STOCK-BASED COMPENSATION

Stock-based compensation expense included in general and administrative expenses consisted of the following:



	Years Ended December 31,
	2018		2017		2016
PBF Energy options	$	11,545	$	9,369	$	11,020
PBF Energy restricted shares	7,460		12,134		7,276
PBF Energy performance awards	1,207		—		—
	$	20,212	$	21,503	$	18,296

PBF LLC Series A warrants and options

PBF LLC granted compensatory warrants to employees of the Company in connection with their purchase of Series A units in PBF LLC. The warrants grant the holder the right to purchase PBF LLC Series A Units. One-quarter of the PBF LLC Series A compensatory warrants were exercisable at the date of grant and the remaining three-quarters become exercisable over equal annual installments on each of the first three anniversaries of the grant date subject to acceleration in certain circumstances. They are exercisable for ten years from the date of grant. The remaining warrants became fully exercisable in connection with the initial public offering of PBF Energy.

In addition, options to purchase PBF LLC Series A units were granted to certain employees, management and directors. Options vest over equal annual installments on each of the first three anniversaries of the grant date subject to acceleration in certain circumstances. The options are exercisable for ten years from the date of grant.

The Company did not issue PBF LLC Series A Unit compensatory warrants or options in 2018, 2017 or 2016.

The following table summarizes activity for PBF LLC Series A compensatory warrants and options for the years ended December 31, 2018, 2017 and 2016:



	Number of PBF LLC Series A Compensatory Warrants and Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Stock Based Compensation, Outstanding at January 1, 2016	640,779		$	10.59	5.46
Exercised	(27,833	)	10.00		—
Outstanding at December 31, 2016	612,946		$	10.62	4.47
Exercised	(126,634	)	10.17		—
Outstanding at December 31, 2017	486,312		$	10.73	3.52
Exercised	(243,700	)	10.62		—
Outstanding at December 31, 2018	242,612		$	10.85	2.64

Exercisable and vested at December 31, 2018	242,612		$	10.85	2.64
Exercisable and vested at December 31, 2017	486,312		$	10.73	3.52
Exercisable and vested at December 31, 2016	612,946		$	10.62	4.47
Expected to vest at December 31, 2018	242,612		$	10.85	2.64

The total intrinsic value of stock options both outstanding and exercisable at December 31, 2018 and December 31, 2017 was $5,290 and $12,016, respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2018, 2017, and 2016 was $7,487, $2,301, and $461, respectively.

There was no unrecognized compensation expense related to PBF LLC Series A warrants and options at December 31, 2018 and December 31, 2017.

Prior to 2014, members of management of the Company had also purchased non-compensatory Series A warrants in PBF LLC with an exercise price of $10.00 per unit, all of which were immediately exercisable. During the year ended December 31, 2018, 19,400 non-compensatory warrants were exercised. There were no non-compensatory warrants exercised during December 31, 2017. At December 31, 2018 and 2017, there were 13,319 and 32,719 non-compensatory warrants outstanding, respectively.

PBF LLC Series B Units

PBF LLC Series B Units were issued and allocated to certain members of management during the years ended December 31, 2011 and 2010. One-quarter of the PBF LLC Series B Units vested at the time of grant and the remaining three-quarters vested in equal annual installments on each of the first three anniversaries of the grant date, subject to accelerated vesting upon certain events. The Series B Units fully vested during the year ended December 31, 2013. There was no activity related to the Series B units for the years ended December 31, 2018, 2017 or 2016.

PBF Energy options and restricted stock

PBF Energy grants awards of its Class A common stock under its equity incentive plans which authorize the granting of various stock and stock-related awards to directors, employees, prospective employees and non-employees. Awards include options to purchase shares of Class A common stock and restricted Class A common stock that vest over a period determined by the plans.

The PBF Energy options and restricted Class A common stock vest in equal annual installments on each of the first four anniversaries of the grant date subject to acceleration in certain circumstances. The options are exercisable for ten years from the date of grant.

The following table summarizes activity for PBF Energy restricted stock for the years ended December 31, 2018, 2017 and 2016.



	Number of PBF Energy Restricted Class A Common Stock		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2016	294,880		$	30.87
Granted	360,820		22.44
Vested	(134,331	)	31.43
Forfeited	—		—
Nonvested at December 31, 2016	521,369		$	24.89
Granted	762,425		25.86
Vested	(172,978	)	24.99
Forfeited	(15,100	)	24.18
Nonvested at December 31, 2017	1,095,716		$	25.56
Granted	58,830		47.24
Vested	(345,073	)	26.13
Forfeited	(15,519	)	24.18
Nonvested at December 31, 2018	793,954		$	26.88

Unrecognized compensation expense related to PBF Energy Restricted Class A Common Stock at December 31, 2018 was $10,280, which will be recognized from 2019 through 2022.

