NOTE N—EQUITY-BASED COMPENSATION

In July 2011, we adopted the U.S. Silica Holdings, Inc. 2011 Incentive Compensation Plan (the “2011 Plan”), which was amended and restated in May 2015. The 2011 Plan provides for grants of stock options, restricted stock, performance share units and other incentive-based awards. We believe our 2011 Plan aligns the interests of our employees and directors with those of our common stockholders. At June 30, 2018, we have 3,650,262 shares of common stock that may be issued under the 2011 Plan. We use a combination of treasury stock and new shares if necessary to satisfy option exercises or vesting of restricted awards and performance share units.

Stock Options

The following table summarizes the status of, and changes in, our stock option awards during the six months ended June 30, 2018:



	Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Contractual Term in Years
Outstanding at December 31, 2017	908,919		$	28.46	$	7,008	6.1 years
Granted	—		—		—
Exercised	(4,167	)	14.65		—
Forfeited	(918	)	31.30		—
Expired	(1,838	)	$	31.30	$	—
Outstanding at June 30, 2018	901,996		$	28.52	$	3,692	5.3 years
Exercisable at June 30, 2018	855,446		$	27.38	$	3,692	5.2 years

There were no grants of stock options during the three and six months ended June 30, 2018 and 2017.

There were 4,167 stock options exercised during both the three and six months ended June 30, 2018. There were 2,083 and 26,935 stock options exercised during the three and six months ended June 30, 2017, respectively. The total intrinsic value of stock options exercised was $0.1 million for the three and six months ended June 30, 2018. The total intrinsic value of stock options exercised was $0.1 million and $0.9 million for the three and six months ended June 30, 2017, respectively. Cash received from options exercised during the three and six months ended June 30, 2018 was $62 thousand. Cash received from options exercised during the three and six months ended June 30, 2017 was thirty thousand and $0.5 million, respectively. The tax benefit realized from option exercises was fourteen thousand for the three and six months ended June 30, 2018. The tax benefit realized from option exercises was twenty thousand and $0.3 million for the three and six months ended June 30, 2017, respectively.

We recognized $0.4 million and $0.9 million of equity-based compensation expense related to options during the three and six months ended June 30, 2018, respectively. We recognized $0.6 million and $1.3 million of equity-based compensation expense related to options during the three and six months ended June 30, 2017, respectively. As of June 30, 2018, there was $0.3 million of total unrecognized compensation expense related to these options, which is expected to be recognized over a weighted-average period of approximately 0.3 years. We account for forfeitures as they occur.

Restricted Stock and Restricted Stock Unit Awards

The following table summarizes the status of, and changes in, our unvested restricted stock awards during the six months ended June 30, 2018:



	Number of Shares		Grant Date Weighted Average Fair Value
Unvested, December 31, 2017	461,346		$	30.76
Granted	237,931		26.34
Vested	(216,228	)	30.04
Forfeited	(22,827	)	31.76
Unvested, June 30, 2018	460,222		$	28.77

We granted 234,079 and 237,931 restricted stock and restricted stock unit awards during the three and six months ended June 30, 2018, respectively. We granted 139,451 and 140,951 restricted stock and restricted stock unit awards during the three and six months ended June 30, 2017, respectively. The fair value of the awards was based on the market price of our stock at date of grant.

We recognized $2.0 million and $3.8 million of equity-based compensation expense related to restricted stock awards during the three and six months ended June 30, 2018, respectively. We recognized $1.8 million and $3.3 million of equity-based compensation expense related to restricted stock awards during the three and six months ended June 30, 2017, respectively. As of June 30, 2018, there was $11.0 million of total unrecognized compensation expense related to these restricted stock awards, which is expected to be recognized over a weighted-average period of 1.9 years.

Performance Share Unit Awards

The following table summarizes the status of, and changes in, our performance share unit awards during the six months ended June 30, 2018:



	Number of Shares		Grant Date Weighted Average Fair Value
Unvested, December 31, 2017	881,416		$	42.16
Granted	201,417		31.24
Vested	(225,000	)	41.99
Forfeited	(8,072	)	52.92
Unvested, June 30, 2018	849,761		$	39.31

We granted 201,417 and 90,501 of performance share unit awards during the three and six months ended June 30, 2018 and 2017, respectively. The grant date fair value of these awards was estimated to be $31.24 and $67.69 for both the three and six months ended June 30, 2018 and 2017, respectively, and the number of units that will vest will depend on the percentage ranking of the Company's total shareholder return ("TSR") compared to the TSRs for each of the companies in the peer group over the three year period from January 1, 2018 through December 31, 2020 for the current period grant, and from January 1, 2017 through December 31, 2019 for the prior year grant. The related compensation expense is recognized on a straight-line basis over the vesting period.

The grant date fair value for these awards was estimated using a Monte Carlo simulation model. The Monte Carlo simulation model requires the use of highly subjective assumptions. Our key assumptions in the model included the price and the expected volatility of our common stock and our self-determined peer group companies’ stock, risk-free rate of interest, dividend yields and cross-correlations between our common stock and our self-determined peer group companies' stock.

We recognized $4.5 million and $8.6 million of compensation expense related to performance share unit awards during the three and six months ended June 30, 2018, respectively. We recognized $4.0 million and $7.4 million of compensation expense related to performance share unit awards during the three and six months ended June 30, 2017, respectively. As of June 30, 2018, there was $15.5 million of estimated total unrecognized compensation expense related to these performance share unit awards, which is expected to be recognized over a weighted-average period of 1.4 year.