10. Equity‑Based Compensation

General

The Company has granted options to purchase the Company’s common stock under its 2014 GYP Holdings I Corp. Stock Option Plan. The stock options granted under this plan vest over a four-year period and have a 10-year term. In October 2017, the shareholders of the Company approved the GMS Inc. Equity Incentive Plan (the “Equity Incentive Plan”). Grants subsequent to October 2017 will be made from the Equity Incentive Plan. The Equity Incentive Plan is administered by a committee of the Board of Directors, which determines the terms of the awards granted. Under the Equity Incentive Plan, the committee may grant various forms of equity-based incentive compensation, including stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards, among others. The Company’s Equity Incentive Plan provides for the issuance of a maximum of 2.5 million shares, of which approximately 2.4 million shares were still available for grant as of April 30, 2018. The Company intends to use authorized and unissued shares to satisfy share award exercises.

Share-based compensation expense related to stock options and restricted stock units was $1.7 million, $2.4 million and $2.7 million during the years ended April 30, 2018, 2017 and 2016, respectively, and is included in selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income.

Stock Option Awards

The following table presents stock option activity as of and for the year ended April 30, 2018:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Options	Price		Life (years)	Value
	(shares and dollars in thousands)
Outstanding as of April 30, 2017	2,088	$	13.49	7.23	$	47,336
Options granted	63		37.49
Options exercised	(199)		12.53
Options forfeited	—		—
Options expired	—		—
Outstanding as of April 30, 2018	1,952	$	14.37	6.52	$	33,209
Exercisable as of April 30, 2018	1,682	$	12.97	6.31	$	30,599
Vested and expected to vest as of April 30, 2018	1,946	$	14.33	6.52	$	33,173

The aggregate intrinsic value represents the value of the Company’s closing stock price on the last trading day of the period in excess of the weighted average exercise price multiplied by the number of options outstanding, exercisable or expected to vest. Options expected to vest are unvested shares net of expected forfeitures. The total intrinsic value of options exercised during the years ended April 30, 2018, 2017 and 2016 was $4.3 million, $0.6 million and $8.9 million, respectively. As of April 30, 2018, there was $1.1 million of total unrecognized compensation cost related to stock options. That cost is expected to be recognized over a weighted-average period of 2.1 years.

There were no stock options granted during the year ended April 30, 2016. The fair value of stock options granted during the years ended April 30, 2018 and 2017 was estimated using the Black-Scholes option-pricing model with the following assumptions:


	Year Ended
	April 30,
	2018		2017
Volatility	30.86	%	40.68	%
Expected life (years)	6.0		6.0
Risk-free interest rate	2.18	%	1.55	%
Dividend yield	—	%	—	%

The weighted average grant date fair value of options granted during the years ended April 30, 2018 and 2017 was $12.81 per share and $9.68 per share, respectively. The expected volatility was based on the average volatility of peer public entities that are similar in size and industry since prior to our IPO discussed in Note 1, “—Initial and Secondary Public Offerings,” we did not have sufficient history to estimate the expected volatility of our common stock price. The expected life of stock options was based on previous history of exercises. The risk‑free rate was based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the stock option. The expected dividend yield was 0% as we have not declared any common stock dividends to date and do not expect to declare common stock dividends in the near future. The fair value of the underlying common stock at the date of grant was determined based on the value of the Company’s closing stock price on the trading day immediately preceding the date of the grant.

Restricted Stock Units

During the year ended April 30, 2018, the Company granted 21,766 restricted stock units to employees pursuant to its Equity Incentive Plan. All of these awards were outstanding as of April 30, 2018. The restricted stock units vest ratably over three years and have a fair value of $37.49 per unit. The Company did not grant any restricted stock units during the years ended April 30, 2017 or 2016. As of April 30, 2018, there was $0.7 million of total unrecognized compensation cost related to nonvested restricted stock units. That cost is expected to be recognized over a weighted-average period of 2.6 years.