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

At December 31, 2017 and 2016, there were 20,135,514 and 20,525,614 shares of common stock outstanding, respectively, and no shares of preferred stock outstanding.

Dividends

For the three years ending December 31, 2017, 2016 and 2015 our Board of Directors declared cash dividends of $0.50, $0.750 and $0.625 per share of our outstanding common stock, respectively. An immaterial amount of dividends declared were related to unvested RSUs and unvested shares of restricted stock which are accrued for and paid when the applicable vesting conditions are met. Accrued cash dividends on forfeited RSUs and restricted stock are also forfeited. Cash dividends paid as disclosed in the statements of cash flows for the years ended December 31, 2017, 2016 and 2015 included previously declared cash dividends on vested RSUs and on shares of vested restricted stock issued to non-executive members of our Board of Directors.

On February 28, 2018, our Board of Directors declared a regular quarterly cash dividend of $0.125 per share of common stock, with a record date of March 16, 2018, and a payment date of March 30, 2018. This cash dividend of approximately $2.6 million is expected to be paid from available cash on hand.

Common Stock Repurchase Program

On July 31, 2008, our Board of Directors approved a program to repurchase our common stock in the open market. This program has been extended at various times, most recently through December 31, 2018, with a repurchase authority of $10.0 million as of February 28, 2018.

We use available cash on hand and net cash provided by operating activities to fund the common stock repurchase program. This repurchase authority allows us, at management’s discretion, to selectively repurchase shares of our common stock from time to time in the open market depending upon market price and other factors.

Repurchased shares of our common stock were accounted for as a reduction to common stock and additional paid-in-capital in the period in which the repurchase occurred. All repurchased shares of common stock are returned to the status of authorized, but unissued, shares of the Company.

Common stock purchased in 2017, 2016 and 2015 (excluding the purchase of common stock for tax withholdings) was as follows:



For the Three Months Ended	Shares Purchased	Amount		Shares Purchased	Amount		Shares Purchased	Amount
(dollars in thousands)	2017			2016			2015
March 31,	—	$	—	291,861	$	4,893	27,467	$	465
June 30,	572,550	10,000		65,791	1,078		177,330	3,002
September 30,	—	—		13,884	228		502,942	8,309
December 31,	—	—		16,719	274		189,438	3,196
Total	572,550	$	10,000	388,255	$	6,473	897,177	$	14,972

Net (Loss) Income per Common Share

Basic net (loss) income per common share is computed on the basis of the weighted average common shares outstanding. Diluted net (loss) 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 unvested and outstanding equity awards. The components of basic and diluted net (loss) income per common share were as follows for the periods stated:



	For the Year Ended December 31,
(in thousands, except for share and per share amounts)	2017			2016		2015
Numerator:
Net (loss) income	$	(15,306	)	$	13,979	$	80,246

Denominator:
Basic and diluted weighted average outstanding shares of common stock	20,210,260			20,586,066		21,471,041
Basic and diluted net (loss) income per common share	$	(0.76	)	$	0.68	$	3.74

For the years ended December 31, 2017, 2016 and 2015, the following securities were not included in the calculation of diluted shares outstanding as the effect would have been anti-dilutive:



	For the Year Ended December 31,
	2017	2016	2015
Restricted stock units	90,665	—	—

Share-based Compensation Plans

On March 23, 2012, our Board of Directors adopted the Spok Holdings, Inc. 2012 Equity Incentive Award Plan (the “2012 Equity Plan”) that was subsequently approved by our stockholders on May 16, 2012. A total of 2,194,986 shares of common stock have been reserved for issuance under this plan.

Awards under the 2012 Equity Plan may be in the form of stock options, common stock, restricted stock, RSUs, performance awards, dividend equivalents, deferred stock, deferred stock units, or stock appreciation rights.

Restricted stock awards generally vest one year from the date of grant. Related dividends accumulate during the vesting period and are paid at the time of vesting.

Contingent RSU's generally vest over a three year performance period upon successful completion of the performance objectives. Non-contingent RSU's generally vest in thirds, annually, over a three year period. Dividend equivalents rights generally accompany each RSU award and those rights accumulate and vest along with the underlying RSU.