The estimated fair value of PBF Energy options granted during the years ended December 31, 2018, 2017 and 2016 was determined using the Black-Scholes pricing model with the following weighted average assumptions:



	December 31, 2018			December 31, 2017			December 31, 2016
Expected life (in years)	6.25			6.25			6.25
Expected volatility	35.8		%	39.5		%	39.7		%
Dividend yield	3.49		%	4.58		%	4.73		%
Risk-free rate of return	2.82		%	2.09		%	1.42		%
Exercise price	$	35.25		$	26.52		$	26.18

The following table summarizes activity for PBF Energy options for the years ended December 31, 2018, 2017 and 2016.



	Number of PBF Energy Class A Common Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Stock-based awards, outstanding at January 1, 2016	4,256,375		$	27.89	8.32
Granted	1,792,000		26.18		10.00
Exercised	(11,250	)	25.86		—
Forfeited	(66,500	)	28.74		—
Outstanding at December 31, 2016	5,970,625		$	27.37	8.02
Granted	1,638,075		26.52		10.00
Exercised	(462,500	)	25.65		—
Forfeited	(263,425	)	27.71		—
Outstanding at December 31, 2017	6,882,775		$	27.27	7.82
Granted	2,500,742		35.25		10.00
Exercised	(884,878	)	27.57		—
Forfeited	(141,981	)	33.49		—
Outstanding at December 31, 2018	8,356,658		$	29.60	7.48
Exercisable and vested at December 31, 2018	3,531,066		$	27.39	6.27
Exercisable and vested at December 31, 2017	2,958,875		$	27.58	6.77
Exercisable and vested at December 31, 2016	2,271,375		$	27.23	7.21
Expected to vest at December 31, 2018	8,356,658		$	29.60	7.48

The total estimated fair value of PBF Energy options granted in 2018 and 2017 was $23,892 and $10,913 and the weighted average per unit fair value was $9.55 and $6.66. The total intrinsic value of stock options outstanding and exercisable at December 31, 2018, was $36,523 and $19,355, respectively. The total intrinsic value of stock options outstanding and exercisable at December 31, 2017, was $56,656 and $23,665, respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2018 and 2017 was $12,445 and $2,365, respectively.

Unrecognized compensation expense related to PBF Energy options at December 31, 2018 was $33,162, which will be recognized from 2019 through 2022.

PBF Energy Performance Awards

Performance Share Awards

In October 2018, the PBF Energy granted 179,072 performance share awards, with a weighted average grant date fair value of $50.23, to certain officers of the Company which have a three-year performance period from January 1, 2018 through December 31, 2020 (“Performance Cycle”). The payout for the performance share units is based on the relative ranking of the TSR of PBF Energy’s common stock as compared to the TSR of a selected group of industry peer companies over an average of four measurement periods. The performance share units will vest on December 31, 2020, subject to forfeiture or acceleration under certain circumstances set forth in the award agreement.

The performance share awards are issued under PBF Energy’s 2017 equity compensation plan and are settled in PBF Energy’s common stock at the end of the performance cycle. The number of shares distributed will range from zero to 200 percent of the number of performance share units granted based on the Company’s achievement of prescribed TSR rankings relative to its peers during the applicable performance measurement periods in the Performance Cycle plus additional shares of Common Stock may be awarded at vesting with respect to the computed value of dividend equivalents accrued during such performance measurement. The performance share awards are accounted for as equity awards, for which the fair value was determined on the grant date by application of a Monte Carlo simulation model. For the year ended December 31, 2018 there have been no forfeitures of performance share awards.

The performance share awards grant date fair value was calculated using a Monte Carlo valuation model with the following assumptions:



Risk-free interest rate	2.89	%
Dividend yield	2.95	%
Expected volatility	39.04	%

The risk-free interest rate for the remaining performance period as of the grant date is based on a linear interpolation of published yields of traded U.S. Treasury Interest-Only STRIP Bonds. The dividend yield assumption is based on the annualized most recent quarterly dividend divided by the stock price on the grant date. The assumption for the expected volatility of the Company’s stock price reflects the average of PBF Energy’s common stock historical and implied volatility.

As of December 31, 2018, unrecognized compensation cost related to performance share awards was $8,303, which is expected to be recognized over a weighted average period of two years.

Performance Unit awards

In October 2018, the Company granted 7,279,188 performance unit awards, with a fair value of $0.92 at December 31, 2018, to certain officers of the Company. The Performance Cycle and payout methodology for the performance unit awards is consistent with that of the performance share units. The performance units will vest on December 31, 2020, subject to forfeiture or acceleration under certain circumstances set forth in the award agreement.

The performance unit awards are dollar denominated with a target value of $1.00, with actual payout of up to $2.00 per unit (or 200 percent of target). The performance unit awards are settled in cash based on the payout amount determined at the end of the performance cycle. The Company accounts for the performance unit awards as liability awards which the Company recorded at fair market value on the date of grant. Subsequently, the performance unit awards will be marked-to-market at the end of each fiscal quarter by application of a Monte Carlo simulation model. For the year ended December 31, 2018 there have been no forfeitures of performance unit awards.

As of December 31, 2018, unrecognized compensation cost related to performance unit awards was $6,182, which is expected to be recognized over a weighted average period of two years.