12. Equity Transactions

2006 Omnibus Long-Term Incentive Plan

In conjunction with the Company's initial public offering, the board of directors and the Company's stockholders approved the 2006 Omnibus Long-Term Incentive Plan, or the 2006 Plan, on December 2, 2005. The 2005 Stock Option and Incentive Plan was terminated when the 2006 Plan became effective, immediately after the closing of the initial public offering.

A portion of the options and restricted shares granted to employees vest based on certain performance conditions being satisfied by the Company. Performance-based stock options are tied to the Company's annual performance against pre-established internal targets and the actual payout under these awards may vary from zero to 100% of an employee's target payout, based upon the Company's actual performance during the previous twelve months. The performance-based stock options are also subject to vesting requirements and generally vest when the performance condition has been satisfied. The fair value for stock options granted during the period was estimated at the grant date using the Black-Scholes option pricing model, as described in Note 2, and the fair value of restricted shares granted is based on the closing price of the shares on the grant date. Compensation cost is recognized when the performance condition has been satisfied or when it becomes probable that the performance condition will be satisfied.

Under the 2006 Plan, as amended, 10,000,000 shares of common stock were available for issuance. At September 30, 2014, there were 772,227 shares remaining reserved for issuance in connection with awards under the 2006 Plan. In February 2015, at the Company's annual meeting of stockholders, the stockholders approved an amendment to the 2006 Plan which increased the shares available for issuance under the 2006 Plan by 3,000,000 shares and established a fungible share pool so that awards other than options or stock appreciation rights granted after January 9, 2015, would be counted as 1.5 shares from the shares reserved for issuance under the 2006 Plan. During the twelve months ended September 30, 2016, the Company canceled 92,499 options and 214,014 restricted shares with performance conditions because the Compensation Committee, which administers the 2006 Plan, determined the performance goals had become unachievable. At September 30, 2016, there were 456,424 shares remaining reserved for issuance in connection with awards under the 2006 Plan.

During fiscal year 2015, the Company issued 737,972 cash-settled stock appreciation rights at the price of $9.35, and 59,156 cash-settled stock appreciation rights were forfeited. During the twelve months ended September 30, 2016, the Company issued 1,062,668 cash-settled stock appreciation rights at a price of $4.57 and 153,338 cash-settled stock appreciation rights were forfeited. Stock appreciation rights are recorded as liability awards. The maximum number of shares subject to options or stock appreciation rights that can be awarded under the 2006 Plan to any person is 1,000,000 per year. The maximum number of shares that can be awarded under the 2006 Plan to any person, other than pursuant to an option or stock appreciation right, is 700,000 per year. The Company issues stock appreciation rights where restrictions lapse upon either the passage of time (service vesting), achievement of performance targets, or some combination of these conditions. For those stock appreciation rights with only service conditions, the Company recognizes compensation cost on a straight-line basis over the explicit service period. For awards with both performance and service conditions, the Company starts recognizing compensation cost over the remaining service period, when it is probable the performance condition will be met. The stock appreciation rights that include only service conditions generally vest over a period of one to four years conditioned on continued employment for the incentive period.

For the years ended September 30, 2016, 2015 and 2014 the Company recorded stock-based compensation of $12.3 million, $12.4 million, and $12.6 million, respectively. The total costs related to unvested awards, not yet recognized, as of September 30, 2016 was $17.1 million, which will be recognized over the weighted average vesting period of 34.1 months.

The 2006 Plan permits the granting of options to purchase shares of common stock intended to qualify as incentive stock options under the Internal Revenue Code and stock options that do not qualify as incentive stock options ("non-qualified stock options"). The exercise price of each stock option may not be less than 100% of the fair market value of the common stock on the date of grant. However, if a grant recipient, who holds at least 10% of the common stock of the Company, receives an incentive stock option, the exercise price of such incentive stock option may not be less than 110% of the fair market value of the common stock on the date of grant. The term of each stock option is fixed by the compensation committee and may not exceed 10 years from the date of grant.

The compensation committee may also award under the 2006 Plan:


	•	restricted stock, which are shares of common stock subject to restrictions;
	•	stock units, which are common stock units subject to restrictions;
	•	dividend equivalent rights, which are rights entitling the recipient to receive credits for dividends that would be paid if the recipient had held a specified number of shares of common stock;
	•	stock appreciation rights, which are rights to receive a number of shares or, in the discretion of the compensation committee and subject to applicable law, an amount in cash or a combination of shares and cash, based on the increase in the fair market value of the shares underlying the right during a stated period specified by the compensation committee;
	•	unrestricted stock, which are shares of common stock granted without restrictions as a bonus; and
	•	performance and annual incentive awards, ultimately payable in common stock or cash, as determined by the compensation committee (the compensation committee may grant multi-year and annual incentive awards subject to achievement of specified goals tied to business criteria set forth in the 2006 Plan).

