10. Equity-Based Compensation

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 businesses 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 (often subject to performance-based or market-based conditions) and (4) deferred stock units (DSUs). ICG’s grants of equity-based compensation are approved by the Compensation Committee of its Board of Directors. 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” in ICG’s Consolidated Statements of Operations.

Equity-Based Compensation (in thousands, except weighted average years):

	Three Months Ended March 31,				Unrecognized Equity-Based Compensation as of		Weighted Average Years Remaining of Equity-Based Compensation as of
	2014		2013		Mar. 31, 2014		Mar. 31, 2014
SARs	$	250	$	601	$	1,088		1.7
Restricted Stock		3,293		1,189		53,844		2.9
DSUs		146		90		314		0.8
		3,689		1,880		55,246
Equity-Based Compensation for Consolidated Businesses		187		183		1,255		2.1
Total Equity-Based Compensation	$	3,876	$	2,063	$	56,501

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 months ended March 31, 2014 and 2013 was as follows:

	Three Months Ended March 31,
	2014						2013
	Number of SARs		Weighted Average Base Price		Weighted Average Fair Value		Number of SARs		Weighted Average Base Price		Weighted Average Fair Value
Exercised ⁽¹⁾		293,925	$	8.07	$	4.70		126,624	$	7.40	$	4.45

⁽¹⁾	The exercise of SARs listed in this table resulted in the issuance of 120,459 shares and 37,233 shares of ICG’s Common Stock during the three months ended March 31, 2014 and 2013, respectively.

There were 938,883 SARs and 1,232,808 SARs outstanding as of March 31, 2014 and December 31, 2013, respectively. The aggregate intrinsic value of the SARs outstanding as of March 31, 2014 and December 31, 2013 were $10.6 million and $12.0 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.

There was no activity with respect to stock options during the three months ended March 31, 2014 and 2013. There were 250 stock options outstanding as of both March 31, 2014 and December 31, 2013; the aggregate intrinsic value of the stock options outstanding as of both March 31, 2014 and December 31, 2013 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.

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 March 31, 2014, issued and unvested shares of restricted stock granted to ICG’s employees vest as follows: (1) 50,998 shares of restricted stock vest 25% each year over a four-year period, (2) 41,636 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) 403,448 shares of restricted stock vest upon the achievement of certain performance goals, as discussed below. Additionally, as of March 31, 2014, 3,205,000 shares of restricted stock granted to ICG’s senior executive group, including ICG’s executive officers, are subject to vesting in accordance with the lapse of specified service periods, and the achievement of certain performance goals and market conditions, as discussed below.

During the year ended December 31, 2013, in lieu of a right to receive 50% of their respective target bonus amounts under the ICG 2013 Performance Plan (the “2013 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 “2013 Performance Shares”) (determined based on the value of 50% of their respective individual target bonuses under the 2013 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 2013 Performance Plan (1) was greater than or equal to 50%, all of that employee’s 2013 Performance Shares vested or (2) was greater than 0% but less than 50%, a portion of that employee’s 2013 Performance Shares equal to two times the achievement percentage vested. All of those 2013 Performance Shares vested during the first quarter of 2014.

During the three months ended March 31, 2014, in lieu of any right to receive 100% of their respective target bonus amounts under the ICG 2014 Performance Plan (the “2014 Performance Plan”) in cash, senior ICG employees, including ICG’s executive officers, were issued a total of 158,942 shares of restricted stock (the “2014 Performance Shares”) (determined based on the value of their respective individual target bonuses under the 2014 Performance Plan and the closing price of ICG’s Common Stock of $20.33 per share on February 28, 2014, the date of the restricted stock grant). If and to the extent that an individual’s achievement percentage under the 2014 Performance Plan (1) is greater than or equal to 100%, all of that employee’s 2014 Performance Shares will vest or (2) is greater than 0% but less than 100%, a portion of that employee’s 2014 Performance Shares equal to two times the achievement percentage will vest.

As of March 31, 2014, outstanding shares of restricted stock granted to ICG’s Chief Executive Officer and President during 2011 vest as follows: (1) 183,334 shares of restricted stock vest in equal installments each November and May through November 9, 2015 and (2) 366,666 shares of restricted stock vest based on stipulated market thresholds related to ICG’s Common Stock price through December 31, 2015. During the three months ended March 31, 2014, in light of the sale of Procurian and the resulting improbability of the achievement of the 366,666 performance-based awards that were initially included in that grant, both ICG’s Chief Executive Officer and ICG’s President elected to forfeit those shares of restricted stock. ICG had reversed previously-recorded equity compensation cost related to those awards during 2013. 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 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.

