief Executive Officer and ICG’s President vest according to specified service periods, performance goals and market conditions, as discussed below.

During the six months ended June 30, 2013, in lieu of their right to receive 50% of their respective target bonus amounts under the ICG 2013 Performance Plan (the “Performance Plan”) in cash, senior ICG employees, including each of ICG’s executive officers, were issued a total of 130,440 shares of restricted stock (the “Performance Shares”) (determined based on the value of 50% of their respective individual target bonuses under the Performance Plan and the closing price of ICG’s common stock of $13.09 per share on March 1, 2013, the date of the restricted stock grant). If and to the extent that an individual’s achievement percentage under the Performance Plan (1) is greater than or equal to 50%, all of that employee’s Performance Shares will vest or (2) is greater than 0% but less than 50%, a portion of that employee’s Performance Shares equal to two times the achievement percentage will vest. As of June 30, 2013, ICG expects all of those performance-based restricted stock awards to vest.

As of June 30, 2013, outstanding shares of restricted stock granted to ICG’s Chief Executive Officer and ICG’s President vest as follows: (1) 229,168 shares of restricted stock vest in equal installments each November and May through November 9, 2015, (2) 366,666 shares of restricted stock vest based on the achievement of stipulated performance goals related to ICG’s results on or before December 31, 2015, and (3) 366,666 shares of restricted stock vest based on stipulated market thresholds related to ICG’s Common Stock price through December 31, 2015. As of June 30, 2013, ICG expects all of those performance-based and market-based restricted stock awards to vest. In the event of a change of control (as defined by the Plan) before December 31, 2015, all of the shares contingent upon the achievement of the financial and stock price metrics would automatically vest, and any unrecognized equity-based compensation expense associated with those awards would be immediately recognized. Additionally, in the event of a change of control during which ICG’s Chief Executive Officer and ICG’s President are terminated, any remaining service-based awards would automatically vest, and any unrecognized equity-based compensation expense associated with those awards would be immediately recognized.

ICG issues restricted stock awards annually to its non-management board of directors under ICG’s Amended and Restated Non-Management Director Compensation Plan (the “Director Plan”). Those awards vest 100% on the one-year anniversary date of the grant. During the three and six months ended June 30, 2013 and 2012, ICG granted 30,750 shares of restricted stock under the Director Plan, which are included in the table below. Also see the subsection “DSUs” in this Note 9.

Share activity with respect to restricted stock awards for the three and six months ended June 30, 2013 and 2012 was as follows:

	Three Months Ended June 30,
	2013					2012
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Granted		—	$		—		98,223	$	9.24
Vested		62,458	$		10.54		62,461	$	10.54
Forfeited		1,718	$		10.31		375	$	12.15

	Six Months Ended June 30,
	2013					2012
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Granted		168,190	$		13.06		116,973	$	9.11
Vested		137,904	$		10.12		68,711	$	10.19
Forfeited		10,395	$		12.67		375	$	12.15

There were 1,237,354 and 1,217,463 shares of restricted stock issued and unvested as of June 30, 2013 and December 31, 2012, respectively.

DSUs

ICG periodically issues DSUs to its non-management directors. Each DSU represents a share of Common Stock into which that DSU will be converted upon the termination of the recipient’s service at ICG. DSUs issued annually under the Director Plan vest on the one-year anniversary of the grant date.

Share activity with respect to those DSUs for the six months ended June 30, 2013 and 2012 was as follows:

	Six Months Ended June 30,
	2013					2012
	Number of DSUs			Grant Date Fair Value		Number of DSUs		Grant Date Fair Value
Granted		29,250	$		13.09		41,250	$	8.40
Vested		41,250	$		8.40		52,500	$	13.32

There were 29,250 DSUs and 41,250 DSUs issued and unvested at June 30, 2013 and December 31, 2012, respectively.

ICG issues quarterly compensation payments to each non-management director for his service on the Board of Directors and its committees, as applicable, under the Director Plan. Each director has the right to elect to receive those payments in whole or in part in the form of DSUs in lieu of cash. Each participating director receives DSUs representing shares of ICG’s Common Stock with a fair market value equal to the relevant cash fees (with such fair market value determined by reference to the closing Common Stock price reported by NASDAQ on the date these cash fees otherwise would have been paid). Those DSUs vest immediately. The expense for those DSUs is recorded when the fees to which the DSUs relate are earned and is included in the line item “general and administrative” in ICG’s Consolidated Statements of Operations (but is not reflected in the summarized Equity-Based Compensation table above).

Activity related to quarterly grants of DSUs for service was as follows:

Three Months Ended June 30,

2013

2012

Number of
DSUs

Expense
Recognized

(in thousands)

Number of
DSUs

Expense
Recognized
(in thousands)

Granted and vested

7,888

9,538

Six Months Ended June 30,

2013

2012

Number of
DSUs

Expense
Recognized

(in thousands)

Number of
DSUs

Expense
Recognized
(in thousands)

Granted and vested

15,372

191

15,251

176

Consolidated Core Companies

All of ICG’s consolidated core companies issue equity-based compensation awards to their employees. Those awards are most often in the form of stock options that vest over four years. The fair value of the stock option awards are estimated on the grant date using the Black-Scholes option pricing model. The majority of the stock options vest 25% on the first anniversary of the grant date, and the remaining 75% vest ratably each month over the subsequent 36 months. The remaining awards generally vest ratably over four years, with 25% vesting on each anniversary date over that term. Expense related to equity-based awards recorded by ICG’s consolidated core companies for the three- and six-month periods ended June 30, 2013 and 2012 primarily relates to Procurian.