Note 17—Stock Based Compensation

The Company recognized compensation expense related to awards under its stock based compensation plans as follows:


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2017		2016		2017		2016
Performance Based Units	$	—	$	—	$	—	$	9,460
2014 Equity Incentive Plan		—		—		—		16,352
Payroll taxes relating to stock based compensation		—		—		—		723
		—		—		—		26,535
2015 Incentive Award Plan		692		75		1,938		225
Other		34		29		322		304
Total	$	726	$	104	$	2,260	$	27,064

Performance Based Units

In connection with Carlyle’s acquisition of Chesapeake, certain members of Chesapeake’s management were allowed to co-invest with Carlyle in an entity controlled by Carlyle that holds an investment in the Company. At the time of the grant, those members of management that invested alongside Carlyle received a specified number of common shares, which were subject to a performance-based ratchet (the “Ratchet”). Pursuant to the Ratchet, members of management’s ownership percentage could increase based on Chesapeake completing an “Exit” that resulted in a specified return on invested capital (“MOIC”) and internal rate of return (“IRR”) for certain investors. An Exit is defined as the completion of a liquidating event, which includes the completion of an initial public offering (“IPO”). Since a liquidity event, including an IPO, is generally not probable until it occurs, no compensation cost had been recognized in the financial statements through the initial public offering date. On October 22, 2015, the Company completed its IPO (see Note 1) and accordingly the performance-based units vested and the Company recognized stock based compensation expense of approximately $9,460 at that time. The expense at the time of the IPO was calculated using the IPO stock price of $13 per share on a per share equivalent basis of Carlyle shares, less a lack of marketability discount rate due to the shares not being freely tradeable by the members of management.

2014 Equity Incentive Plan (Mustang Investment Holdings L.P.)

The 2014 Equity Incentive Plan (the “2014 Plan”) provides for profits interests and restricted capital interests in Mustang Investment Holdings L.P. (“Holdings”) to be granted to directors, officers and employees of the Company. Time-vesting profits interests vested twenty percent per year on each of the first five anniversaries of August 15, 2013, as per the applicable award agreement. All performance-vesting profits interests would vest based on Holdings’ principal investors obtaining various thresholds of an internal rate of return as defined in the 2014 Plan, which represents a performance condition.

Since the profits interests issued under the 2014 Plan are for interests in Holdings, which is outside of the consolidated group, the value of the profits interests was marked to market at each of the Company’s reporting periods. On October 22, 2015, the Company completed its IPO and in connection with the IPO the performance-vesting profits interests vested and the Company accelerated the vesting of the time-vesting profits interest.

The Company recognized compensation expense related to awards under the 2014 Plan as follows:


	Nine Months Ended
	March 31, 2016
Time vesting profits interests	$	5,569
Time vesting restricted capital interests		3,410
Performance-vesting profits interests		7,373
Total	$	16,352

2014 Plan—Profits Interests Valuation

The Company calculated the estimated fair value of each award as of the reporting date for each grant prior to the IPO using the Black–Scholes option valuation model. The expense at the time of the IPO was calculated using the IPO stock price of $13 per share on a per share equivalent basis of Holdings shares less a lack of marketability discount rate due to the shares not being freely tradeable. At the time of the Company’s IPO all the profits interests in Holdings were converted on an equivalent share basis. As of June 30, 2016, there are no profits interests outstanding, nor is there any unearned compensation related to unvested profits interests.

2014 Plan—Restricted Capital Interests Valuation

For restricted capital interests issued under the 2014 Plan the Company calculated the estimated fair value of each award using the Black-Scholes option valuation model. The expense at the time of the IPO was calculated using the IPO stock price of $13 per share on a per share equivalent basis of Holdings shares less a lack of marketability discount rate due to the shares not being freely tradeable. At the time of the Company’s IPO all the restricted capital interests in Holdings were converted on an equivalent share basis. As of June 30, 2016, there are no restricted capital interests outstanding, nor is there any unearned compensation related to unvested restricted capital interests.

2015 Incentive Award Plan

The Multi Packaging Solutions International Limited 2015 Incentive Award Plan (the “2015 Plan”) was adopted in October 2015 and provides for the grant of stock options, including incentive stock options and nonqualified stock options, restricted stock, dividend equivalents, restricted stock units, stock appreciation rights, and other stock or cash-based awards. All awards under the 2015 Plan are granted pursuant to award agreements, which, together with the 2015 Plan, detail the terms and conditions of the awards, including any applicable vesting, payment terms and post-termination exercise limitations. Awards may be subject to performance criteria, which are determined by the Company’s Board of Directors (or a committee thereof), and that must be achieved in order for the awards to vest and/or be settled. An aggregate of 9,000 common shares was initially made available for issuance under the 2015 Plan.

A summary of the stock activity for the nine months ended March 31, 2017 under the 2015 Plan is as follows:


	Number		Weighted Average Grant Date Fair Value (per share)
Non-vested as of June 30, 2016		171,854	$	13.41
Granted		482,358	$	13.72
Forfeited		(23,271)	$	13.72
Vested		(18,602)	$	13.98
Non-vested as of March 31, 2017		612,339	$	13.78

As of March 31, 2017, $6,653 of unrecognized stock-based compensation expense related to non-vested restricted stock awards under the 2015 Incentive Award Plan is expected to be recognized over a weighted-average period of 2.4 years.

In November 2016, the Company’s members approved the 2016 Incentive Award Plan (the “2016 Plan”), and since that time, no new awards may be granted under the 2015 Plan. No awards have been granted under the 2016 Plan.