17. 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 year ended December 31, 2017, the Company valued the granted options using the “Black Scholes Option Pricing Model” and recorded $1.3 million of related compensation expense, which is included in the Company’s 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 Option Pricing 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 years ended December 31, 2016 or 2015.

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 option agreement expired on July 8, 2017.

Stock Options under 2012 Equity Incentive Plan

In connection with the 2015 merger and the grant to members of the Company’s management of restricted stock options upon the pricing of the IPO, the outstanding stock options for 343,662 shares under the 2012 Equity Incentive Plan were surrendered and cancelled on June 24, 2015, and unamortized balance was expensed immediately. For the years ended December 31, 2017, 2016 and 2015, amortization of the fair value of these stock options was $0, $0 and $1.2 million, respectively, which is included in the Company’s consolidated statements of operations as a component of general and administrative expense.


				Weighted-
		Weighted		Average
		Average		Remaining	Weighted
	Number of	Exercise		Contractual	Average
	Options	Price		Term (years)	Fair Value
	(‘000)
Outstanding, January 1, 2015	344	$	38.26		$	18.22
Granted	—
Exercised	—
Forfeited	(344)	$	38.26		$	18.22
Outstanding, December 31, 2015	—
Granted	—
Exercised	—
Forfeited	—
Outstanding, December 31, 2016	—
Granted	525		4.69	7	$	2.47
Exercised	—
Forfeited	—
Outstanding, December 31, 2017	525		4.69	6	$	2.47

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 December 31, 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, (b) the date that is 30 days following the first anniversary of the grant date and (c) consummation of the Merger, 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.

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, which were valued at $6.26 per share, will generally vest on the earlier of (a) the date of the Company’s next annual meeting of shareholders and (b) the first anniversary of the RSU’s grant date, subject to continued service with the Company through the applicable vesting date. On May 16, 2017 (the date of the Company’s annual meeting of shareholders), the RSUs vested and the Company issued 28,752 shares in settlement of the RSUs.

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. At the effective time of the Merger, all outstanding RSUs will become fully vested and will be terminated and cancelled, and will be automatically exchanged for the right to receive ordinary shares of Euronav as part of the Merger Consideration. The shares for the first two vesting increments were issued within three business days after December 3, 2015, the shares for the third and fourth vesting increments were issued within three business days after December 3, 2016 and December 3, 2017, respectively, 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 such increment. The RSUs were included in determining the diluted net income per share for the year ended December 31, 2015. The RSUs were not included, prior to issuance, in determining the basic net income per share for fiscal 2015 since there are certain circumstances, although remote, in which certain shares would not be issued. On December 3, 2015, the Company issued 574,546 shares in settlement of RSUs that had vested on June 24, 2015 and June 30, 2015. On December 7, 2016, the Company issued 278,483 shares in settlement of RSUs that had vested on December 1, 2016. On December 5, 2017, the Company issued 278,480 shares in settlement of RSUs that had vested on December 1, 2017. As of December 31, 2017, 44,919 RSUs were forfeited and 317,757 shares were remaining to be issued in fiscal 2018, following the vesting date for the final increment. Upon each vesting of the RSU’s, the Company withheld shares of common stock for certain employees in an amount sufficient to cover the minimum statutory tax withholding obligations and issued shares of its common stock for the remaining amount. The total fair value of the RSUs that vested during the years ended December 31, 2017, 2016 and 2015 was $1.4 million, $1.2 million and $5.4 million, respectively. The total fair value is calculated as the number of shares vested during the period multiplied by the closing stock price on the vesting date.

Stock options 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 will be amortized over the vesting period using a graded amortization schedule. For the years ended December 31, 2017, 2016 and 2015, compensation expense of $3.1 million, $5.8 million and $11.9 million, respectively, in connection with the RSUs is included in the Company’s consolidated statements of operations as a component of general and administrative expense. Future amortization for the following year is: 2018— $1.1 million, over a weighted average remaining period of 1 year.

The following table summarizes certain information of the RSUs unvested and vested as of December 31, 2017:


				Weighted-
		Weighted		Average
		Average		Remaining
	Number of	Exercise		Contractual
	RSU's	Price		Term (years)
	(‘000)
Outstanding, January 1, 2015	—	$	—
Granted	1,664		13.19
Vested	(666)		9.39
Forfeited	(45)
Outstanding, December 31, 2015	953
Granted	—
Vested	(318)		3.9
Forfeited	—
Outstanding, December 31, 2016	635		—	2
Granted	74
Vested	(346)
Forfeited	—
Outstanding, December 31, 2017	363		—	1

2015 Warrant Agreement

In connection with the 2015 merger, the Company entered into an amended and restated warrant agreement (the “2015 Navig8 warrant agreement”) with Navig8 Limited. Under the 2015 Navig8 warrant agreement, 1,600,000 warrants that had, prior to the Navig8 merger, provided Navig8 Limited the right to purchase 1,600,000 shares of Navig8 Crude common stock at $10 per share, were converted in connection with the 2015 merger into warrants entitling Navig8 Limited to purchase 0.8947 shares of our common stock for each warrant held for a purchase price of $10.00 per warrant, or $11.18 per share. The warrants under the 2015 Navig8 warrant agreement expired on March 31, 2016.