17.	STOCK INCENTIVE PLANS

Under the Company’s stock incentive plan, Alaska Communications, through the Compensation and Personnel Committee of its Board of Directors,

may

grant stock options, restricted stock, stock-settled stock appreciation rights, performance share units and other awards to officers, employees, consultants, and non-employee directors. Upon the effective date of the Alaska Communications Systems Group, Inc.

2011

Incentive Award Plan, as amended and restated on

June 30, 2014, (

“2011

Incentive Award Plan”), the Alaska Communications Systems Group, Inc.

1999

Stock Incentive Plan and the ACS Group, Inc.

1999

Non-Employee Director Stock Compensation Plan, (together the “Prior Plans”) were retired. All future awards will be granted from the

2011

Incentive Award Plan. The Alaska Communications Systems Group, Inc.

2012

ESPP was approved by the Company’s shareholders in

June 2012

and the ACS

1999

Employee Stock Purchase Plan (

“1999

ESPP”) was retired on

June 30, 2012.

References to “stock incentive plans” include, as applicable, the

2011

Incentive Award Plan, the

2012

ESPP, the

1999

ESPP and the Prior Plans. On

June 25, 2018,

the Company increased the number of shares reserved for issuance under the

2011

Incentive Award Plan by

3,000

shares. An aggregate of

22,210

shares of the Company’s common stock have been authorized for issuance under its stock incentive plans. At

December 31, 2019,

a total of

2,276

shares remain available for future issuance under the Company’s equity compensation plans, including the

2011

Incentive Award Plan and

2012

Employee Stock Purchase Plan. Stock-based compensation expense reflects forfeitures of share-based awards when they occur.

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

June 25, 2018,

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 and Performance Stock Units as the primary equity-based incentive for executive and certain non union-represented employees. The disclosures below are primarily associated with RSU and PSU grants awarded in

2017,

2018

and

2019.

Restricted Stock Units and Non-Employee Director Stock Compensation

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. RSU’s granted in

2017

vest ratably over

three

years, RSUs granted in

2018

vest ratably over

three

years or cliff vest in

one

year, and RSUs granted in

2019

vest ratably over the

three

-year period ending

March 1, 2022.

Since

January 2008,

the Company has maintained a policy which requires that non-employee directors receive a portion of their annual retainer in the form of Alaska Communications stock. This requirement

may

be suspended for specified periods and was suspended beginning in the

second

quarter of

2018

through

2019

due the limited availability of shares. Non-employee director stock compensation vests when granted. The directors make an annual election on whether to have the stock issued or to have it deferred.

In the

second

quarter of

2019,

RSU’s granted to the Company’s former Chief Executive Officer in

2017

and

2018

were modified. The vesting dates were accelerated from

2020

and

2021

June 2019,

and the awards were revalued. The modification resulted in a net increase in share-based compensation expense of

$112

recorded in

2019.

The modification is included in grants and cancellations in the table below.

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

December 31, 2019:

				Weighted
				Average
				Grant-Date
	Number of			Fair
	Shares			Value
Nonvested at December 31, 2018		1,185		$	1.88
Granted		610		$	1.68
Vested		(770	)	$	1.86
Canceled or expired		(233	)	$	1.93
Nonvested at December 31, 2019		792		$	1.74

Performance Based Units

PSUs granted prior to

2017

vested ratably over

three

years beginning at the grant date, while PSUs granted in

2017

vest at the end of the

2.5

-year performance period, subject to achievement of certain performance conditions, achievement of a market condition and approval of the Compensation and Personnel Committee of the Board of Directors. As of

December 31, 2019,

certain Company performance targets were deemed probable of achievement and the relevant stock compensation was expensed accordingly. The PSUs granted in

2018

will vest in

three

equal installments, or tranches, if certain stock price thresholds and service thresholds are achieved. PSUs granted in the

third

quarter of

2019

will vest proportionally over the

three

-year period ending in

March 2022

subject to the achievement of certain Company performance targets.

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.

In the

second

quarter of

2019,

certain PSU’s granted to the Company’s former Chief Executive Officer in

2017

and

2018

were modified. The vesting dates were accelerated from

2019,

2020

and

2021

June 2019,

and the awards were revalued. The modification resulted in a net increase in share-based compensation expense of

$102

recorded in

2019.

The modification is included in grants and cancellations in the table below.

The following table summarizes PSU activity for the year ended

December 31, 2019:

				Weighted
				Average
				Grant-Date
	Number of			Fair
	Shares			Value
Nonvested at December 31, 2018		1,938		$	1.10
Granted		1,437		$	0.94
Vested		-		$	-
Canceled or expired		(1,746	)	$	1.00
Nonvested at December 31, 2019		1,629		$	1.07

Selected Information on Equity Instruments and Share-Based Compensation

Selected information on equity instruments and share-based compensation under the plan for the years ended

December 31, 2019

and

2018

is as follows:

	Years Ended
	December 31,
	2019		2018
Total compensation cost for share-based payments	$	1,580	$	1,757
Weighted average grant-date fair value of equity instruments granted	$	1.16	$	0.97
Total fair value of shares vested during the period	$	1,432	$	1,534
Unamortized share-based payments	$	1,124	$	1,438
Weighted average period in years to be recognized as expense		1.69		1.06

Share-based compensation expense is classified as “Selling, general and administrative expense” in the Company’s Consolidated Statements of Comprehensive Income.

The Company purchases, from shares authorized under the

2011

Incentive Award Plan, sufficient vested shares to cover minimum employee payroll tax withholding requirements upon the vesting of restricted stock. The Company expects to repurchase approximately

240

shares in

2020.

This amount is based upon an estimation of the number of shares of restricted stock and performance share awards expected to vest during

2020.

December 31, 2019,

2,093

shares remain available for future issuance under the Company’s

2011

Incentive Award Plan.

Alaska Communications Systems Group, Inc.

2012

Employee Stock Purchase Plan

The Alaska Communications Systems Group, Inc.

2012

Employee Stock Purchase Plan was approved by the Company’s shareholders in

June 2012.

The

2012

ESPP will terminate upon the earlier of (i) the last exercise date prior to the

tenth

anniversary of the adoption date, unless sooner terminated in accordance with the

2012

ESPP; or (ii) the date on which all purchase rights are exercised in connection with a change in ownership of the Company. A participant in the

2012

ESPP will be granted a purchase right to acquire shares of common stock at

six

-month intervals on an ongoing basis, subject to the continuing availability of shares under the

2012

ESPP. Each participant

may

authorize periodic payroll deductions in any multiple of

(up to a maximum of

15%

) of eligible compensation to be applied to the acquisition of common stock at semiannual intervals. The

2012

ESPP imposes certain limitations upon a participant’s rights to acquire common stock.

participant will have any shareholder rights with respect to the shares covered by their purchase rights until the shares are actually purchased on the participant’s behalf.

adjustments will be made for dividends, distributions or other rights for which the record date is prior to the date of the actual purchase.

The Company reserved

1,500

shares of its common stock for issuance under the

2012

ESPP. The fair value of each purchase right under the

2012

ESPP is charged to compensation expense over the offering period to which the right pertains, and is reflected in total compensation cost for share-based payments in the above table. Shares purchased by employees and the associated compensation expense under the

2012

ESPP, which is reflected in the preceding table, were

not

material in the years ended

December 31, 2019

and

2018.

December 31, 2019,

183

shares remain available for future issuance under the Company’s

2012

ESPP.