The following table summarizes the activities under the 2012 Equity Plan from January 1, 2015 through December 31, 2017:



	Activity
Total equity securities available at January 1, 2015	1,747,586
Less: RSU and restricted stock awarded to eligible employees, net of forfeitures	(264,355	)
Total equity securities available at December 31, 2015	1,483,231
Less: RSU and restricted stock awarded to eligible employees, net of forfeitures	(236,292	)
Total equity securities available at December 31, 2016	1,246,939
Less: RSU and restricted stock awarded to eligible employees, net of forfeitures	(106,281	)
Total equity securities available at December 31, 2017	1,140,658

The following table details activities with respect to outstanding RSUs and restricted stock for the year ended December 31, 2017 and has been reclassified to conform to current period's presentation which includes restricted stock activity:



	Shares		Weighted- Average Grant Date Fair Value
Unvested at January 1, 2017⁽¹⁾	451,493		$	17.10
Granted	249,435		20.37
Vested	(143,394	)	18.14
Forfeited⁽²⁾	(164,450	)	17.71
Unvested at December 31, 2017⁽¹⁾	393,084		$	18.54

⁽¹⁾Approximately 100,767 RSUs from the 2016 grant are not expected to vest based on the Company's current assessment of the related performance obligations.

⁽²⁾107,616 RSUs did not vest based on the Company's actual performance at December 31, 2017 as compared to the related performance obligations.

Of the 393,084 unvested RSUs and restricted stock outstanding at December 31, 2017, 308,960 RSUs include contingent performance requirements for vesting purposes. At December 31, 2017, there was $3.2 million of unrecognized net compensation cost related to RSUs and restricted stock, which is expected to be recognized over a weighted average period of 1.57 years.

Employee Stock Purchase Plan

In 2016 our Board of Directors adopted the Spok Holdings, Inc. Employee Stock Purchase Plan ("ESPP") that was subsequently approved by our stockholders on July 25, 2016. A total of 250,000 shares of common stock have been reserved for issuance under this plan.

The Company's ESPP allows employees to purchase shares of common stock at a discounted rate, subject to plan limitations. Under the ESPP, eligible participants can voluntarily elect to have contributions withheld from their pay for the duration of an offering period, subject to the 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 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.

The Company uses the Black-Scholes model to calculate the fair value of each offering period on their offer date. The Black-Scholes model requires the use of estimates for the expected term, the expected volatility of the underlying common stock over the expected term, the risk-free interest rate and the expected dividend payment.

For the year ended December 31, 2017, employees purchased 17,760 shares of common stock for a total price of $0.3 million. For the year ended December 31, 2016, employees purchased 3,961 shares of common stock for a total price of $0.1 million.

The following table summarizes the activities under the ESPP from January 1, 2017 through December 31, 2017:



	Activity
Total ESPP equity securities available at January 1, 2016	—
Plus: Registration of 2016 ESPP	250,000
Less: common stock purchased by eligible employees	(3,961	)
Total ESPP equity securities available at January 1, 2017	246,039
Less: common stock purchased by eligible employees	(17,760	)
Total ESPP equity securities available at December 31, 2017	228,279

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 consolidated financial statements.

Stock-based Compensation Expense

Compensation expense associated with common stock, RSUs and restricted stock was recognized based on the fair value of the instruments, over the instruments’ vesting period. Stock based compensation expense increased by $2.8 million for the year ended December 31, 2017 from the same period in 2016 primarily due to a one-time reversal of $2.0 million in stock compensation expense related to the 2015 and 2016 awards during 2016 which was not subsequently incurred during 2017 and the amortization of more awards in 2017 as compared to 2016. As of December 31, 2017, we do not currently believe it is probable that 50% of the awards issued in 2016 will vest based on the related performance criteria and our assessment of the anticipated future performance applied to the performance criteria. The remaining 50% of awards expected to vest will continue to be expensed accordingly over the remaining applicable service periods.

Stock based compensation expense decreased by $1.0 million for the year ended December 31, 2016 from the same period in 2015 primarily due to a one-time reversal of $2.0 million in stock compensation expense related to the 2015 and 2016 awards which did not occur during 2015 partially offset by the amortization of more awards in 2016 as compared to 2015.

The following table reflects stock based compensation expense for the periods stated:



Operating Expense Category	For the Year Ended December 31,
(Dollars in thousands)	2017		2016		2015
Performance-based RSUs	$	1,762	$	413	$	1,498
Time-based RSUs and restricted stock	1,862		418		370
ESPP	64		23		—
Total stock based compensation	$	3,688	$	854	$	1,868