Share Repurchase Program

The Company is authorized to repurchase issued and outstanding shares of its common stock under a share repurchase program approved by our Board of Directors. Share repurchases may be made through open market purchases, privately negotiated transactions or otherwise, at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other market conditions. The repurchase program may be discontinued or suspended at any time, and will be funded using our available cash. The Company's Board of Directors reviews the share repurchase program periodically, the last such review having occurred in May 2016. We did not repurchase shares under this program during the twelve months ended September 30, 2016. As of September 30, 2016, we may repurchase an additional $10.1 million shares under this program. A summary of the Company's share repurchase activity from fiscal year 2009 to the year ended September 30, 2016 is as follows:

Fiscal Year Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Cash Paid for Shares Purchased		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)
2013		—		—		—		31,000,000
2014		2,962,978	$	15.90		44,873,000		5,127,000
2015		—		—		—		5,127,000
2016		—		—		—	$	10,127,000


(1)	On February 5, 2014, our Board of Directors approved an additional $19.0 million for the share repurchase program. On May 5, 2016, the Company's Board of Directors approved the repurchase of an additional $5.0 million in shares raising the current amount approved for repurchase, that may yet be expended up to $10.1 million.

Stock Option Activity

A summary of the Company's stock option activity for the years ended September 30, 2016, 2015, and 2014 is as follows:

	Options		Weighted- Average Exercise Price
Options outstanding at September 30, 2013		1,592,406	$	16.46
Options granted		437,755		22.41
Options exercised		(383,160)		10.83
Options canceled		(181,094)		18.14

Options outstanding at September 30, 2014		1,465,907		19.50
Options granted		310,177		9.92
Options exercised		(14,869)		7.09
Options canceled		(288,572)		20.26

Options outstanding at September 30, 2015		1,472,643		17.46
Options granted		583,228		6.68
Options exercised		(1,251)		7.48
Options canceled		(346,133)		16.99

Options outstanding at September 30, 2016		1,708,487		13.91


Options exercisable at September 30, 2016		979,633		17.76

The following table summarizes information about options outstanding at September 30, 2016:

	Options Outstanding
Range of Exercise Price	Number Outstanding		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
$5.53 - $11.24		939,057		7.83	$	7.85
$11.25 - $46.72		769,430		5.02		21.31

The following table summarizes information about options exercisable at September 30, 2016:

	Options Exercisable
Range of Exercise Price	Number Exercisable		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
$5.53 - $11.24		319,733		5.12	$	9.42
$11.25 - $46.72		659,900		4.57		21.80

The following table summarizes information about assumptions used in valuing options granted:

	Year ended September 30
	2016		2015		2014
Dividend yield		—		—		—
Expected volatility		51.5% - 58.6%		71.9% - 77.9%		50.9%
Risk-free interest rate		0.5% - 1.5%		0.26% - 1.4%		0.1% - 1.2%
Expected forfeiture rate		23.5%		22.2% - 22.8%		22.8%

The intrinsic value of outstanding and exercisable options at September 30, 2016 was approximately $3.2 million and $0.6 million, respectively, based on a stock price of $11.24 on September 30, 2016.

The weighted average grant date fair value of options granted during 2016, 2015, and 2014 was $2.07, $4.89, and $7.89, respectively.

The intrinsic value of options exercised at September 30, 2016, 2015, and 2014 was approximately $3,128, $4,000, and $1,119,000, respectively. Approximately 0.4 million unvested service-based stock options are expected to vest.

Restricted Share Activity

A summary of the Company's restricted share activity for the years ended September 30, 2016, 2015, and 2014 is as follows:

	Restricted Shares		Weighted- Average Fair Value
Unvested restricted shares at September 30, 2013		1,543,869	$	28.89
Restricted shares granted		1,040,748		18.78
Restricted shares vested		(436,204)		24.72
Restricted shares canceled		(250,586)		23.87

Unvested restricted shares at September 30, 2014		1,897,827		24.96
Restricted shares granted		1,298,604		10.04
Restricted shares vested		(343,204)		27.50
Restricted shares canceled		(486,040)		26.54

Unvested restricted shares at September 30, 2015		2,367,187		16.08
Restricted shares granted		1,504,655		5.54
Restricted shares vested		(715,188)		16.09
Restricted shares canceled		(495,409)		20.25

Unvested restricted shares at September 30, 2016		2,661,245		9.34

The intrinsic value and weighted average remaining contractual life in years of unvested restricted shares at September 30, 2016 is approximately $29.9 million and 8.68, respectively, based on a stock price of $11.24 on September 30, 2016. Approximately 1.6 million unvested service-based restricted stock shares are expected to vest.