Share-Based and Long-Term Incentive Compensation

Share-based and long-term incentive compensation expense consists of:



	For the Year
	2017		2016		2015
	(In thousands)
Cash-settled awards	$	634	$	717	$	(3,127	)
Equity-settled awards	5,001		2,444		5,026
Restricted stock	—		22		(8		)
Stock options	1,008		854		2,355
Total share-based compensation	$	6,643	$	4,037	$	4,246
Deferred cash	558		388		228
	$	7,201	$	4,425	$	4,474

Share-based and long-term incentive compensation expense is included in:



	For the Year
	2017		2016		2015
	(In thousands)
General and administrative	$	6,177	$	3,323	$	2,451
Other operating	1,024		1,102		2,023
	$	7,201	$	4,425	$	4,474

In 2017, share-based compensation expense included $4,349,000 in charges related to the acceleration of vesting and settlement of outstanding equity awards in connection with the Merger. Excluded from share-based compensation expense in the table above are fees earned by our previous directors in the amount of $449,000 for 2017, $725,000 for 2016 and $1,203,000 for 2015 for which they elected to defer payment until retirement in the form of share-settled units. These deferred fees were settled in 2017 as a result of the Merger. These expenses are included in general and administrative expense on our consolidated statements of income (loss).

Share-Based Compensation

The fair value of awards granted to retirement-eligible employees and expensed at the date of grant was $9,000 in 2017, $600,000 in 2016 and $517,000 in 2015. Unrecognized share-based compensation expense related to non-vested equity-settled awards was $1,424,000 at year-end 2017. The weighted average period over which this amount will be recognized is estimated to be four years. We did not capitalize any share-based compensation in 2017, 2016 or 2015.

In 2017 and 2016, we issued 322,586 and 300,491 shares out of our treasury stock associated with vesting of stock-based awards or exercise of stock options, net of 75,870 and 25,082 shares withheld having a value of $981,000 and $222,000 for payroll taxes in connection with vesting of stock-based awards or exercise of stock options which are reflected in financing activities in our consolidated statements of cash flows.

Cash-settled awards

Cash-settled awards granted to our employees in the form of restricted stock units or stock appreciation rights generally vest over three to five years from the date of grant and generally provide for accelerated vesting upon death, disability or if there is a change in control. Cash-settled stock appreciation rights have a ten-year term, generally become exercisable ratably over four years and provide for accelerated or continued vesting upon retirement, death, disability or if there is a change in control. Stock appreciation rights are granted with an exercise price equal to the market value of our stock on the date of grant.

Cash-settled awards granted to our directors in the form of restricted stock units are fully vested at the time of grant and payable upon retirement.

The following table summarizes the activity of cash-settled restricted stock unit awards in 2017:



	Equivalent Units		Weighted Average Grant Date Fair Value
	(In thousands)		(Per unit)
Non-vested at beginning of period	42		$14.98
Granted	—		—
Vested	(30	)	15.66
Forfeited	(12	)	13.15
Non-vested at end of period	—		—

The weighted average grant date fair value of cash-settled restricted stock unit awards was $13.26 per unit for 2015. The fair value of cash-settled restricted stock unit awards settled was $2,178,000 in 2017, $1,195,000 in 2016, and $2,469,000 in 2015.

The following table summarizes the activity of cash-settled stock appreciation rights in 2017:



	Rights Outstanding		Weighted Average Exercise Price	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (Current Value Less Exercise Price)
	(In thousands)		(Per share)	(In years)	(In thousands)
Balance at beginning of period	374		$12.97	3	$773
Granted	—		—
Exercised	(234	)	10.14
Forfeited	(140	)	17.69
Balance at end of period	—		—	0	—
Exercisable at end of period	—		—	0	—

The intrinsic value of cash-settled stock appreciation rights settled was $1,581,000 in 2017, $154,000 in 2016 and $206,000 in 2015.

The fair value of accrued cash-settled awards at year-end 2017 was $0 since all outstanding equity awards were accelerated as a result of the Merger and $1,758,000 at year-end 2016 and was included in other liabilities in our consolidated balance sheets.

