10 .	STOCK INCENTIVE PLANS

Under the Company’s stock incentive plan, stock options, restricted stock, stock-settled stock appreciation rights, performance share units and other awards

may

be granted to officers, employees, consultants, and non-employee directors. Long-term incentive awards (“LTIP”) were granted to executive management annually through

2010.

2011

Incentive Award Plan

June 10, 2011,

Alaska Communications shareholders approved the

2011

Incentive Award Plan, which was amended and restated on

June 30, 2014

and which terminates in

2021.

Following termination, all shares granted under this plan, prior to termination, will continue to vest under the terms of the grant when awarded. All remaining unencumbered shares of common stock previously allocated to the Prior Plans were transferred to the

2011

Incentive Award Plan. In addition, to the extent that any outstanding awards under the Prior Plans are forfeited or expire or such awards are settled in cash, such shares will again be available for future grants under the

2011

Incentive Award Plan. The Company grants Restricted Stock Units (“RSUs”) and Performance Stock Units (“PSUs”) as the primary equity based incentive for executive and certain non union-represented employees.

Restricted Stock Units

The Company measures the fair value of RSUs based on the number of shares granted and the quoted closing market price of the Company’s common stock on the date of grant. RSUs granted in

2018

vest ratably over

three

years.

The following table summarizes the RSU, LTIP and non-employee director stock compensation activity for the

nine

-month period ended

September 30, 2018:

				Weighted
				Average
				Grant Date
	Number			Fair
	of Units			Value
Nonvested at December 31, 2017		1,223		$	2.00
Granted		695			1.72
Vested		(677	)		1.92
Canceled or expired		(48	)		1.86
Nonvested at September 30, 2018		1,193		$	1.88

Performance Stock Units

The PSUs granted in

2018

will vest in

three

equal installments, or tranches, if certain stock price thresholds and service thresholds are achieved.

The Company measures the fair value of the

2018

PSUs using a Monte Carlo simulation model as more fully described below. Share-based compensation expense subject to a market condition is recognized regardless of whether the market condition is satisfied, provided that the requisite service has been provided.

The following table summarizes the PSU activity for the

nine

-month period ended

September 30, 2018.

				Weighted
				Average
				Grant Date
	Number			Fair
	of Units			Value
Nonvested at December 31, 2017		1,331		$	1.47
Granted		1,243			0.55
Vested		(126	)		1.77
Canceled or expired		(378	)		1.73
Nonvested at September 30, 2018		2,070		$	0.85

The table below sets forth the average grant date fair value assumptions used in the Monte Carlo simulation model for the

2018

PSUs.

Valuation (grant) date	July 20, 2018			July 23, 2018
Number of units granted		1,118			125
Fair market value of the Company's Common Stock	$	1.68		$	1.67
Risk-free interest rate		2.66	%		2.70	%
Expected dividend yield		0	%		0	%
Expected volatility		37.08	%		36.89	%
Simulation period (in years)		3			3

Estimated fair value per award:
Vesting Tranche 1	$	0.37		$	0.35
Vesting Tranche 2	$	0.59		$	0.58
Vesting Tranche 3	$	0.71		$	0.70

●

Fair Market Value

– based on the quoted closing price of the Company’s common stock.

●

Risk-free interest rate

– based on the rates for U.S. Treasury

zero

-coupon bonds with a maturity of

years, which is the longest performance period of the PSUs.

●

Dividend Yield

– based on the fact that the Company has

not

paid cash dividends since

2012

and does

not

anticipate paying cash dividends in the foreseeable future.

●

Expected Volatility

– based on the historical volatility of the Company’s common stock over the

three

-year period preceding the grant date.

●

Performance Period

– based on the period of time from the valuation date through the end of the performance period.

The following table provides selected information about the Company’s share-based compensation as of and for the

three

and

nine

-month periods ended

September 30, 2018

and

2017:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Total compensation cost for share-based payments	$	642	$	261	$	1,209	$	842

Weighted average grant-date fair value of equity instruments granted (per share)	$	0.80	$	2.27	$	0.97	$	2.26
Total fair value of shares vested during the period	$	-	$	83	$	1,524	$	2,369

At September 30:
Unamortized share-based payments					$	2,039	$	2,276
Weighted average period (in years) to be recognized as expense						1.2		1.7