15. STOCK‑BASED COMPENSATION

Stock Options

2017 Stock Options

On January 5, 2017, Peter C. Georgiopoulos, Chief Executive Officer and Chairman of the Board of the Company and Leonard J. Vrondissis, Executive Vice President, Secretary and Chief Financial Officer of the Company were each granted awards of stock options pursuant to the Company’s amended 2012 Equity Incentive Plan.

Mr. Georgiopoulos received stock options to purchase 500,000 shares of common stock. Mr. Vrondissis received stock options to purchase 25,000 shares of common stock. The stock options are exercisable at an exercise price of $4.69 per share of common stock. The exercise price is equal to the closing trading price of the Company’s common stock on the New York Stock Exchange on January 5, 2017. The stock options were fully vested upon grant, have a 7-year term, subject to earlier termination upon the occurrence of certain events related to termination of employment, and are subject to the provisions of stock option grant agreements.

During the first quarter of 2017, the Company valued the granted options using “Black Scholes Model” and during the three and nine months ended September 30, 2017 recorded $0 and $1.3 million, respectively of related compensation expense, which is included in the Company’s condensed consolidated statements of operations as a component of general and administrative expense. In accordance with FASB ASC Topic 718, the Company used the following assumptions for the Black Scholes Model: stock price volatility of 49.48%; contractual option term of 7 years; expected option life of 3.5 years; dividend yield of 0%; and risk free interest rate of 2.26%. The actual amount realized by the named executives in the agreements will likely vary based on a number of factors, including the Company’s performance, stock price fluctuations and applicable vesting. There was no such expense during the three and nine months ended September 30, 2016.

2015 Stock Options

In connection with the 2015 merger, the Company agreed to convert each outstanding option to acquire Navig8 Crude common stock into an option to acquire the number of shares of the common stock of the Company equal to the product obtained by multiplying (i) the number of shares of Navig8 Crude common stock subject to such stock option immediately prior to the consummation of the 2015 merger by (ii) 0.8947, at an exercise price per share equal to the quotient obtained by dividing (A) the per share exercise price specified in such stock option immediately prior to the 2015 merger by (B) 0.8947. Immediately prior to the consummation of the 2015 merger, there was one option to purchase 15,000 shares of Navig8 common stock at $13.50 per share; this option was converted into an option to purchase 13,420 of the Company’s common shares at an exercise price of $15.088 per share. The fair value of the stock option was calculated by using the Black-Scholes option pricing model. As this stock option was assumed by the Company in conjunction with the 2015 merger, the fair value of this stock option at the date of the 2015 merger of $39.0 thousand was included as part of vessel acquisition costs within Vessels-under-construction. The option agreement expired on July 8, 2017.

The following table summarizes certain information of the stock options outstanding:


	Options Exercisable,
	September 30, 2017
				Weighted Average
		Weighted		Remaining
	Number of	Average		Contractual Life
Exercise Price	Options	Exercise Price		(years)
	(‘000)
$4.69	525	$	4.69	6.3

Restricted Stock Units

2017 Restricted Stock Units

On May 16, 2017, in accordance with the Company’s amended 2012 Equity Incentive Plan, the Company granted certain non-employee directors 44,856 RSUs, which remain outstanding as of September 30, 2017. The RSUs, which were valued at $5.35 per share, will generally vest on the earlier of (a) the date of the Company’s next annual meeting of shareholders and (b) the date that is 30 days following the first anniversary of the grant date, subject to the director’s continued service with the Company through the applicable vesting date. The RSUs are amortized over a one-year period from the grant date and valued at the grant price of $5.35 per share.

2016 Restricted Stock Units

On September 9, 2016, in accordance with the Company’s amended 2012 Equity Incentive Plan, the Company granted certain non-employee directors 28,752 RSUs. The RSUs were valued at $6.26 per share. On May 16, 2017 (the date of the Company’s annual meeting of shareholders), the RSUs vested and the Company issued 28,752 shares.

2015 Restricted Stock Units

On June 24, 2015, in connection with the pricing of the Company’s IPO, the Company granted members of management RSUs on 1,663,660 shares of the Company’s common stock pursuant to the Company’s amended 2012 Equity Incentive Plan. The RSUs, which were valued at the IPO price of $14.00 per share, vest ratably in 20% increments or tranches on June 24, 2015, June 30, 2015, December 1, 2016, December 1, 2017 and December 1, 2018, subject for each increment to employment with the Company through the applicable vesting date for such increment. The shares for the first two vesting increments were issued within three business days after December 3, 2015 and the shares for the remaining vesting increments are expected to be issued within a similar short period of time following the vesting date for each of such increments. The unvested RSUs were excluded in determining the diluted net (loss) income per share for the three and nine months ended September 30, 2017 and 2016, because the impact is anti-dilutive. As of September 30, 2017, 44,919 RSUs have been forfeited and 635,518 shares remain to be issued in future years, following the vesting date for each increment.

Stock options granted to management prior to the IPO under the 2012 Equity Incentive Plan had been cancelled in connection with the granting of the RSUs. The incremental compensation cost of these RSUs on their grant date of $22.0 million was calculated to be the excess of the fair value of the RSUs over the fair value of the cancelled stock options immediately prior to cancellation and are amortized over the vesting period using a graded amortization schedule.

For the three months ended September 30, 2017 and 2016, compensation expense in connection with the RSUs was $0.8 million and $1.4 million, respectively, and for the nine months ended September 30, 2017 and 2016, compensation expense in connection with the RSUs was $2.3 million and $4.2 million, respectively. Compensation expense is included in the Company’s condensed consolidated statements of operations as a component of general and administrative expense.

The following table summarizes certain information of the outstanding unvested and vested RSUs:


		Weighted-
		Average
		Remaining
	Number of	Contractual
	RSU's	Term (years)
	(‘000)
Outstanding, December 31, 2016	664
Granted	45
Vested	(29)
Forfeited	—
Outstanding, September 30, 2017	680		1.1