Stock Compensation

The Company’s stock-based compensation is in accordance with its 2015 Incentive Compensation Plan (the “Plan”), pursuant to which the Compensation Committee of the Company is authorized to grant up to 2,750,000 shares to officers and employees of the Company, in the form of equity-based awards, including time or performance based options and restricted stock. In addition, the Company may grant cash-settled awards, including stock-appreciation rights (SARs) and phantom stock awards. As of December 31, 2016, there were 1,200,047 shares available for grant under the Plan.

Total stock-based compensation recorded by the Company for the twelve months ended December 31, 2016 for both equity and liability-classified awards was $3.7 million.

The following table summarizes the components of stock-based compensation expense in the consolidated statements of (loss) income for the twelve months ended December 31, 2016:



(in thousands)	Amount
Selling, general, and administrative expenses	$	3,423
Research and development expenses	261
Total	$	3,684

The following table summarizes the components of stock-based compensation expense in the consolidated statements of (loss) income for the five months ended December 31, 2015:



(in thousands)	Amount
Selling, general, and administrative expenses	$	1,071
Research and development expenses	53
Total	$	1,124

Time-Based Stock Options

During the twelve months ended December 31, 2016 and the five months ended December 31, 2015, the Company’s compensation committee approved time-based stock options to be granted to officers and employees of the Company, which vest ratably over three years. A summary of the status of the Company’s time-based stock options (“Options”) as of December 31, 2016 and the activity since August 1, 2015 is as follows:



	Number of Shares Underlying Awards		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (In thousands)
Outstanding at August 1, 2015	—		$	—	0	$	—
Granted	1,106,875		12.00		9.58	—
Exercised	—		—		0	—
Forfeited or expired	—		—		0	—
Outstanding at December 31, 2015	1,106,875		12.00		9.58	—
Exercisable at December 31, 2015	—		—		0	—
Vested and expected to vest at December 31, 2015	1,106,875		$	12.00	9.58	$	—

Outstanding at January 1, 2016	1,106,875		$	12.00	9.58	$	—
Granted	167,598		5.37		9.76	—
Exercised	—		—		0	—
Forfeited or expired	(522,500	)	12.00		0	—
Outstanding at December 31, 2016	751,973		$	10.52	8.91	$	—
Exercisable at December 31, 2016	—		—		0	—
Vested and expected to vest at December 31, 2016	751,973		$	10.52	8.91	$	—

The Options granted during the twelve months ended December 31, 2016 vest over a three year period, one-third on each anniversary of each holder's grant date. The Options granted during the five months ended December 31, 2015 vest over a three year period, one-third on each anniversary of each holder’s grant date, with the exception of Options granted to the Company’s Chief Executive Officer, which vest one-third on the first anniversary of the grant date and 1/36 each month for two years thereafter.

The fair value of each Option was estimated on the date of grant using the Hull-White or Black-Scholes option pricing models with the assumptions described below. For the periods indicated, since the Company has limited historical volatility information available, the expected volatility was based on actual volatility for comparable public companies projected over the expected terms of Options and the actual volatility for the Company since the Business Combination. The Company did not apply a forfeiture rate to the Options as there is not enough historical information available to estimate. The risk-free interest rate was based on the U.S. Treasury yield curve at the time of the grant over the expected term of the Options. The expected life for the Hull-White model was calculated as the average time to achieve the 2.0x strike exercise price in the simulation. The expected life for the Black-Scholes model was estimated using the simplified method.



	Year Ended December 31, 2016	August 1, 2015 Through December 31, 2015
Weighted average grant date fair value	$2.51	$4.03
Risk-free interest rate	1.32%	1.67% - 1.70%
Expected life (years)	6.00	5.73 - 5.97
Estimated volatility factor	48.3%	47.7% - 48.0%
Expected dividends	None	None

As of December 31, 2016, the Company had unrecognized compensation costs for stock options, totaling $1.3 million that is expected to be recognized over an average period of 1.4 years.

