(3) Share-Based Compensation

As discussed in Note 1. Basis of Presentation and Summary of Significant Accounting Policies - (o) Share-Based Compensation, the Company accounts for its share-based compensation by recognizing the grant date fair value of share-based awards, net of estimated forfeitures, as compensation expense over the underlying requisite service periods of the related awards. The grant date fair value is based upon the Company’s share price on the date of grant.

The following table reflects the total share-based compensation expense amounts reported in the accompanying Consolidated Statements of Operations:


	Year Ended
	December 31,
	2016		2015		2014
	(In thousands)
Cost of ATM operating revenues	$	875	$	1,218	$	1,273
Selling, general, and administrative expenses		20,555		18,236		15,229
Total share-based compensation expense	$	21,430	$	19,454	$	16,502

The increase in total share-based compensation expense each year was attributable to the timing and amount of grants made during preceding periods and additional estimated expense related to performance-based awards in 2016.

Share-based compensation plans. The Company currently has two long-term incentive plans - the Third Amended and Restated 2007 Stock Incentive Plan (as amended, the “2007 Plan”) and the 2001 Stock Incentive Plan (“2001 Plan”). The purpose of each of these plans is to provide members of the Board and employees of the Company additional incentive and reward opportunities designed to enhance the profitable growth of the Company. Equity grants awarded under these plans generally vest in various increments over four years based on continued employment. The Company handles stock option exercises and other share grants through the issuance of new common shares.

In conjunction with the Redomicile Transaction, on July 1, 2016, Cardtronics plc executed a deed of assumption pursuant to which Cardtronics plc adopted the 2007 Plan and assumed all outstanding awards granted under the 2007 Plan (including awards granted under the 2007 Plan prior to the completion of the Redomicile Transaction) and the 2001 Stock Incentive Plan of Cardtronics Delaware, as amended. All grants during the periods above were made under the 2007 Plan.

2007 Plan. The 2007 Plan provides for the granting of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code, options that do not constitute incentive stock options, Restricted Stock Awards (“RSAs”), phantom share awards, Restricted Stock Units (“RSUs”), bonus share awards, performance awards, and annual incentive awards. The number of common shares that may be issued under the 2007 Plan may not exceed 9,679,393 shares. The shares issued under the 2007 Plan are subject to further adjustment to reflect share dividends, share splits, recapitalizations, and similar changes in the Company’s capital structure. As of December 31, 2016, 416,500 options and 5,682,343 shares of RSAs and RSUs, net of cancellations, had been granted under the 2007 Plan, and options to purchase 288,425 common shares have been exercised.

2001 Plan. No awards were granted in 2016, 2015, and 2014 under the Company’s 2001 Plan. As of December 31, 2016, options to purchase an aggregate of 6,438,172 common shares (net of options cancelled) had been granted pursuant to the 2001 Plan, all of which the Company considered as non-qualified stock options, and 6,306,821 of these options had been exercised.

Restricted Stock Awards. The number of the Company’s outstanding RSAs as of December 31, 2016, and changes during the year ended December 31, 2016, are presented below:


	Number of Shares	Weighted Average Grant Date Fair Value
RSAs outstanding as of January 1, 2016	47,235	$	27.36
Vested	(33,610)	$	27.34
RSAs outstanding as of December 31, 2016	13,625	$	27.41

The majority of RSAs granted vest ratably over a four-year service period. No RSAs were granted in 2016, 2015, and 2014. The total fair value of RSAs that vested during the years ended December 31, 2016, 2015, and 2014 was $1.1 million, $1.2 million, and $10.8 million, respectively. Compensation expense associated with RSAs totaled $0.4 million, $0.9 million, and $1.9 million during the years ended December 31, 2016, 2015, and 2014, respectively, and there was no unrecognized compensation expense associated with all outstanding RSAs as of December 31, 2016.

