7. Equity Transactions

On December 15, 2016 (the “Effective Date”), the Company’s stockholders approved the 2016 Incentive Award Plan (the “Plan”). The Plan is designed to motivate high levels of performance and align the interests of the Company’s employees, directors and consultants with the long-term interests of its stockholders by linking compensation to Company performance while building value of the Company. Awards granted under the Plan may include stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards. Under the Plan, the following types of shares go back into the pool of shares available for issuance:

unissued shares related to forfeited or cancelled restricted stock and stock options from Plan awards and Prior Plan awards (that were outstanding as of the Effective Date) and;

shares tendered to satisfy the tax withholding obligation related to the vesting of restricted stock (but not stock options).

Unlike the Company’s 2007 Equity Incentive Award Plan (the “Prior Plan”), the Plan has no evergreen provision to increase the shares available for issuance; any new shares would require stockholder approval. The Prior Plan was set to expire in October 2017, however, with the approval of the Plan, the Company will no longer award equity from the Prior Plan. At March 31, 2017, the remaining aggregate number of shares of the Company’s common stock authorized for future issuance under the Plan was 4,050,011. At March 31, 2017, there were 5,307,652 shares of the Company’s common stock that remain outstanding under the Plan and Prior Plan.

Stock Options

Stock option activity during the nine months ended March 31, 2017 was as follows:


				Weighted-
		Weighted-		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
	Shares	Price		Life (Years)	Value

Outstanding, June 30, 2016	2,350,175	$	20.20		$	46,573
Granted	—		—
Exercised	(102,450)		14.86
Forfeited or canceled	(264,993)		22.69

Outstanding, March 31, 2017	1,982,732	$	20.15	3.55	$	2,996,884
Exercisable, March 31, 2017	1,606,459	$	21.09	3.00	$	1,578,824

The aggregate intrinsic value of options exercised during the nine months ended March 31, 2017 and 2016 was $0.2 million and $0.5 million respectively.

As of March 31, 2017, there was $2.6 million of total unrecognized compensation expense related to unvested stock options granted. The cost is expected to be recognized over a weighted average period of 1.9 years. During the three months ended March 31, 2017 and 2016, the Company recognized $0.5 million and $1.0 million, respectively, of stock-based compensation expense related to stock options. During the nine months ended March 31, 2017 and 2016, the expense was $1.6 million and $3.0 million, respectively.

Restricted Stock Awards

Restricted stock award activity during the nine months ended March 31, 2017 was as follows:


		Weighted-Average
		Grant Date
	Shares	Fair Value

Nonvested, June 30, 2016	2,131,790	$	12.46
Granted	1,191,191		12.23
Vested	(873,825)		14.60
Forfeited or canceled	(140,838)		12.17
Nonvested, March 31, 2017	2,308,318	$	11.55

Performance Based Restricted Stock Awards (included above)

During the nine months ended March 31, 2017, 333,489 new performance based restricted stock awards were granted and 467,131 remain nonvested at March 31, 2017. During the nine months ended March 31, 2017, 99,155 performance-based awards vested. Vesting of the performance-based restricted stock awards is contingent on the achievement of certain financial performance goals and service vesting conditions.

Equity Incentive Market Based Awards (included above)

During the nine months ended March 31, 2017, the Company granted 58,000 performance based equity incentive market based awards with a weighted average grant date fair value of $4.99 per share.

The awards were granted pursuant to the Prior Plan and 50% of the shares granted vest immediately upon achievement of specified average closing prices of the Company’s stock for 30 consecutive days following the public release of fiscal year 2017 earnings and the remaining 50% vesting ratably in semi-annual intervals until the three year anniversary from grant date. Additionally, vesting is dependent upon continuing service by the grantee as an employee of the Company at each vest date, unless the grantee is eligible for earlier vesting. The fair value was determined using a Monte Carlo simulation model incorporating the following factors: stock price on the grant date of $11.50, risk free rate of return of 0.6%, and expected volatility of approximately 50%.

During the nine months ended March 31, 2017, 71,796 and 93,750 of previously issued market based awards vested upon on the attainment of the average stock price performance target of $13 and $16 per share, respectively, for 30 consecutive days. As of March 31, 2017, there were 476,813 of unvested awards with market based vesting conditions.

Service-Based Restricted Stock Awards (included above)

During the nine months ended March 31, 2017, 799,702 new service-based restricted stock awards were granted and 1,364,374 remain nonvested at March 31, 2017. During the nine months ended March 31, 2017, 609,124 service-based restricted stock awards vested.

As of March 31, 2017, there was $16.2 million of total unrecognized compensation expense related to unvested restricted stock awards. The cost is expected to be recognized over a weighted average period of 1.6 years. The total fair value of shares vested during the nine months ended March 31, 2017 and 2016 was $13.5 million and $7.4 million, respectively. During the three months ended March 31, 2017 and 2016, the Company recognized $4.8 million and $2.9 million, respectively, of stock-based compensation expense related to restricted stock awards. During the nine months ended March 31, 2017 and 2016, the expense was $13.0 million and $10.5 million, respectively.

Performance Share Units

As of March 31, 2017, there were 1,016,602 nonvested outstanding performance share units with a weighted average fair value of $12.87 per share. Total unrecognized compensation expense related to unvested performance share units was $13.1 million. For the nine months ended March 31, 2017, the Company determined the achievement of the performance conditions was not probable, therefore no expense was recorded during the three and nine months ended March 31, 2017.