NOTE 13—ACCOUNTING FOR STOCK-BASED COMPENSATION

Stock Incentive Plans

On June 5, 2015, the Company’s stockholders approved an amendment (the “Amendment”) to the ICF International, Inc. 2010 Omnibus Incentive Plan (as amended, the “Omnibus Plan”). The Amendment, among other items, increased the new shares available for issuance under the Omnibus Plan by 1,540,000 shares from 3,550,000 to 5,090,000 (for an aggregate 5,966,186 shares, which includes shares that remained available under the 2006 Long-Term Equity Incentive Plan when the Omnibus Plan was initially adopted). The Omnibus Plan provides for the granting of options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards, and other stock-based awards to all officers, key employees, and non-employee directors of the Company. Under the terms of the Omnibus Plan, shares awarded that are not stock options or stock appreciation rights, are counted as 1.93 shares deducted for every one share delivered under those awards. Shares awarded that are stock options or stock appreciation rights are counted as a single share deducted from the Omnibus Plan for every one share delivered under those awards. As of December 31, 2017, the Company had approximately 1.9 million shares available to grant under the Amended Plan. CSRSUs have no impact on the shares available for grant under the Omnibus Plan, and have no impact on the calculated shares used in earnings per share calculations.

The total stock-based compensation expense for the years ended December 31, 2017, 2016, and 2015, the unrecognized compensation expense at December 31, 2017, and the weighted-average period to recognize the remaining unrecognized shares are as follows:

	Stock-Based Compensation Expense
	Recognized as of December 31,						Unrecognized
	2017		2016		2015		December 31, 2017		Weighted-Average Period to Recognize (years)
Stock Options	$	164	$	909	$	1,546	$	—		—
Restricted Stock Units		7,080		6,325		7,409		12,659		1.9
Cash-Settled Restricted Stock Units		7,253		7,091		4,414		13,922		1.9
Non-Employee Director Awards		671		741		645		—		—
Performance Shares		2,376		877		727		2,717		1.5
Total	$	17,544	$	15,943	$	14,741	$	29,298

The assumptions of employment termination forfeiture rates used in the determination of fair value of stock awards during the 2017 calendar year were based on the Company’s historical average of actual forfeitures from the previous 5 years preceding the reporting period. The expected annualized forfeiture rates used during the 2017 calendar year varied from 1.86% to 19.51%, and the Company does not expect these termination rates to vary significantly in the future.

Stock Options

Option awards are granted with an exercise price equal to the market value of the Company’s common stock on the date of grant. All options outstanding as of December 31, 2017 have a 10-year contractual term. Options generally have a vesting term of three or four years. There were no option awards granted during 2017, 2016, and 2015.

The following table summarizes the changes in outstanding stock options:

	Number of Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding at January 1, 2015		766,924		$	28.20
Exercised		(43,919	)	$	21.23
Granted		—		$	—
Forfeited/Expired		—		$	—
Outstanding at December 31, 2015		723,005		$	28.62
Exercised		(128,301	)	$	23.65
Granted	—			$	—
Forfeited/Expired		(7,297	)	$	40.68
Outstanding at December 31, 2016		587,407		$	29.56
Exercised		(175,909	)	$	26.84
Granted		—		$	—
Forfeited/Expired		—		$	—
Outstanding at December 31, 2017		411,498		$	30.71	$	8,965

Vested plus expected to vest at December 31, 2017		411,498		$	30.71	$	8,965
Exercisable at December 31, 2017		411,498		$	30.71	$	8,965

The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $52.50 as of December 31, 2017. The total intrinsic value of options exercised was $4.5 million, $2.5 million, and $0.8 million for the years ended December 31, 2017, 2016, and 2015, respectively. The fair value of shares vested was $1.9 million, $1.3 million, and $2.0 million for the years ended December 31, 2017, 2016, and 2015, respectively. As of December 31, 2017, the weighted-average remaining contractual term for options vested was 5.0 years and for exercisable options was 5.0 years.

Information regarding stock options outstanding as of December 31, 2017 is summarized below:

	OPTIONS OUTSTANDING						OPTIONS EXERCISABLE
Range of Exercise Prices	Number Outstanding As of December 31, 2017		Weighted Average Remaining Contractual Term		Weighted Average Exercise Price		Number Exercisable As of December 31, 2017		Weighted Average Exercise Price
$21.77 to $25.00		62,917		3.3	$	21.77		62,917	$	21.77
$25.01 to $28.00		205,332		4.8	$	26.50		205,332	$	26.50
$28.01 to $40.68		143,249		6.1	$	40.68		143,249	$	40.68
$21.77 to $41.00		411,498		5.0	$	30.71		411,498	$	30.71

Restricted Stock Units

RSUs generally have a vesting term of three or four years. On vesting the employee is issued one share of stock for each RSU awarded. The fair value of shares vested was $6.3 million, $7.2 million, and $6.3 million for the years ended December 31, 2017, 2016, and 2015, respectively.

A summary of the Company’s RSUs is presented below.