During the three months ended March 31, 2014, 2,655,000 shares of restricted stock were granted to ICG’s senior executives, included ICG’s executive officers. Those awards vest as follows: (1) 1,377,500 shares of restricted stock vest in equal installments each February 28, 2015, 2016, 2017 and 2018 and (2) 1,277,500 shares of restricted stock vest based on stipulated market thresholds related to ICG’s Common stock price through February 28, 2018. The vesting of the market-based shares is contingent upon the 45-trading day volume-weighted average price (“VWAP”) of ICG’s Common Stock meeting or exceeding specified 45-trading day VWAP targets ($28.07, $30.16, $32.38 and $34.71) on or before February 28, 2018, with 25% of the shares vesting on the first business day following achievement of each of the targets. If any of the VWAP targets is achieved (1) on or prior to February 28, 2015, 50% of the shares that would have vested upon achieving the VWAP target will instead vest on the one-year anniversary of the grant, and the remaining 50% of the shares that would have vested upon achieving the WVAP target will instead vest on February 28, 2016, or (2) between the one-year anniversary of the grant and February 28, 2016, 50% of the applicable shares will vest on the date of achievement of the VWAP target, and the remaining 50% of the shares that would have vested upon achieving the WVAP target will instead vest on February 28, 2016.

During the three months ended March 31, 2014 and 2013, ICG granted 37,500 shares and 30,750 shares, respectively, of restricted stock under ICG’s Amended and Restated Non-Management Director Compensation Plan (the “Director Plan”), which are included in the table below. See “Non-Management Director Equity-Based Compensation” in this Note 10 for additional details related to vesting.

Share activity with respect to restricted stock awards for the three months ended March 31, 2014 and 2013 was as follows:

	Three Months Ended March 31,
	2014				2013
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Granted		3,095,948	$	17.21		168,190	$	13.06
Vested		175,771	$	12.68		75,446	$	9.76
Forfeited		366,666	$	9.96		8,677	$	10.63

There were 3,738,582 shares and 1,185,071 shares of restricted stock issued and unvested as of March 31, 2014 and December 31, 2013, respectively.

Non-Management Director Equity-Based Compensation

ICG periodically issues DSUs and/or shares of restricted stock to its non-management directors in accordance with the Director Plan. 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. Portions of those DSUs and/or shares of restricted stock vest on each anniversary date of the grant.

For 2014, each non-management director is also entitled to receive quarterly cash payments for his service on the Board of Directors and its committees, as applicable, under the Director Plan. Each director had the option to elect to receive DSUs in lieu of all or a portion of those cash fees. 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). DSUs received in lieu of cash fees are fully vested at the time they are granted and are settled in shares of ICG’s Common Stock upon the termination of the recipient’s service at ICG. 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” on ICG’s Consolidated Statements of Operations (but is not reflected in the summarized Equity-Based Compensation table above).

Share activity with respect to periodically-issued DSUs for the three months ended March 31, 2014 and 2013 was as follows:

	Three Months Ended March 31,
	2014				2013
	Number of DSUs		Grant Date Fair Value		Number of DSUs		Grant Date Fair Value
Granted		22,500	$	17.63		29,250	$	13.09
Vested		29,250	$	13.09		41,250	$	8.40

There were 22,500 DSUs and 29,250 DSUs issued and unvested at March 31, 2014 and December 31, 2013, respectively. All 22,500 DSUs issued and unvested at March 31, 2014 are expected to vest during the three months ended March 31, 2015.

Activity related to grants of DSUs for service in lieu of cash for the three months ended March 31, 2014 and 2013 was as follows:

	Three Months Ended March 31,
	2014				2013
	Number of DSUs		Expense Recognized (in thousands)		Number of DSUs		Expense Recognized (in thousands)
Granted and vested		5,913	$	79		7,484	$	95

In April 2014, the Director Plan was amended and restated (such plan, as amended, the “Amended Director Plan”). Pursuant to the Amended Director Plan, effective January 1, 2015, the compensation of the Company’s non-management directors will be changed as follows: (1) the form of director retainer fee payments will be changed from quarterly cash payments to annual director restricted stock grants (provided that a restricted stock grant with a six-month vesting period will be granted in January 2015 and, thereafter, the annual grants will be made in connection with ICG’s annual meeting of stockholders) and (2) the number and frequency of non-management director service grant DSUs/shares of director restricted stock will change from 7,500 annually to 22,500 triennially (with 7,500 DSUs/shares of director restricted stock vesting on the one-year anniversary of the grant date, and the remaining 15,000 DSUs/shares of Director Restricted Stock vesting in equal quarterly installments over the following two years). The annual grants of shares of director restricted stock that will replace the quarterly cash retainer fees will (a) be made on the first business day of each year, (b) be equal in value to the total amount of annual retainer fees that are otherwise payable for the upcoming year (based on the NASDAQ closing price of ICG’s Common Stock on the grant date), (c) vest on the one-year anniversary of the grant date and (d) no longer be subject to a director option to receive DSUs in lieu of the shares.

Consolidated Businesses

All of ICG’s consolidated businesses issue equity-based compensation awards to their employees. Those awards are most often in the form of stock options for the respective businesses’ stock that vest over four years. The fair value of the stock option awards is estimated on the grant date using the Black-Scholes option pricing model. The majority of the stock options typically vest 25% on the first anniversary of the grant date, and the remaining 75% vest ratably each month over the subsequent 36 months. The other awards generally vest ratably over four years, with 25% vesting on each anniversary date over that term.