Time-Based Stock Appreciation Rights (SARS)

During the five months ended December 31, 2015, the Company’s compensation committee approved time-based stock appreciation rights ("SARS") to be granted to officers and employees of the Company outside of the United States, which vest ratably over three years. A summary of the Company’s time-based SARs as of December 31, 2016 is as follows:



	Number of Awards		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (In thousands)
Outstanding at August 1, 2015	—		$	—	0	$	—
Granted	165,000		12.00		9.71	—
Exercised	—		—		0	—
Forfeited or expired	—		—		0	—
Outstanding at December 31, 2015	165,000		12.00		9.71	—
Exercisable at December 31, 2015	—		—		0	—
Vested and expected to vest at December 31, 2015	165,000		$	12.00	9.71	$	—

Outstanding at January 1, 2016	165,000		$	12.00	9.71	$	—
Granted	—		—		0	—
Exercised	—		—		0	—
Forfeited or expired	(6,875	)	12.00		0	—
Outstanding at December 31, 2016	158,125		$	12.00	8.71	$	—
Exercisable at December 31, 2016	—		—		0	—
Vested and expected to vest at December 31, 2016	158,125		$	12.00	8.71	$	—

Holders of these SARs are entitled under the terms of the Plan to receive cash payments calculated based on the excess of the Company’s stock price over the target price in their award; consequently, these awards are accounted for as liability-type awards and the Company measures compensation cost based on their estimated fair value at each reporting date and the number of options expected to vest, net of estimated forfeitures, if any.

Upon issuance, the fair value of each SAR award was estimated using the Hull-White option pricing model with the assumptions described below. For the periods indicated, since the Company has limited historical volatility information available, the expected volatility was based on actual volatility for comparable public companies projected over the expected terms of SAR awards. The Company did not apply a forfeiture rate to the SAR awards as there is not enough historical information available to estimate. The risk-free interest rate was based on the U.S. Treasury yield curve at the time of the grant over the expected term of the SAR awards. The expected life was calculated as the average time to achieve the 2.0x strike exercise price in the simulation. Because the SARs are liability classified, they are revalued at each reporting date. The assumptions used to value the SARs as of their issuance dates and as of December 31, 2016 are presented below:



	As of December 31, 2016	August 1, 2015 Through December 31, 2015
Fair value of awards	$0.32	$1.74
Risk-free interest rate	1.87%	2.24%-2.25%
Expected life (years)	4.73	6.40-6.54
Estimated volatility factor	54.5%	47.5%-47.7%
Expected dividends	None	None

As of December 31, 2016, the Company had unrecognized compensation costs for SARs, totaling $29 thousand that is expected to be recognized over an average period of 1.3 years.

Restricted Stock

During the twelve months ended December 31, 2016 and the five months ended December 31, 2015, the Company’s compensation committee approved equity-classified performance-based and time based restricted stock awards to be granted to officers, employees of the Company, which vest ratably over three years. The restricted stock issued in 2015 also contains a performance condition which must be met in order for vesting to occur. A summary of the Company’s restricted stock awards as of December 31, 2016 and the activity since August 1, 2015 is as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Non-vested RSUs at August 1, 2015	—		$	—
Granted	596,491		6.34
Vested	—		—
Forfeited or expired	—		—
Non-vested RSUs at December 31, 2015	596,491		$	6.34

Non-vested RSUs at January 1, 2016	596,491		$	6.34
Granted	194,570		5.32
Vested	(354,637	)	6.34
Forfeited or expired	(84,407	)	6.35
Non-vested RSUs at December 31, 2016	352,017		$	5.77

As of December 31, 2016, Management has concluded that it is not probable that the performance condition for the remaining unvested performance-based restricted stock will be met and therefore no compensation is expected to be recognized for those RSUs; however, if it becomes probable that those performance conditions will be met, the Company could recognize up to $1.0 million. Unrecognized compensation expense for the unvested time-based restricted shares is $0.9 million, which is expected to be recognized over a weighted average period of 1.8 years.

