Equity-based Compensation

3 Months Ended

Mar. 31, 2017

Equity-based Compensation

Equity-based Compensation

10. Equity-based Compensation

Restricted Stock Awards and Restricted Stock Units

We record equity-based compensation expense equal to the fair value of share-based payments over the vesting periods of the Long-Term Incentive Plan (“LTIP”) awards. We recorded compensation expense from awards granted under our LTIP of $9.8 million and $10.6 million during the three months ended March 31, 2017 and 2016, respectively. The total tax benefit for the three months ended March 31, 2017 and 2016 was $3.3 million and $3.6 million, respectively. Additionally, we recorded a tax windfall and shortfall related to equity-based compensation of $0.5 million and $1.2 million for the three months ended March 31, 2017 and 2016, respectively. The fair value of awards vested during the three months ended March 31, 2017 and 2016 was approximately $8.8 million and $4.6 million, respectively. The Company granted both restricted stock awards and restricted stock units with service vesting criteria and granted both restricted stock awards and restricted stock units with a combination of market and service vesting criteria under the LTIP. Substantially all these awards vest over three or four year periods. Restricted stock awards are issued and included in the number of outstanding shares upon the date of grant and, if such awards are forfeited, they become treasury stock. Upon vesting, restricted stock units become issued and outstanding stock.

The following table reflects the outstanding restricted stock awards as of March 31, 2017:  

		Weighted-
	Service Vesting	Average
	Restricted Stock	Grant-Date
	Awards	Fair Value
	(In thousands)
Outstanding at December 31, 2016	488	$	8.83
Granted	—		—
Forfeited	—		—
Vested	(220)		8.62
Outstanding at March 31, 2017	268		9.00

The following table reflects the outstanding restricted stock units as of March 31, 2017:

		Weighted-		Market / Service	Weighted-
	Service Vesting	Average		Vesting	Average
	Restricted Stock	Grant-Date		Restricted Stock	Grant-Date
	Units	Fair Value		Units	Fair Value
	(In thousands)			(In thousands)
Outstanding at December 31, 2016	4,160	$	6.91	7,194	$	12.29
Granted	1,867		6.39	2,146		9.50
Forfeited	(33)		8.01	(11)		11.82
Vested	(971)		5.72	(61)		15.44
Outstanding at March 31, 2017	5,023		6.94	9,268		11.63

As of March 31, 2017, total equity-based compensation to be recognized on unvested restricted stock awards and restricted stock units is $53.4 million over a weighted average period of 1.71 years. At March 31, 2017, the Company had approximately 2.4 million shares that remain available for issuance under the LTIP.

For restricted stock awards and restricted stock units with a combination of market and service vesting criteria, the number of common shares to be issued is determined by comparing the Company’s total shareholder return with the total shareholder return of a predetermined group of peer companies over the performance period and can vest in up to 100% of the awards granted for restricted stock awards and up to 200% of the awards granted for restricted stock units. The grant date fair value was $9.45 per award for restricted stock awards and ranged from $4.83 to $15.81 per award for restricted stock units. The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair value of the award. The expected volatility utilized in the model was estimated using our historical volatility and the historical volatilities of our peer companies and was 55.0% for the restricted stock awards and ranged from 44.0% to 54.0% for restricted stock units. The risk-free interest rate was based on the U.S. treasury rate for a term commensurate with the expected life of the grant and was 0.5% for restricted stock awards and ranged from 0.5% to 1.4% for restricted stock units.