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, 2018 and 2017, we had no stock options outstanding.

At December 31, 2018 and 2017, there were 19,389,066 and 20,135,514 shares of common stock outstanding, respectively, and no shares of preferred stock outstanding.

Dividends

For the three years ending December 31, 2018, 2017 and 2016 our Board of Directors declared cash dividends of $0.50, $0.50 and $0.75 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, 2018, 2017 and 2016 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 27, 2019, our Board of Directors declared a regular quarterly cash dividend of $0.125 per share of common stock, with a record date of March 15, 2019, and a payment date of March 29, 2019. This cash dividend of approximately $2.4 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. In February 2018, the Company's Board of Directors authorized the repurchase of up to $10.0 million of the Company's common stock through December 31, 2018 on the open market or in privately negotiated transactions. As of July 2018, the repurchase authority had been exhausted. In August 2018, the Company's Board of Directors authorized the repurchase of up to an additional $10.0 million of the Company's common stock through December 31, 2018 on the open market or in privately negotiated transactions. In November 2018, the Company's Board of Directors extended the repurchase authority through December 31, 2019.

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 2018, 2017 and 2016 (excluding commission and 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)	2018			2017			2016
March 31,	127,792	$	1,922	—	$	—	291,861	$	4,893
June 30,	501,782	7,520		572,550	10,000		65,791	1,078
September 30,	36,542	558		—	—		13,884	228
December 31,	263,000	3,446		—	—		16,719	274
Total	929,116	$	13,446	572,550	$	10,000	388,255	$	6,473

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)	2018			2017			2016
Numerator:
Net (loss) income	$	(1,479	)	$	(15,306	)	$	13,979

Denominator:
Basic and diluted weighted average outstanding shares of common stock	19,667,891			20,210,260			20,586,066
Basic and diluted net (loss) income per common share	$	(0.08	)	$	(0.76	)	$	0.68

For the years ended December 31, 2018, 2017 and 2016, 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,
	2018	2017	2016
Restricted stock units	178,279	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, 2016 through December 31, 2018:



	Activity
Total equity securities available at January 1, 2016	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
Less: RSU and restricted stock awarded to eligible employees, net of forfeitures	(236,221	)
Total equity securities available at December 31, 2018	904,437

The following table details activities with respect to outstanding RSUs and restricted stock for the year ended December 31, 2018 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, 2018	393,084		$	18.54
Granted	343,102		15.65
Vested	(199,991	)	17.22
Forfeited⁽¹⁾	(131,870	)	16.93
Unvested at December 31, 2018	404,325		$	17.27

⁽¹⁾100,767 RSUs did not vest based on the Company's actual performance at December 31, 2017 as compared to the related performance obligations.

Of the 404,325 unvested RSUs and restricted stock outstanding at December 31, 2018, 254,641 RSUs include contingent performance requirements for vesting purposes. At December 31, 2018, there was $3.5 million of unrecognized net compensation cost related to RSUs and restricted stock, which is expected to be recognized over a weighted average period of 1.60 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, 2018, employees purchased 20,120 shares of common stock for a total price of $0.2 million. For the year ended December 31, 2017, employees purchased 17,760 shares of common stock for a total price of $0.3 million.

The following table summarizes the activities under the ESPP from January 1, 2016 through December 31, 2018:



	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 January 1, 2018	228,279
Less: common stock purchased by eligible employees	(20,120	)
Total ESPP equity securities available at December 31, 2018	208,159

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 grant date fair value of the instruments, over the instruments’ vesting period.

During the year ended December 31, 2016 a one-time reversal of approximately $2.0 million in stock compensation expense was incurred based on our assessment that it was probable that only 50% of the awards issued in 2016 and 2015 would vest based on the related performance criteria and our assessment of the anticipated future performance applied to the performance criteria. This directly impacted the stock based compensation expense for the year ended December 31, 2016 and indirectly impacted stock compensation expense for the year ended December 31, 2017 as a result of lower amortization.

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



	For the Year Ended December 31,
(Dollars in thousands)	2018		2017		2016
Performance-based RSUs	$	2,127	$	1,762	$	413
Time-based RSUs and restricted stock	2,756		1,862		418
ESPP	71		64		23
Total stock based compensation	$	4,954	$	3,688	$	854