Phantom Stock Awards

During the twelve months ended December 31, 2016 and the five months ended December 31, 2015, the Company’s compensation committee approved phantom stock awards to be awarded to officers and employees of the Company located outside of the United States, which vest ratably over three years. These awards will be settled in cash upon vesting and are therefore liability-classified, requiring remeasurement at each balance sheet date. A summary of the Company’s Phantom Stock Awards as of December 31, 2016 is as follows:



	Number of Awards		Weighted-Average Grant Date Fair Value
Non-vested phantom stock awards at August 1, 2015	—		$	—
Granted	154,502		6.34
Vested	—		—
Forfeited or expired	—		—
Non-vested phantom stock awards at December 31, 2015	154,502		$	6.34

Non-vested phantom stock awards at January 1, 2016	154,502		$	6.34
Granted	10,500		6.11
Vested	(49,655	)	6.34
Forfeited or expired	(5,538	)	6.34
Non-vested phantom stock awards at December 31, 2016	109,809		$	6.32

As of December 31, 2016, Management concluded that it is not probable that the performance condition for the remaining unvested phantom shares will be met and therefore no compensation is expected to be recognized for those phantom shares; however, if it becomes probable that those performance conditions will be met, the Company could recognize up to $0.3 million of additional compensation expense. Unrecognized compensation expense for the unvested time-based phantom shares is $24 thousand, which is expected to be recognized over a weighted average period of 1.7 years.

Director Shares

On January 31, 2014, 20,125 founder shares were transferred to each of Boulevard’s three independent directors (“Director Shares”), adjusted for the effect of stock dividends in February 2014 (for a total of 60,375 founder shares). On March 13, 2014, the underwriters exercised a portion of the over-allotment option from the Public Offering, resulting in a portion of the Director Shares being forfeited. As a result, the Director Shares were adjusted ratably resulting in each director holding 18,375 Director Shares (for a total of 55,125 Director Shares) at December 31, 2016.

The Director Shares were effectively subject to achievement of two performance conditions — the Company completing its initial public offering (IPO) and a business combination within 21 months of the IPO. Additionally 25% (13,781 shares in the aggregate) are subject to forfeiture if the Company’s stock price does not trade at or above $13 for any 20 day period of a 30 day period commencing on the Closing date through July 31, 2020 (5 years).

The grant date fair value of the Director Shares with performance conditions was estimated as of their deemed grant date of January 31, 2014. The aggregate fair value of the Director Shares of $0.4 million was recognized as an expense upon consummation of the Business Combination, at which point the performance conditions had been achieved.

The fair value of the Director Shares was estimated using a Monte Carlo Simulation Model that used the following assumptions:



Risk-free interest rate	1.96%
Expected life (years)	6.47
Estimated volatility factor	31.16%
Expected dividends	None

As of December 31, 2016, the Company had unrecognized compensation costs for the Director shares (founder shares) of $29 thousand that is expected to be recognized over an average period of 1.1 years.

Board of Director Grants

Certain directors receive shares of restricted stock subject to the terms, provisions and restrictions of the 2015 Incentive Compensation Plan. The shares granted during the five months ended December 31, 2015 vest over a three year period, one-third on each anniversary of each holder’s grant date, provided the Director is still serving as a director of the Company. The shares granted during the twelve months ended December 31, 2016 vest over a one year period on the one year anniversary of each holder's grant date, provided the Director is still serving as a director of the Company. Upon termination of directorship for any reason, the Director immediately forfeits any unvested shares without payment. A summary of the Company’s time-based restricted stock awarded to the Board of Directors for the twelve months ended December 31, 2016 is as follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Non-vested time-based restricted stocks at August 1, 2015	—		$	—
Granted	26,387		6.34
Vested	—		—
Forfeited or expired	—		—
Non-vested time-based restricted stock at December 31, 2015	26,387		$	6.34

Non-vested time-based restricted stock at January 1, 2016	26,387		$	6.34
Granted	69,539		5.08
Vested	(76,802	)	5.22
Forfeited or expired	(4,600	)	6.34
Non-vested time-based restricted stock at December 31, 2016	14,524		$	6.22