13. Stock-Based Compensation

CPI Card Group Inc. Omnibus Plan

In conjunction with the completion of the Company’s initial public offering (“IPO”), the Company adopted the CPI Card Group Inc. Omnibus Plan (the “Omnibus Plan”) pursuant to which cash and equity based incentives may be granted to participating employees, advisors and directors. The Company has reserved 4,000,000 shares of common stock for issuance under the Omnibus Plan. Shares available for grant under the Omnibus Plan were 2,571,638 as of March 31, 2016.

During the three months ended March 31, 2016, the Company granted awards of non-qualified stock options under the Omnibus Plan for 400,000 shares of common stock. The stock option awards have an exercise price of $10 per share, a 10 year term, and vest 33.4% on October 9, 2017, 33.3% on October 9, 2018 and 33.3% on October 9, 2019. The fair value of the stock option awards was determined using a Monte-Carlo simulation with the following assumptions: volatility of 35.2%, risk-free interest rate of 1.51%, dividend yield of 2.28% and expected term of 6.59 years.

Outstanding and exercisable stock options under the Omnibus Plan are as follows:


				Weighted-
		Weighted-		Average
		Average		Remaining
		Exercise		Contractual Term
	Options	Price		(in Years)
Outstanding as of December 31, 2015	795,450	$	10.00	9.80
Granted	400,000		10.00	9.93
Outstanding as of March 31, 2016	1,195,450	$	10.00	9.67

Unvested options as of March 31, 2016 will vest as follows:


2016		—
2017		399,280
2018		398,085
2019		398,085
Total unvested options as of March 31, 2016		1,195,450

During the three months ended March 31, 2016, the Company granted awards of restricted stock units for 232,912 shares of common stock. The restricted stock unit awards contain conditions associated with continued employment or service. On the vesting date, which is one year from the date of grant, shares of common stock will be issued to the award recipients.

The following table summarizes the changes in the number of outstanding restricted stock units for the three month period ended March 31, 2016:


		Weighted-
		Average
		Grant Date
	Shares	Fair Value
Outstanding as of December 31, 2015	—	$	—
Granted	232,912		7.91
Vested	—		—
Forfeited	—		—
Outstanding as of March 31, 2016	232,912	$	7.91

Compensation expense for the Omnibus Plan for the three months ended March 31, 2016 was $422. As of March 31, 2016, the total unrecognized compensation expense related to unvested options and restricted stock units was $4,405, which the Company expects to recognize over an estimated weighted average period of 2.1 years.

CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan

In 2007, the Company’s Board of Directors adopted the CPI Holdings I, Inc. Amended and Restated 2007 Stock Option Plan (the “Option Plan”). Under the provisions of the Option Plan, stock options may be granted to employees, directors, and consultants at an exercise price greater than or equal to (and not less than) the fair market value of a share on the date the option is granted.

As a result of the Company’s adoption of its Omnibus Plan in conjunction with the IPO, as further described above, no further awards will be made under the Option Plan. The outstanding stock options have a 10-year life and vest as noted in each respective grant letter. All stock options are non-qualified. No stock options were granted during the three month period ended March 31, 2015.

The following table summarizes the changes in the number of outstanding stock options for the three month period ended March 31, 2016:


				Weighted-
				Average
				Remaining
		Weighted- Average		Contractual Term
	Options	Exercise Price		(in Years)

Outstanding as of December 31, 2015	462,000	$	0.0003	5.57
Granted	—		—	—
Forfeited	—		—	—
Outstanding as of March 31, 2016	462,000	$	0.0003	5.32

Exercisable as of March 31, 2016	421,667	$	0.0004	5.14

Unvested options as of March 31, 2016 will vest as follows:


2016		40,333
Total unvested options as of March 31, 2016		40,333

Compensation expense for the three months ended March 31, 2016 and unrecorded compensation expense at March 31, 2016, related to options previously granted under the Option Plan, were de minimis. The aggregate intrinsic value of stock option awards outstanding and exercisable under the Option Plan as of March 31, 2016 was $3,807 and $3,475, respectively.

Other Stock-Based Compensation Awards

During June 2015, the Company issued 191,664 restricted shares of common stock to executives of the Company with a weighted-average grant date fair value of $9.48 per share. The awards contain conditions associated with continued employment or service. The terms of the unvested restricted shares of common stock provide voting and regular dividend rights to the holders, and accordingly are included in weighted-average shares outstanding in the Company’s basic earnings per share calculation. See Note 11 “Earnings per Share”. The restricted shares vest over one to three year periods, at which time the restrictions lapse. As of March 31, 2016, 191,664 restricted shares of common stock were outstanding.

Total compensation expense related to the unvested restricted shares of common stock awards was $323 for the three months ended March 31, 2016. As of March 31, 2016, there was $848 of total remaining unrecognized compensation expense related to unvested restricted shares of common stock that will be recognized over a weighted average period of 0.99 years.

Phantom Stock Plan

The Company recognized $606 of compensation expense during the three months ended March 31, 2015 related to the phantom stock plan. The phantom stock plan was terminated, and all outstanding obligations thereunder were settled, during October 2015 in conjunction with the Company’s IPO.