Restricted Stock Units. The Company grants RSUs under its Long-term Incentive Plan (“LTIP”), which is an annual equity award program under the 2007 Plan. The ultimate number of RSUs that are determined to be earned under the LTIP are approved by the Compensation Committee of the Company’s Board of Directors on an annual basis, based on the Company’s achievement of certain performance levels during the calendar year of its grant. The majority of these grants have both a performance-based and a service-based vesting schedule (“Performance-RSUs”), and the Company recognizes the related compensation expense based on the estimated performance levels that management believes will ultimately be met. A portion of the awards have only a service-based vesting schedule (“Time-RSUs”), for which the associated expense is recognized ratably over four years. Performance-RSUs and Time-RSUs are convertible into the Company’s common shares after the passage of the vesting periods, which are 24, 36, and 48 months from January 31 of the grant year, at the rate of 50%, 25%, and 25%, respectively. Performance-RSUs will be earned only if the Company achieves certain performance levels. Although the Performance-RSUs are not considered to be earned and outstanding until at least the minimum performance metrics are met, the Company recognizes the related compensation expense over the requisite service period (or to an employee’s qualified retirement date, if earlier) using a graded vesting methodology. RSUs are also granted outside of LTIPs, with or without performance-based vesting requirements.

The number of the Company’s non-vested RSUs as of December 31, 2016, and changes during the year ended December 31, 2016, are presented below:


	Number of Shares	Weighted Average Grant Date Fair Value
Non-vested RSUs as of January 1, 2016	891,439	$	35.60
Granted	593,207	$	37.63
Vested	(475,507)	$	35.03
Forfeited	(37,388)	$	36.49
Non-vested RSUs as of December 31, 2016	971,751	$	37.08

The above table only includes earned RSUs; therefore, the Performance-RSUs granted in 2016 but not yet earned are not included. The number of Performance-RSUs granted at target in 2016, net of estimated forfeitures, was 345,397 units with a grant date fair value of $38.18 per unit. Time-RSUs are included as granted. The weighted average grant date fair value of the RSUs granted was $37.63, $38.35, and $31.87 for the years ended December 31, 2016, 2015, and 2014 respectively. The total fair value of RSUs that vested during the years ended December 31, 2016, 2015, and 2014 was $16.1 million, $9.7 million, and $6.9 million, respectively. Compensation expense associated with RSUs totaled $21.0 million, $18.6 million, and $14.6 million for the years ended December 31, 2016, 2015, and 2014, respectively. As of December 31, 2016, the unrecognized compensation expense associated with earned RSUs was $12.4 million, which will be recognized using a graded vesting schedule for Performance-RSUs and a straight-line vesting schedule for Time-RSUs, over a remaining weighted average vesting period of approximately 2.2 years.

Options. The number of the Company’s outstanding stock options as of December 31, 2016, and changes during the year ended December 31, 2016, are presented below:


	Number of Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term
				(In thousands)
Options outstanding as of January 1, 2016	77,901	$	10.11
Exercised	(64,451)	$	10.42
Options outstanding as of December 31, 2016	13,450	$	8.67	$	617		1.78	years

Options vested and exercisable as of December 31, 2016	13,450	$	8.67	$	617		1.78	years

Options exercised during the years ended December 31, 2016, 2015, and 2014 had a total intrinsic value of $2.1 million, $2.7 million, and $2.8 million, respectively, which resulted in estimated tax benefits to the Company of $0.7 million, $0.9 million, and $0.9 million, respectively. The cash received by the Company as a result of option exercises was $0.7 million, $1.1 million, and $0.8 million for the years ended December 31, 2016, 2015, and 2014, respectively. As of December 31, 2016, the Company had no unrecognized compensation expense associated with outstanding options as all remaining outstanding options became fully vested during 2015. Compensation expense recognized related to stock options totaled $0.01 million for the year ended December 31, 2014. There was no compensation expense recognized in 2016 and 2015 related to stock options.

Fair value assumptions. The Company utilizes the Black-Scholes option-pricing model to value options, which requires the input of certain subjective assumptions, including the expected life of the options, a risk-free interest rate, a dividend rate, an estimated forfeiture rate, and the future volatility of the Company’s common equity. These assumptions are based on management’s best estimate at the time of grant. There have been no options granted since 2010.