8. Equity-Based Compensation

General

The Company measures compensation cost for all share‑based awards at fair value on the grant date (or measurement date if different) and recognizes compensation expense, net of estimated forfeitures, over the requisite service period for awards expected to vest. The Company estimates the fair value of stock options using the Black-Scholes valuation model, and determines the fair value of restricted stock units based on the quoted price of GMS’s common stock on the date of grant. The Company estimates forfeitures based on historical analysis of actual forfeitures and employee turnover. Actual forfeitures are recorded when incurred and estimated forfeitures are reviewed and adjusted at least annually.

Equity-based compensation expense related to stock options and restricted stock units was $2.6 million and $1.3 million during the nine months ended January 31, 2019 and 2018, respectively, and is included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income.

Stock Option Awards

The following table presents stock option activity for the nine months ended January 31, 2019:


				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, 2018	1,952	$	14.37	6.52	$	33,209
Options granted	374		25.58
Options exercised	(103)		12.41
Options forfeited	(41)		27.00
Options expired	—		—
Outstanding as of January 31, 2019	2,182	$	16.15	6.35	$	10,261
Exercisable as of January 31, 2019	1,724	$	13.51	5.63	$	10,217
Vested and expected to vest as of January 31, 2019	2,173	$	16.10	6.34	$	10,260

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 nine months ended January 31, 2019 and 2018 was $0.8 million and $3.7 million, respectively. As of January 31, 2019, there was $3.2 million of total unrecognized compensation cost related to stock options. That cost is expected to be recognized over a weighted-average period of 2.3 years.

There were no stock options granted during the nine months ended January 31, 2018. The fair value of stock options granted during the nine months ended January 31, 2019 was estimated using the Black-Scholes option-pricing model with the following assumptions:


	Nine Months Ended
	January 31, 2019
Volatility	33.71	%
Expected life (years)	6.0
Risk-free interest rate	2.87	%
Dividend yield	—	%

The weighted average grant date fair value of options granted during the nine months ended January 31, 2019 was $9.72 per share. The expected volatility was based on the average volatility of peer public entities that are similar in size and industry because prior to our IPO 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

The following table presents restricted stock unit activity for the nine months ended January 31, 2019:


		Weighted
	Number of	Average
	Restricted	Exercise
	Stock Units	Price
	(shares in thousands)
Outstanding as of April 30, 2018	22	$	37.49
Granted	188		24.87
Vested	(7)		37.49
Forfeited	(15)		26.41
Outstanding as of January 31, 2019	188	$	25.72

As of January 31, 2019, there was $3.7 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 2.1 years.