STOCKHOLDERS' EQUITY

General

Our authorized capital stock consists of 75 million shares of common stock, par value $0.0001 per share, and 25 million shares of preferred stock, par value $0.0001 per share.

At March 31, 2017 and December 31, 2016 we had no stock options outstanding.

At March 31, 2017 and December 31, 2016, there were 20,530,795 and 20,525,614 shares of common stock outstanding, respectively, and no shares of preferred stock outstanding.

Changes in Stockholders' Equity

Changes in stockholders’ equity for the three months ended March 31, 2017 consisted of the following:



	(Dollars in thousands)
Balance at January 1, 2017	$	322,087
Net income for the three months ended March 31, 2017	854
Cash dividends declared	(2,651		)
Amortization of stock based compensation	955
Other	160
Balance at March 31, 2017	$	321,405

Dividends

The following table details our cash dividend payments made in 2017. Cash dividends paid as disclosed in the condensed consolidated statements of cash flows for the three months ended March 31, 2017 and 2016 include previously declared cash dividends on shares of vested restricted common stock ("restricted stock") issued to our non-executive directors and dividends related to vested restricted stock units ("RSUs") issued to eligible employees. Cash dividends on RSUs and restricted stock have been accrued and are paid when the applicable vesting conditions are met. Accrued cash dividends on forfeited restricted stock and RSUs are also forfeited.



Declaration Date	Record Date	Payment Date	Per Share Amount		Total Payment⁽¹⁾
					(Dollars in thousands)
December 20, 2016	January 4, 2017	January 17, 2017	$	0.250	$	5,128
March 1, 2017	March 17, 2017	March 30, 2017	0.125		$	2,566
	Total		$	0.375	$	7,694

(1) The total payment reflects the cash dividends paid in relation to common stock and vested restricted stock.

On April 26, 2017, our Board of Directors declared a regular quarterly cash dividend of $0.125 per share of common stock with a record date of May 23, 2017, and a payment date of June 23, 2017. This cash dividend of approximately $2.6 million will be paid from available cash on hand.

Common Stock Repurchase Program

On April 26, 2017, the Company's Board of Directors authorized the repurchase of up to $10.0 million of the Company's common stock through 2017 on the open market or in privately negotiated transactions.

Net Income per Common Share

Basic net income per common share is computed on the basis of the weighted average common shares outstanding. Diluted net income per common share is computed on the basis of the weighted average common shares outstanding plus the effect of all potentially dilutive common shares including outstanding restricted stock and RSUs, which are treated as contingently issuable shares, using the “treasury stock” method.

The Company has determined, based on the provisions of the 2015 Long-Term Incentive Plan ("LTIP"), that unvested RSUs do not currently meet, nor have they met since issuance, the criteria to be considered dilutive. Therefore we have excluded them from the calculation of both diluted net income per common share as well as the diluted weighted average shares of common stock and common stock equivalents for the three months ending March 31, 2016 and removed them from the comparative three months ending March 31, 2016. This correction is immaterial to our financial statements and corresponding disclosures.

The Company determined, based on the performance criteria of the 2015 LTIP for the 2015 and 2016 grants, that unvested RSUs have not met since issuance, the criteria to be considered dilutive. Our first quarter 2017 interim Condensed Consolidated Financial Statements reflect this determination within the calculation of basic and diluted weighted average shares outstanding and earnings per share for the months ended March 31, 2017 and 2016.

We assessed the materiality of these changes on our 2016 financial statements in accordance with SEC Staff Accounting Bulletin ("SAB") No. 99, Materiality, codified in Accounting Standards Codification ("ASC") 250, Presentation of Financial Statements, and concluded that they were not material to any prior annual or interim periods. We have corrected the first quarter 2016 by revising the first quarter 2016 interim condensed consolidated financial statements and other financial information included herein. Periods not presented herein will be revised, as applicable, in future filings.

The components of basic and diluted net income per common share were as follows for the periods stated:



	For the Three Months Ended March 31,
(in thousands, except for share and per share amounts)	2017		2016
Numerator:
Net income	$	854	$	3,444

Denominator:
Weighted average shares used to compute net income per common share - basic	20,530,739		20,706,082
Weighted average shares used to compute net income per common share - diluted	20,585,542		20,706,082
Basic and diluted net income per common share	$	0.04	$	0.17

Spok Holdings, Inc. Equity Incentive Award Plan

The following table summarizes the activities under the 2012 Equity Incentive Award Plan ("2012 Equity Plan") from January 1, 2017 through March 31, 2017:



	Activity
Total equity securities available at January 1, 2017	1,246,939
Less: 2015 LTIP RSUs awarded to eligible employees, net of forfeitures	116,128
Less: 2017 Time Based LTIP RSUs awarded to eligible employees, net of forfeitures	116,095
Less: Restricted stock awarded to non-executive members of the Board of Directors	5,181
Total equity securities available at March 31, 2017	1,009,535

2015 LTIP. On December 9, 2014, our Board of Directors adopted an LTIP (which provides for a 36 month vesting period) that included a stock component in the form of RSUs. Under this incentive program, RSUs will be granted to eligible employees annually and each annual grant will generally vest over a three year service period. Each annual grant includes performance metrics required to be met for vesting purposes, as established by the Board of Directors. Our Board of Directors also approved that future cash dividends related to the RSUs will be set aside and paid in cash to each eligible employee when the RSUs are converted into shares of common stock. RSUs would be converted into shares of common stock on the earlier of a change in control of the Company (as defined in the 2015 LTIP) or on or after the third business day following the day that we file the Annual Report on Form 10-K with the SEC for the grant's final vesting year, but in no event later than December 31 of the year following the vesting date if the pre-established performance conditions are achieved. Any unvested RSUs awarded under the 2015 LTIP and the related cash dividends are forfeited if the participant terminates employment with the Company.

