6. Stock Options and Restricted Stock Awards

The Company maintains the 2014 Equity Incentive Plan (the “2014 Plan”) for the purpose of granting equity awards to employees, directors and consultants. The 2014 Plan was approved by the Company’s stockholders and became effective in November 2014 and was subsequently amended in May 2015. The 2014 Plan replaced the 2007 Equity Incentive Plan (the “2007 Plan”), and no further equity awards may be granted under the 2007 Plan (the 2014 Plan and the 2007 Plan are collectively referred to as the “Plans”). In addition, the Company has granted nonqualified stock options to a director outside of the Plans.

Stock Options

All options granted under the Plans become exercisable over periods established at the date of grant. The option exercise price is generally not less than the estimated fair market value of the Company’s common stock at the date of grant, as determined by the Company’s management and Board of Directors. An employee’s vested options must be exercised at or within 90 days of termination to avoid forfeiture. As of September 30, 2017, all outstanding options were fully vested.

Stock option activity for the three months ended September 30, 2017 is as follows:



	Number of Options^(a)		Weighted Average Exercise Price
Options outstanding at June 30, 2017	78,201		$	9.07
Options exercised	(38,820	)	$	7.90
Options outstanding at September 30, 2017	39,381		$	10.22
(a) Includes the effect of options granted, exercised, forfeited or expired from the 2007 Plan.

Restricted Stock

The value of each restricted stock award is equal to the fair market value of the Company’s common stock at the date of grant. Vesting of time-based restricted stock awards range from one to three years. The estimated fair value of restricted stock awards, including the effect of estimated forfeitures, is recognized on a straight-line basis over the restricted stock’s vesting period.

Restricted stock award activity for the three months ended September 30, 2017 is as follows:



	Number of Shares		Weighted Average Fair Value
Outstanding at June 30, 2017	486,584		$	21.26
Granted	173,442		$	30.89
Forfeited	(16,431	)	$	20.92
Vested	(154,894	)	$	23.91
Outstanding at September 30, 2017	488,701		$	23.85

Performance-Based Restricted Stock

The Company also grants performance-based restricted stock awards to certain executives and other management. In August 2017, the Company granted an aggregate maximum 251,479 shares that vest based on the Company’s total shareholder return relative to total shareholder return of the Company’s peer group (a market condition), as measured by the closing prices of the stock of the Company and the peer group members for the 90 trading days preceding July 1, 2017 compared to the closing prices of the stock of the Company and the peer group members for the 90 trading days preceding July 1, 2020. Vesting of these awards will be determined on the date that the Company’s Annual Report on Form 10-K for the fiscal year ending June 30, 2020 is filed.

To calculate the estimated fair value of these restricted stock awards with market conditions, the Company uses a Monte Carlo simulation, which uses the expected average stock prices to estimate the expected number of shares that will vest. The Monte Carlo simulation resulted in a fair value of approximately $3,587, which the Company will recognize as expense using the straight-line method over the period that the awards are expected to vest. Stock-based compensation expense related to an award with a market condition will be recognized regardless of whether the market condition is satisfied, provided that the requisite service has been provided.

Fiscal 2017 awards granted in August 2016 that are outstanding vest based on the Company’s total shareholder return relative to total shareholder return of the peer group (a market condition), as measured by the closing prices of the stock of the Company and its peer group for the 90 trading days preceding July 1, 2016 compared to the closing prices for the 90 trading days preceding July 1, 2019.

Performance-based restricted stock award activity for the three months ended September 30, 2017 is as follows:



	Number of Shares		Weighted Average Fair Value
Outstanding at June 30, 2017	318,584		$	11.97
Granted	251,479		$	14.27
Forfeited	(7,748	)	$	12.19
Outstanding at September 30, 2017	562,315		$	13.00