LONG-TERM COMPENSATION PLANS

In June 2014, the Company's stockholders adopted the 2013 Plan, which is administered by the compensation committee of the Board, except as otherwise expressly provided in the 2013 Plan. The Board approved a maximum of 15,500,000 shares of common stock (subject to increase in accordance with the terms of the 2013 Plan), which were reserved and made available for issuance under the 2013 Plan.

As of December 31, 2016, a total of 373,434 shares of common stock had been issued and 2,828,003 RSUs and options were outstanding under the 2013 Plan.



	Total		RSUs				Stock Options
	Total		Equity Classified		Liability Classified		Stock Options
Outstanding as of December 31, 2015	1,006,436		501,634		329,802		175,000
Granted	2,145,066		1,754,868		—		390,198
Exercised/Issued	(7,642	)	(7,642	)	—		—
Forfeited	(140,857	)	(131,367	)	(9,490	)	—
Outstanding as of December 31, 2016	3,003,003		2,117,493		320,312		565,198

Equity Classified RSUs

For the three years ended December 31, 2016, the Company issued the following RSU grants following their approval by the Board:



Year of Issuance:	RSUs	Weighted average grant date fair value		Weighted average vesting period (months)
2016	1,754,868	$	10.85	33.8
2015	453,260	24.55		54.6
2014	151,352	26.13		42.5

In addition to RSUs containing service-only vesting conditions, the Company has issued RSUs for which vesting is also tied to performance or market conditions. Certain of these RSUs with performance or market vesting conditions also contain provisions for additional share awards in the event certain performance or market conditions are met at the end of specified measurement periods. These conditions were generally based on ROIC or TSR targets. As of December 31, 2016, the following equity classified RSUs were outstanding:



	December 31, 2016
Vesting Conditions:	Outstanding	Expected to vest	Weighted average remaining service period (months)	Potential additional awards
Service-based	782,566	782,566	23.5	—
Performance-based	717,917	586,200	25.9	437,867
Market-based	617,010	617,010	30.9	1,182,109
Total	2,117,493	1,985,776	26.5	1,619,976

During 2016, the Board approved 166,667 RSUs under the 2013 Plan subject to adjusted EBITDA performance conditions that must be achieved in the applicable vesting year which have yet to be set. These awards also include a multiplier of zero to 100% based upon adjusted EBITDA target benchmarks. As the target adjusted EBITDA benchmarks have not yet been established, these RSUs have been excluded from the grant activity presented above. The adjusted EBITDA target benchmarks are expected to be established in 2017 and 2018.

For all equity classified RSUs, shares are issued immediately upon satisfaction of vesting conditions.

For the years ended December 31, 2016, 2015 and 2014, compensation expense associated with these awards totaled $6.5 million, $0.8 million and $0.8 million, respectively. Compensation expense was calculated based on the grant date market value. As of December 31, 2016, unrecognized compensation expense associated with equity classified RSUs that are expected to vest was $17.5 million.

Liability Classified Share-Based Payments

During the year ended December 31, 2014, the Company granted to certain employees 329,823 RSUs that cliff vest on December 31, 2020. These RSUs are subject to an adjusted EBITDA performance condition and a share price market condition. Additionally, the number of shares of common stock to be issued was limited to a maximum cash value, requiring these awards to be classified as liabilities. As of December 31, 2016, a total of 320,312 RSUs associated with these grants remained outstanding, with unrecognized compensation expense of approximately $6.0 million, which will be amortized over the remaining 4.0 years until they vest.

For the years ended December 31, 2016, 2015 and 2014, compensation expense (income) associated with these awards totaled $0.4 million, $(0.1) million and $0.6 million, respectively. Compensation expense was calculated based on a market value that is remeasured each reporting period. The Company currently expects all liability classified RSUs to vest.

Stock Options

During the year ended December 31, 2016, the Company granted non-qualified stock options under the 2013 Plan as follows:



	Stock Options	Weighted average strike price per share		Weighted average grant date fair value per share
Stock options granted	390,198	$	8.05	$	4.35

All options granted during 2016 were subject to annual graded-vesting over a three-year period and had contractual lives of ten years from the grant date. The fair value of the grants was calculated using the Black-Scholes option pricing model at the grant date. As of December 31, 2016, there were 175,000 outstanding stock options with a weighted average exercise price of $11.50, which were considered exercisable and out-of-the-money, and 390,198 outstanding stock options which were unvested and had an aggregate intrinsic value of $0.7 million.

The following table provides the range of assumptions used in valuing the stock option grants using the Black-Scholes option pricing method:



		Black-Scholes Input Assumptions
Weighted average expected term (years)		6.0
Expected volatility		53.0%
Risk-free rate		1.52% to 1.56%
Expected dividend rate		—%
Fair value price per share		$4.32 to $4.81

Weighted average expected term was calculated based on the simplified method for plain vanilla options as the Company had concluded that its historical share option exercise experience did not provide a reasonable basis upon which to estimate expected term and certain alternative information to assist with estimating it was not easily obtainable. Expected volatility was calculated based on a blend of the implied and historical equity volatility of an index of comparable companies. Risk-free rate of return was based on an interpolation of U.S. Treasury rates to reflect an expected term of six years at the date of grant.

For the year ended December 31, 2016, the Company recognized compensation expense associated with stock options of $0.5 million. For the years ended December 31, 2015 and 2014, stock option expense totaled zero. Compensation expense was calculated based on the grant date market value. As of December 31, 2016, unrecognized compensation expense associated with unvested portions of outstanding options was $1.3 million. The Company currently expects all stock options to vest.

Long-Term Cash Bonus Plan

During the year ended December 31, 2015, the Company established the LTCB under the 2013 Plan. As of December 31, 2016, the plan provided participants the potential right to receive bonuses totaling $9.8 million, a decrease of approximately $5.5 million from December 31, 2015 due to forfeitures. Benefits under the plan vest over periods ranging from 36 to 62.5 months and include adjusted EBITDA performance targets, which were subject to appropriate and equitable adjustments by the Board's compensation committee in order to reflect any subsequent acquisition, divestiture or other corporate reorganizations, as necessary. At December 31, 2016, the Company assessed that the performance conditions associated with the LTCB were improbable of being met during the specified measurement periods. As a result, the Company ceased accruing compensation expense associated with these awards and reversed the previously recorded compensation expense.

For the years ended December 31, 2016 and 2015, compensation (income) expense associated with the LTCB totaled $(0.1) million and $0.1 million, respectively.

Employee Stock Purchase Plan

The Company adopted the ESPP in 2014. The Board approved a maximum of 5,178,815 shares of common stock, which were reserved and made available for issuance under the plan. As of December 31, 2016, a total of 191,560 shares had been issued under the ESPP and approximately 1,100 employees were eligible to participate in the ESPP.

For the years ended December 31, 2016 and 2015, compensation expense associated with the ESPP totaled $0.4 million and $0.1 million, respectively. For the year ended December 31, 2014, such compensation expense was de minimis.