Meeting of Shareholders on May 1, 2019, the Company’s shareholders approved a 4.4 million increase to the shares available for awards granted under the Omnibus Plan, raising the overall total to 12.4 million shares. The Omnibus Plan replaced the Akorn, Inc. 2014 Stock Option Plan (as amended and restated “2014 Plan”), which was approved by shareholders at the Company's 2014 Annual Meeting of Shareholders on May 2, 2014 and subsequently amended by proxy vote of the Company’s shareholders on December 16, 2016. The 2014 Plan had reserved 7.5 million shares for issuance upon the grant of stock options, restricted stock units (“RSUs”), performance share unit awards (“PSUs”) or various other instruments to employees, officers, directors, and consultants. Following shareholder approval of the Omnibus Plan, no new awards could be granted under the 2014 Plan, although previously granted awards remain outstanding pursuant to their original terms.

Under the Omnibus Plan, there were approximately 2.7 million stock option award shares, 3.8 million RSU shares and 0.9 million PSU shares outstanding as of June 30, 2020. As of June 30, 2020, approximately 3.6 million shares remained available for future award grants under the Omnibus Plan.

Also outstanding as of June 30, 2020, were inducement awards consisting of 0.4 million stock option award shares, 0.4 million RSU shares and 0.2 million PSU shares granted under Nasdaq Listing Rule 5635(c)(4). Such shares were granted outside of the Omnibus Plan, but are otherwise subject to the terms and conditions of the Omnibus Plan.

The Company accounts for stock-based compensation in accordance with ASC Topic 718 - Compensation — Stock Compensation. Accordingly, stock-based compensation cost for stock options and RSUs is estimated at the grant date based on the fair value of the award, and the cost is recognized as expense ratably over the vesting period. The Company uses the Black-Scholes-Merton model for estimating the grant date fair value of stock options. Determining the assumptions that enter into the model is highly subjective and requires judgment. The Company uses an expected volatility that is based on the historical volatility of its stock. The expected life assumption is based on historical employee exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the average market rate on U.S. Treasury securities in effect during the quarter in which the options were granted. The dividend yield reflects historical experience as well as future expectations over the expected term of the option. The Company estimates forfeitures at the time of grant and revises in subsequent periods, as necessary, if actual forfeitures differ from those estimates.

All RSUs are valued at the closing market price of the Company’s common stock on the day of grant and the total value of the units is recognized as expense ratably over the vesting period of the grant. PSU awards granted with vesting subject to market conditions are valued at date of grant through a Monte Carlo simulation model. The calculated grant-date fair value is recognized as expense ratably over the vesting period, subject to forfeiture estimates. PSU awards granted with vesting subject to, and determined based on achievement of, performance conditions are valued at date of grant based on the closing price of the Company’s stock and anticipated vesting level at grant date. The awards are re-evaluated quarterly to determine the vesting level that is more likely than not to be achieved, and cumulative expense is adjusted accordingly.

The Company uses the single-award method for allocating compensation cost related to stock options to each period. The following table sets forth the components of the Company’s share-based compensation expense for the three and six month periods ended June 30, 2020 and 2019 (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Stock options	$	777	$	1,440	$	1,602	$	2,821
Employee stock purchase plan	—		269		—		498
Restricted stock units and Performance share units	3,570		3,879		6,176		6,989
Total stock-based compensation expense	$	4,347	$	5,588	$	7,778	$	10,308

From time to time, the Company has granted stock option awards to certain employees, executives and directors. The stock option awards generally vest 25% per year on each of the first four anniversaries of the grant date. Set forth in the following table are the weighted-average assumptions used in estimating the grant date fair value of the stock options granted under the


	Three Months Ended June 30,									Six Months Ended June 30,
	2020			2019			2020			2019
Expected volatility	—		%	52		%	59.96		%	57		%
Expected life (in years)	0.0			6.2			6.3			6.2
Risk-free interest rate	—		%	2.3		%	0.96		%	2.4		%
Dividend yield	—			—			—			—
Weighted-average grant date fair value per stock option	$	—		$	2.34		$	0.59		$	2.37
Forfeiture rate	—		%	8.0		%	8		%	8		%