Equity-settled awards

Equity-settled awards granted to our employees and directors include restricted stock units (RSU), which vest after three years for directors and five years for employees from the date of grant, market-leveraged stock units (MSU), which vest after three years from date of grant and performance stock units (PSU), which generally vest after three years from the date of grant if certain performance goals are met. The following table summarizes the activity of equity-settled awards in 2017:



	Equivalent Units		Weighted Average Grant Date Fair Value
	(In thousands)		(Per unit)
Non-vested at beginning of period	555		$	14.70
Granted	198		14.55
Vested	(653	)	14.28
Forfeited	(14	)	14.59
Non-vested at end of period	86		17.54

In 2017 and 2016, we granted 198,000 and 313,000 RSU awards. The grant date fair value was based on the market value of the stock on the date of the grant. In 2015, we granted 234,000 MSU awards. The vesting of these awards was accelerated in accordance with their terms upon change in control of the company and settled in cash in 2017 in connection with the Merger. We estimated the grant date fair value of MSU awards using a Monte Carlo simulation pricing model and the following assumptions:



	For the Year
	2015
Expected stock price volatility	32.9		%
Risk-free interest rate	1.0		%
Expected dividend yield	—		%
Weighted average grant date fair value of MSU awards (per unit)	$	15.11

The weighted average grant date fair value of equity-settled awards (RSU, MSU and PSU) per unit in 2017, 2016 and 2015 was $14.55, $9.04 and $12.99. The fair value of equity-settled awards settled was $14,894,000, $2,884,000 and $4,451,000 in 2017, 2016 and 2015.

Stock options

Stock options have a ten-year term, generally become exercisable ratably over four years and provide for accelerated or continued vesting upon retirement, death, disability or if there is a change in control. All options have been granted with an exercise price equal to the market value of our stock on the date of grant. In the first quarter of 2016, stock options were issued to each of two new directors to acquire 20,000 shares of common stock of which 6,500 shares vest on the first and second anniversary of the date of grant and the remaining 7,000 shares vest on the third anniversary of the date of grant. Expense associated with annual restricted stock units and non-qualified stock options to our board of directors is included in share-based compensation expense. The following table summarizes the activity of stock option awards in 2017:



	Options Outstanding		Weighted Average Exercise or Settlement Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (Current Value Less Exercise Price)
	(In thousands)		(Per share)		(In years)	(In thousands)
Balance at beginning of period	1,836		$	19.39	5	$	449
Granted	—		—
Exercised or settled in merger	(768	)	14.07
Forfeited	(1,068	)	23.21
Balance at end of period	—		—		—	—
Exercisable at end of period	—		—		—	—

We estimated the grant date fair value of stock options using the Black-Scholes option pricing model and the following assumptions:



	For the Year
	2016			2015
Expected stock price volatility	39.5		%	45.6		%
Risk-free interest rate	1.5		%	1.8		%
Expected life of options (years)	6			6
Expected dividend yield	—		%	—		%
Weighted average grant date fair value of options (per share)	$	8.60		$	6.51

We determine the expected life using the simplified method which utilizes the midpoint between the vesting period and the contractual life of the awards. The expected stock price volatility assumption was determined using a blend of historical and implied volatility.

The intrinsic value of options exercised was $2,603,000 in 2017, $61,000 in 2016 and $0 in 2015.

Long-Term Incentive Compensation

In 2017 and 2016, we granted $1,180,000 and $620,000 of long-term incentive compensation in the form of deferred cash compensation. The 2017 deferred cash awards vest annually over three years, and the 2016 deferred cash awards vest after two years. The 2016 award provides for accelerated vesting upon retirement, disability, death, or if there is a change in control. Expense associated with deferred cash awards is recognized ratably over the vesting period or earlier based on retirement eligibility or accelerated vesting under the change of control provision. The 2016 award and the first payment on the 2017 award were settled in cash based upon their terms in connection with the Merger.