On January 2, 2015, our Board of Directors granted 254,777 RSUs with a grant date fair value of $4.4 million. An additional 6,123 RSUs were granted to eligible employees who were promoted or joined the Company during the twelve months ended December 31, 2015. On January 28, 2016 our Board of Directors issued a second grant of 227,082 RSUs with a grant date fair value of $3.8 million. An additional 7,629 RSUs were granted to eligible employees who were promoted or joined the Company during the twelve months ended December 31, 2016. On January 2, 2017 our Board of Directors issued a third grant of 108,428 RSUs with a grant date fair value of $2.2 million. An additional 8,182 RSUs were issued to eligible employees who were promoted or joined the Company during the three months ended March 31, 2017. All issuances were made to eligible employees under the 2012 Equity Plan for the 2015 LTIP pursuant to a Restricted Stock Unit Agreement. Eligible employees have the opportunity to earn RSUs based upon continued employment with the Company and the achievement of performance goals established by our Board of Directors for our consolidated revenue and operating cash flows (as defined by the Company) during the period of January 1, 2015 through December 31, 2017 (“the 2015-2017 performance period”) for the 2015 grant, the period of January 1, 2016 through December 31, 2018 ("the 2016-2018 performance period") for the 2016 grant, and January 1, 2017 through December 31, 2019 ("the 2017-2019 performance period") for the 2017 grant, respectively. (For additional details regarding stock compensation refer to Note 9, "Stock Based Compensation".)

The following table details activities with respect to RSUs issued and outstanding under the 2015 LTIP for the three months ended March 31, 2017:



	Shares		Weighted- Average Grant Date Fair Value		Total Unrecognized Compensation Cost (Dollars in thousands)		Weighted-Average Period Over Which Cost is Expected to be Recognized (In months)
Non-vested RSUs at January 1, 2017	451,493		$	17.10
Granted	116,610		20.57
Vested	—
Forfeited	(1,963	)	17.86
Non-vested RSUs at March 31, 2017	566,140		$	17.81	$	3,770	21

2017 Time Based LTIP. On January 2, 2017, our Board of Directors granted 108,394 RSUs with a grant date fair value of $2.2 million. An additional 8,182 shares were issued to eligible employees who were promoted or joined the Company during the three months ended March 31, 2017. Our Board of Directors also approved that future cash dividends related to the RSUs will be set aside and paid in cash to each eligible employee when the RSUs are converted into shares of common stock. These RSUs vest one third on December 31, 2017, December 31, 2018 and December 31, 2019. RSUs would be converted into shares of common stock on the earlier of a change in control of the Company (as defined in the 2012 Equity Plan) or on or after the third business day following the day that we file the Annual Report on Form 10-K with the SEC for the grant's vesting years, but in no event later than December 31 of the year following the vesting date. Any unvested RSUs awarded under the 2017 time based grant and the related cash dividends are forfeited if the participant terminates employment with the Company. (For additional details regarding stock compensation refer to Note 9, "Stock Based Compensation")

The following table details activities with respect to RSUs issued and outstanding under the 2017 time based LTIP grant for the three months ended March 31, 2017:



	Shares		Weighted- Average Grant Date Fair Value		Total Unrecognized Compensation Cost (Dollars in thousands)		Weighted-Average Period Over Which Cost is Expected to be Recognized (In months)
Non-vested RSUs at January 1, 2017	—		$	—
Granted	116,576		20.57
Vested	—
Forfeited	(481	)	20.75
Non-vested RSUs at March 31, 2017	116,095		$	20.57	$	2,045	21

2016 ESPP. On July 25, 2016 our stockholders approved the registration with the SEC of 250,000 shares of common stock, to be issued from time to time in connection with purchases under the Spok Holdings, Inc. 2016 Employee Stock Purchase Plan ("2016 ESPP"). Shares were first offered for purchase under the 2016 ESPP during the third quarter of 2016. Under the 2016 ESPP, eligible participants can voluntarily elect to have contributions withheld from their pay for the duration of an offering period, subject to the 2016 ESPP limits. At the end of an offering period, contributions will be used to purchase the Company's common stock at a discount to the market price based on the first or last day of the offering period, whichever is lower. Participants are required to hold common stock for a minimum period of two years from the grant date. Participants will begin earning dividends on shares after the purchase date. Each offering period will generally last for no longer than six months. Once an offering period begins, participants cannot adjust their withholding amount. If a participant chooses to withdraw, any previously withheld funds will be returned to the participant, with no stock purchased, and that participant will be eligible to participate in the 2016 ESPP at the next offering period. If the participant terminates employment with the Company during the offering period, all contributions will be returned to the employee and no stock will be purchased at a discounted rate. (For additional details regarding stock compensation refer to Note 9, "Stock Based Compensation".)

For the three months ended March 31, 2017 and 2016 no shares of common stock were purchased under the plan. The following table summarizes the activities under the ESPP from January 1, 2017 through March 31, 2017:



	Activity
Total ESPP equity securities available at January 1, 2017	246,039
Total 2016 ESPP securities available at March 31, 2017	246,039

Amounts withheld from participants will be classified as a liability on the balance sheet until funds are used to purchase shares. This liability amount is immaterial to the overall financial statements.