	Number of Shares			Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value
Non-vested RSUs at January 1, 2015		643,887		$	31.10
Granted		250,159		$	39.04
Vested		(233,899	)	$	26.85
Cancelled		(104,243	)	$	36.76
Non-vested RSUs at December 31, 2015		555,904		$	35.40
Granted		240,868		$	34.68
Vested		(221,659	)	$	32.45
Cancelled		(67,115	)	$	37.60
Non-vested RSUs at December 31, 2016		507,998		$	36.12
Granted		194,227		$	41.41
Vested		(179,974	)	$	35.19
Cancelled		(58,664	)	$	36.04
Non-vested RSUs at December 31, 2017		463,587		$	38.71	$	24,338
RSUs expected to vest in the future		463,587		$	38.71	$	24,338

The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $52.50 per share as of December 31, 2017.

Cash-Settled Restricted Stock Units

CSRSUs generally have a vesting term of four years. A summary of the Company’s CSRSUs is presented below.

	Number of Shares			Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value
Non-vested CSRSUs at January 1, 2015		537,119		$	36.36
Granted		121,015		$	39.35
Vested		(78,033	)	$	33.29
Cancelled		(133,438	)	$	38.14
Non-vested CSRSUs at December 31, 2015		446,663		$	37.18
Granted		233,790		$	34.29
Vested		(146,619	)	$	34.70
Cancelled		(70,812	)	$	37.55
Non-vested CSRSUs at December 31, 2016		463,022		$	35.96
Granted		174,419		$	42.06
Vested		(161,576	)	$	40.78
Cancelled		(83,949	)	$	36.43
Non-vested CSRSUs at December 31, 2017		391,916		$	38.80	$	20,576
CSRSUs expected to vest in the future		391,916		$	38.80	$	20,576

The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $52.50 per share as of December 31, 2017. The fair value of CSRSUs vested and settled in cash for the years ended December 31, 2017, 2016, and 2015 was $6.9 million, $5.9 million and $2.9 million, respectively.

Non-Employee Director Awards

The Company grants awards of unregistered shares to its non-employee directors on a quarterly basis under its Annual Equity Election. The awards are issued from the Company’s treasury stock and have no impact on the shares available for grant under the Omnibus Plan. Non-employee director awards do not include vesting conditions; thus, there was no unrecognized expense related to these awards at December 31, 2017.

A summary of the Company’s non-employee director awards granted by fiscal year is presented below.

For the Year ended December 31,	Number of shares Granted		Weighted- Average Grant Date Fair Value
2015		18,109	$	35.62
2016		15,299	$	39.32
2017		13,861	$	48.41

Performance Share Awards

In the first quarter of 2015, the Company’s Board of Directors approved a performance-based share program (the “Program”) that provides for the issuance of PSAs to its senior management. Under the Program, the number of PSAs that the participant will receive depends on the Company’s achievement of two performance goals during two performance periods. The performance goals under the Program are based on (i) the Company’s compounded annual growth rate in earnings per share (“EPS”) during a two-year performance period and (ii) the Company’s cumulative total shareholder return (“rTSR”) relative to its peer group during a performance period from the first day of the performance period (typically January 1 of the year awarded) to the last day of the third year of the performance period (typically December 31). The PSAs will only be eligible to vest only following the expiration of the three-year performance period. Actual shares vested will be subject to both continued employment by the Company (barring certain exceptions allowing for partial performance periods) and actual financial measures achieved. The actual number of shares of common stock that will be issued to each participant at the end of the applicable performance period will be determined by multiplying the award by the product of two percentages, one based on the Company’s EPS performance and a second one based on the Company’s rTSR performance, subject to a minimum and maximum performance level. As of December 31, 2017, shares granted during 2015, 2016, and 2017 are within year three, two, and one of the performance period, respectively, and therefore have not vested.

A summary of the Company’s PSAs is presented below.

	Number of Shares			Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value
Non-vested PSAs at January 1, 2015		—		$	—
Granted		58,822		$	44.21
Vested		—		$	—
Cancelled		—		$	—
Non-vested PSAs at December 31, 2015		58,822		$	44.21
Granted		74,574		$	37.75
Vested		—		$	—
Cancelled		(3,422	)	$	41.61
Non-vested PSAs at December 31, 2016		129,974		$	40.57
Granted		60,929		$	38.81
Vested		—		$	—
Cancelled		(3,881	)	$	42.83
Non-vested PSAs at December 31, 2017		187,022		$	39.95	$	9,819
PSAs expected to vest in the future		126,846		$	38.09	$	6,659

The aggregate intrinsic value in the preceding table is based on the Company’s closing stock price of $52.50 per share as of December 31, 2017. The fair value of the awards is estimated on the grant date using a Monte Carlo simulation model due to the market condition for the rTSR component. The fair value assumptions using the Monte Carlo simulation model for awards granted in 2017, 2016, and 2015 were 0.0% for dividend yields; 31.3%, 30.9% and 29.3% for historical volatility, respectively; and 1.5%, 1.0%, and 1.0% both risk-free rate of returns, respectively.