Stock Incentive Plans

2010 Long-Term Incentive Plan

On May 25, 2010, the Company’s stockholders approved the 2010 Long-Term Incentive Plan (“2010 LTIP”) which provided for the granting of awards of the Company’s common stock to officers, employees and non-employee directors. On May 20, 2014, the Company’s stockholders approved an amendment to the 2010 LTIP increasing the shares reserved for issuance by 1,800,000 shares of the Company’s common stock and reapproved the performance measures that may apply to awards granted thereunder. As of December 31, 2016, the total number of shares available for issuance under the 2010 LTIP was 2,684,821. The 2010 LTIP became effective on April 1, 2010 and awards may be made under the plan through March 31, 2020. The available awards under the 2010 LTIP include: stock options, stock appreciation rights, RSUs, other stock-based awards and performance shares. The 2010 LTIP limits awards to 200,000 shares to any one participant in any one year. The majority of awards issued under the 2010 LTIP through December 31, 2016, have been RSUs and performance shares, which generally vest over three years. The Company issues new shares upon stock option exercises and vesting of RSUs and performance shares.

Prior Long-Term Incentive Plans

The 2004 Long-Term Incentive Plan (“2004 LTIP”) provided for issuance of shares of non-qualified stock options and RSUs to officers and key employees. The 2005 Long-Term Incentive Plan (“2005 LTIP”) provided for the granting of RSUs to officers and key employees. The 2007 Long-Term Incentive Plan (“2007 LTIP”) provided for the granting of stock options, RSUs and performance share awards of the Company’s common stock to officers, employees and non-employee directors.

The majority of awards granted by the Company vested over a three-year period: one-third of the awards cliff-vested on the first anniversary of the vesting commencement date and the remaining awards vested in equal monthly installments for the 2004 LTIP and equal quarterly installments for the 2005 LTIP and the 2007 LTIP, over the two-year period following the first anniversary of the vesting commencement date.

For option grants, the exercise price equaled the fair value of the Company’s common stock on the date of grant. Stock options expire seven years after the date of grant. RSUs do not have an expiration date. No further grants will be made under the 2004 LTIP, the 2005 LTIP, or the 2007 LTIP.

The following table summarizes the number of securities to be issued and remaining available for future issuance under all of the Company’s stock incentive plans as of December 31, 2016:



	Number of securities to be issued upon exercise of outstanding options and vesting of RSUs	Weighted-average exercise price of outstanding options and vesting of RSUs		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column 1)
2007 Long-Term Incentive Plan⁽¹⁾	1,624	$	0.01	—
2010 Long-Term Incentive Plan⁽²⁾	399,568	$	0.01	2,684,821

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(1)	Includes RSUs.


(2)	Includes RSUs and performance shares.

The following table summarizes the activity for all stock options, RSUs and performance shares under all of the Long-Term Incentive Plans (“LTIPs”) for the year ended December 31, 2016:



		December 31, 2015		Activity during 2016									December 31, 2016
		Outstanding		Granted			Vested / Exercised			Canceled			Outstanding		Exercisable
Plans	Securities	Number	Price	Number		Price	Number		Price	Number		Price	Number	Price	Number	Price
2005 LTIP	RSUs	12,208	0.01	—		—	(12,208	)	0.01	—		—	—	—	—	—
2007 LTIP	RSUs	1,624	0.01	—		—	—		—	—		—	1,624	0.01	1,624	0.01
	Options	21,206	4.80	—		—	(12,370	)	4.80	(8,836	)	4.80	—	—	—	—
2010 LTIP	RSUs	328,578	0.01	124,077	⁽¹⁾	0.01	(219,237	)	0.01	(2,560	)	0.01	230,858	0.01	—	—
	Options	30,000	8.20	—		—	(30,000	)	8.20	—		—	—	—	—	—
	Performance shares	336,268	0.01	156,576	⁽²⁾	0.01	(128,522	)	0.01	(195,612	)	0.01	168,710	0.01	—	—
Total		729,884		280,653			(402,337	)		(207,008	)		401,192		1,624

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Note: Price is weighted-average price per share.


(1)	Consists of non-performance RSUs.


(2)	In January 2016, the Company awarded a maximum of 156,576 performance shares that would have been received if the highest level of performance was achieved. The shares were ultimately canceled as the Company did not achieve the related performance targets for fiscal 2016.

The aggregate intrinsic value of stock options exercised in 2016, 2015 and 2014 was $1.3 million, $1.8 million and $5.2 million, respectively. The aggregate intrinsic value of RSUs exercised in 2016, 2015 and 2014 was $9.3 million, $5.8 million and $5.3 million, respectively. The aggregate intrinsic value of performance shares exercised in 2016, 2015 and 2014 was $5.1 million, $2.7 million and $1.1 million, respectively.

The following table summarizes RSUs and performance shares that have vested and are expected to vest as of December 31, 2016:



		December 31, 2016
		Outstanding		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value⁽¹⁾ (dollars in thousands)
Plans	Securities	Vested	Expected to vest⁽²⁾	Vested	Expected to vest⁽²⁾	Vested		Expected to vest⁽²⁾
2007 LTIP	RSUs	1,624	—	—	—	70		—
2010 LTIP	RSUs	—	222,963	—	—	—		9,601
	Performance shares	—	167,023	—	—	—		7,192
Total		1,624	389,986			$	70	$	16,793

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(1)	Aggregate intrinsic value is calculated based upon the difference between the exercise price of RSUs and the Company’s closing common stock price on December 31, 2016 of $43.07, multiplied by the number of instruments that are vested or expected to vest. RSUs having exercise prices greater than the closing stock price noted above are excluded from this calculation.


(2)	RSUs and performance shares that are expected to vest are net of estimated future forfeitures.

The aggregate fair value of options vested in 2016 and 2015 were zero and $0.3 million in 2014. The aggregate fair value of RSUs vested in 2016, 2015 and 2014 was $9.3 million, $5.8 million and $5.4 million, respectively. The aggregate fair value of performance shares vested in 2016, 2015 and 2014 was $5.1 million, $2.7 million and $1.1 million, respectively.

Assumptions Used for Fair Value

The fair values for RSUs and performance shares, which are based on the fair market value of the Company’s stock at date of grant, are included below for shares granted during 2016, 2015 and 2014. For stock options, the Company uses the Black-Scholes option-pricing model to determine the grant date fair value. Option-pricing models require the input of assumptions that are estimated at the date of grant. The Company did not grant stock options in 2016, 2015, or 2014.



	Year Ended December 31,
	2016		2015		2014
Weighted-average fair value per share of grants:
RSUs	$	38.21	$	32.47	$	18.57
Performance shares ⁽¹⁾	N/A		$	32.60	$	18.40

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(1)	Performance shares awarded in 2016 were ultimately canceled as the Company did not achieve the related performance targets for 2016.

Stock-based Compensation Expense

The Company recognized stock-based compensation expense of $6.1 million, $8.7 million and $6.1 million for the years ended December 31, 2016, 2015 and 2014, respectively. Stock-based compensation expense is included in selling, general and administrative expenses on the consolidated statements of operations. Stock-based compensation expense recognized for 2016 was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. The Company’s forfeiture experience since inception of its plans has been approximately 4% of the total grants. The historical rate of forfeiture is a component of the basis for predicting the future rate of forfeitures, which are also dependent on the remaining service period related to grants and on the limited number of approximately 94 plan participants that have been awarded grants since the inception of the Company’s plans.

As of December 31, 2016, total unrecognized compensation cost related to non-vested share-based compensation arrangements was $3.7 million, which is expected to be recognized over a weighted-average period of 1.2 years.