	Number of Options (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands) ⁽¹⁾
Outstanding at December 31, 2019	5,204	$	14.33	6.8	$	—
Granted	85	1.05
Exercised	—	—
Forfeited	(367)	17.41
Outstanding at June 30, 2020	4,922	$	13.87	6.5	$	—
Exercisable at June 30, 2020	2,413	$	22.90	4.4	$	—

(1) The Aggregate Intrinsic Value of stock options outstanding and exercisable is defined as the difference between the market value of the Company’s common stock as of the date indicated and the exercise price of the stock options. There were no in-the-money options as of June 30, 2020. Stock options for which the exercise price exceeded the market price have been omitted. Fluctuations in the intrinsic value of both outstanding and exercisable options may result from changes in underlying stock price and the timing and volume of option grants, exercises and forfeitures.

From time to time, the Company has granted RSUs to certain employees, executives and directors. Historically, the majority of RSU grants to employees and executives have been issued from the 2014 Plan or the Omnibus Plan (together, the “LTIPs”), which allow for annual grants of RSUs to all eligible employees and executives. The RSU awards generally vest 25% per year on each of the first four anniversaries of the grant date or 50% per year on each of the first two anniversaries of the grant date.

During the three and six month periods ended June 30, 2020, approximately 0.5 million and 0.7 million RSU shares vested and were released, generating tax-deductible expenses totaling $0.1 million and $0.4 million, respectively. During the three and six month periods ended June 30, 2019, approximately 0.3 million and 0.6 million RSU shares vested and were released, generating tax-deductible expenses totaling $0.9 million and $1.8 million, respectively.

During the three and six month periods ended June 30, 2020, no PSU award shares were granted by the Company. For the three and six month periods ended June 30, 2019, zero and 1.2 million PSU award shares were granted, respectively, by the Company. As of June 30, 2020, 1.2 million PSU award shares were outstanding. Of this total, 1.0 million vest two years after grant with vesting level contingent upon meeting various performance conditions, while the remaining 0.2 million vest four years after grant with vesting level contingent on various market conditions. No PSU awards were granted by the Company prior to 2019.


	Total Number of Units (in thousands)	Weighted Average Grant Date Fair Value per Unit		Vesting Based on Performance Conditions	Weighted Average Grant Date Fair Value per Unit		Vesting Based on Market Conditions	Weighted Average Grant Date Fair Value per Unit
Unvested at December 31, 2019	1,218	$	—	964	$	4.06	254	$	3.73
Granted	—	—		—	—		—	—
Vested	—	—		—	—		—	—
Forfeited	(47)	4.06		(47)	4.06		—	—
Unvested at June 30, 2020	1,171	$	3.99	917	$	4.06	254	$	3.73


Valuation Inputs for PSUs with Vesting Subject to Market Conditions:	Six Months Ended June 30,
	2020			2019
PSUs Issued (units in thousands)	—			254
Risk Free Rate	—		%	2.6		%
Volatility	—		%	55.1		%
Dividend	—		%	—		%
Valuation per Share	$	—		$	3.73
Total Fair Value (in thousands)	$	—		$	947

Expected Term	0 years			4 years

Forfeiture Rate Assumed	—		%	8.0		%

In May 2019, the Company awarded $9.7 million in cash-based awards to certain non-executive employees in lieu of the customary RSUs as part of its 2019 LTIP grants. The cash awards are equivalent to the value of RSUs that would have been granted under the previous program design, and vest over two years and are paid in two equal installments after each of the first two anniversaries of the grant date. During the three month periods ended June 30, 2020 and 2019, the Company recorded $1.0 million and $0.7 million, respectively, of expense net of forfeitures, related to the cash-based LTIP awards granted in May 2019. During the six month periods ended June 30, 2020 and 2019, the Company recorded expense of $2.1 million and $0.7 million, respectively, related to these awards.