STOCK-BASED COMPENSATION

The TerraForm Global, Inc. 2014 Long-Term Incentive Plan (the “Incentive Plan”) provides for the award of incentive and non-qualified stock options, stock appreciation rights, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) to employees and non-employee directors, including employees and non-employee directors of SunEdison. The maximum contractual term of an award is 10 years from the date of grant. Shares issued under the plan may be authorized and unissued shares or treasury shares. As of June 30, 2016, the Company had authorized 17,884,910 shares for awards under the Incentive Plan and 9,331,045 shares remained available for future grant under this plan.

Stock-based compensation expense is recorded as a component of general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations and totaled $0.9 million and $2.0 million for the three and six month periods ended June 30, 2016, respectively. No stock-based compensation expense was recognized in the three and six month periods ended June 30, 2015.

Employee benefit related costs, including stock-based compensation costs related to equity awards in the stock of SunEdison, Inc. and its consolidated subsidiaries, of SunEdison employees who provide services to the Company are allocated to the Company based on the relative percentage of their time that the employee spends providing service to the Company. The amount of stock-based compensation expense related to equity awards in the stock of SunEdison and its consolidated subsidiaries which has been allocated to the Company was $0.7 million and $1.6 million for the three and six month periods ended June 30, 2016 and is reflected in the unaudited condensed consolidated statements of operations within general and administrative costs and has been treated as an equity contribution from SunEdison on the unaudited condensed consolidated statements of stockholders' equity. Similarly, stock-based compensation costs related to equity awards to SunEdison employees in the Company’s stock are allocated to SunEdison based on the relative percentage of their time that the employee spends providing service to SunEdison. The amount of stock-based compensation expense related to equity awards in our stock which has been allocated to SunEdison was $0.7 million and $2.0 million for the three and six month periods ended June 30, 2016, respectively, and was recognized as a distribution to SunEdison on the unaudited condensed consolidated statements of stockholders' equity with no impact to the Company’s unaudited condensed consolidated statements of operations.

Restricted Stock Awards

RSAs provide the holder with immediate voting rights, but are restricted in all other respects until vested. Upon a termination of employment for any reason, any unvested shares of Class A common stock held by the terminated participant will be forfeited. All unvested RSAs are paid dividends and distributions.

The following table presents information regarding outstanding RSAs as of June 30, 2016 and changes during the six-month period then ended, after giving effect to the conversion of restricted Class C common stock to restricted Class A common stock on a 178.8491-for-one basis:



	Number of RSAs Outstanding		Weighted Average Grant Date Fair Value Per Share		Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2016	7,774,554		$	0.18
Forfeited	(1,749,137	)	0.18
Outstanding at June 30, 2016	6,025,417		$	0.17	$	19.6

As of June 30, 2016, $1.5 million of total unrecognized compensation cost related to RSAs is expected to be recognized over a weighted average period of approximately 3.2 years.

The weighted-average fair value of RSAs per share on the date of grant was $0.17 for the six-month period ended June 30, 2016. No RSAs were granted for the six-month period ended June 30, 2016.

On September 26, 2014 and March 31, 2015, the Company granted 31,350 and 35,245 shares of restricted Class C common stock, respectively (or 5,606,918 and 6,303,519 shares, respectively, of restricted Class A common stock after giving effect to conversion of restricted Class C common stock to restricted Class A common stock on a 178.8491-for-one basis immediately prior to the completion of the IPO). Subject to accelerated vesting upon certain events, 25.0% of the restricted Class A common stock will vest on the first through fourth anniversary of the date of the IPO. The fair value of each grant was determined by using the percentage of shares granted multiplied by the overall fair value of SunEdison’s equity in the Company. In estimating the fair value of the RSAs, the primary valuation considerations were an enterprise value determined from a discounted cash flow of income-based approach, using a present value of after-tax probability weighted equity cash flow of those power plants expected to be included in the IPO, in a projection period extending through December 2024 and a lack of marketability discount of 10.0% and 5.0% for the September 26, 2014 and March 31, 2015 grants, respectively. The discount model used the following assumptions: a time to liquidity event of seven months and three months; a discount rate of 13.0%and 12.0%; and volatility of 40.0% over the time to a liquidity event for the September 26, 2014 and March 31, 2015 grants, respectively. Estimates of the volatility of the Company’s Class A common stock were based on available information on the volatility of SunEdison and the common stock of comparable publicly traded companies.

Restricted Stock Units

RSUs will not entitle the holders to voting rights and holders of the RSUs will not have any right to receive dividends or distributions.

The following table presents information regarding outstanding RSUs as of June 30, 2016 and changes during the six-month period then ended, after giving effect to the conversion of restricted Class C common stock to restricted Class A common stock on a 178.8491-for-one basis:



	Number of RSUs Outstanding		Aggregate Intrinsic Value (in millions)		Weighted Average Remaining Contractual Life (In Years)
Balance at January 1, 2016	2,846,049
Granted	403,737
Forfeited	(733,839	)
Balance at June 30, 2016	2,515,947		$	8.2	1.6

As of June 30, 2016, $17.6 million of total unrecognized compensation cost related to RSUs is expected to be recognized over a weighted average period of approximately 2.3 years.

As of January 30, 2017, the Company has 2,382,487 RSUs outstanding.

On December 22 and 23, 2015, the Company granted 2,024,800 Class A RSUs to certain employees and executive officers. These are time-based awards which will vest on the following schedule: 25% after one year, 25% after two years, and 50% after three years. The grant date fair value of these awards was $11.0 million which will be recognized as compensation cost on a straight line basis over the three-year service period.

On September 26, 2014 and March 31, 2015, the Company granted 1,550 and 2,750 Class C RSUs, respectively (or 277,216 and 491,835 Class A RSUs, respectively, after giving effect to conversion of Class C RSUs to Class A RSUs on a 178.8491-for-one basis immediately prior to the completion of the IPO). Subject to accelerated vesting upon certain events, 25% of the Class A RSUs will vest on the first through fourth anniversary of the date of the IPO.