The Company historically had a Management Equity Incentive Plan (the “Plan”) under which the Parent awarded certain Class B Units (the “Units”) to employees of the Company. The Units generally vested over a five-year vesting period with 50% of vesting contingent on certain performance criteria of the Company.

A summary of the Company’s historical activity for the Units is presented in the following table:

Class B Units	Shares
Outstanding at December 31, 2015		7,321
Granted		4,647
Less: Redeemed		1,524
Less: Forfeited		3,393
Outstanding at December 31, 2016		7,051
Granted		1,304
Less: Redeemed		155
Less: Forfeited		650
Outstanding at September 30, 2017		7,550

During the fiscal year ended September 30, 2018, prior to the IPO, the Company granted 244 Units and had redemption and forfeiture activity of 165 Units and 44 Units, respectively, totaling 7,585 Units outstanding immediately prior to the IPO.

On June 27, 2018, in connection with the IPO and in accordance with the provisions of the respective Limited Partnership Agreement and Plan documents, all of the 7,585 outstanding Units were converted into 2,241 shares of outstanding common stock of the Company at a weighted average grant date fair value of $14.66, including 1,346 shares subject to vesting under the same vesting conditions of the original Units. Subsequent to the IPO, through September 30, 2018, 252 shares vested and 1,094 shares outstanding remain restricted stock subject to vesting as at September 30, 2018.

On June 27, 2018, in connection with the IPO, the Company issued 684 shares at a weighted average grant date fair value of $22.00, all of which are restricted stock subject to vesting. These shares will vest ratably over a three-year period commencing on the first anniversary of the issuance date and all 684 shares outstanding remain restricted stock subject to vesting as at September 30, 2018.

On June 27, 2018, in connection with the IPO, the Company issued 5,344 stock options to holders of the Units, at a weighted average exercise price of $22.00 and a weighted average grant date fair value of $7.38, 1,567 of which vested and became exercisable upon issuance and 608 of which vested and became exercisable subsequent to the IPO through September 30, 2018. The remaining 3,169 unvested options as of September 30, 2018 will vest and become exercisable under the same vesting and exercise conditions as the holders’ original Units.

On July 2, 2018, in connection with the IPO, the Company granted 403 stock options at a weighted average exercise price of $22.00 and a weighted average grant date fair value of $7.59, all of which will vest and become exercisable ratably over a four-year period commencing on the first anniversary of the grant date.

A summary of the Company’s stock option activity for the year ended September 30, 2018 is presented in the following table:

Stock Options	Shares		Weighted Average Exercise Price
Outstanding at October 1, 2017		—
Grants in connection with the IPO		5,747	$	22.00
Less: Exercised		—
Less: Forfeited and expired units		—
Outstanding at September 30, 2018		5,747	$	22.00
Vested and exercisable at September 30, 2018		2,175
Expected to vest after September 30, 2018		3,572	$	22.00

The Company expenses equity-based compensation using the estimated fair value as of the grant date over the requisite service or performance period applicable to the grant. Estimates of future forfeitures are made at the date of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company recognized $28,795, $3,839 and $2,772 in equity-based compensation expense for the year ended September 30, 2018, the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively, included in Selling, general and administrative expense in the accompanying Consolidated Statements of Operations. The resulting charge increased Additional paid in capital by the same amount. Total unrecognized compensation cost was $48,564, $17,876 and $20,460 as of September 30, 2018, September 30, 2017 and December 31, 2016, respectively, which is expected to be recognized over a weighted average period of 2.4 years.

The fair value of each Unit granted under the Plan was estimated on the date of grant using the Black-Scholes-Merton option-pricing model. The same process was maintained for purposes of valuing the stock option awards issued in connection with the IPO. The Company chose the Black-Scholes-Merton model based on its experience with the model and the determination that the model could be used to provide a reasonable estimate of the fair value of awards with terms such as those discussed above. The Company’s stock price is calculated based on the income approach. Under the income approach, specifically the discounted cash flow method, forecast cash flows are discounted to the present value at a risk-adjusted discount rate. The valuation analyses determine discrete free cash flows over several years based on the forecast financial information provided by management and a terminal value for the residual period beyond the discrete forecast, which are discounted at the appropriate rate to estimate the Company’s enterprise value.

The weighted-average assumptions used in the valuation of Unit awards and stock option awards granted or modified for the year ended September 30, 2018, the nine months ended September 30, 2017 and the year ended December 31, 2016 are presented in the table below:

	Fiscal Year Ended			Nine Months Ended			Year Ended
	September 30, 2018			September 30, 2017			December 31, 2016
Assumptions:
Risk-free interest rate		2.77	%		1.37	%		1.42	%
Dividend yield		—			—			—
Volatility factor		26.93	%		46.00	%		43.00	%
Expected term (in years)		6.0			2.6			3.1

On June 28, 2018, in connection with the IPO, the Company’s Board of Directors adopted, and its stockholders approved, the BrightView Holdings, Inc. 2018 Omnibus Incentive Plan (the “2018 Omnibus Incentive Plan”). The 2018 Omnibus Incentive Plan provides that the total number of shares of common stock that may be issued under the plan is 11,650. Under the plan, the Company may grant stock options, stock appreciation rights, restricted stock, other equity-based awards and other cash-based awards to employees, directors, officers, consultants and advisors.

The Company’s Stockholders have approved the Company’s 2018 Employee Stock Purchase Plan, (the “ESPP”). A total of 1,100 shares of the Company’s common stock were made available for sale on October 22, 2018 and will be issued on November 14, 2019.