Stock-Based Compensation

Compensation expense for stock-based awards is based on the fair values of the awards on the date of grant and is recognized on a straight-line basis over the vesting period of the entire award in the “Labor” line of the Consolidated Statements of Comprehensive Income (Loss). For the years ended December 31, 2015, 2014, and 2013, we recorded total stock-based compensation expense of $5.7 million, $4.1 million, and $5.7 million, respectively.

In September 2015 we granted equity awards to Karen Puckett as a material inducement for her to accept appointment as our Chief Executive Officer. In addition, in October 2015, we granted equity awards to our Chief Marketing Officer as a material inducement to his acceptance of such position. These option, restricted stock, and performance units awards were not submitted for stockholder approval, and were separately listed with the NYSE.

In July 2013 we granted equity awards to Robert Philpott as a material inducement for him to accept appointment as our Chief Executive Officer. These option, restricted stock, and performance unit awards were not submitted for stockholder approval, and were separately registered with the SEC and listed with the NYSE.

In May 2013 our stockholders approved the 2013 Omnibus Incentive Plan (2013 Plan), pursuant to which we may issue up to 5.0 million shares of stock-based awards to directors, employees and consultants. The 2013 Plan replaced the stockholder-approved 2005 Omnibus Incentive Plan (2005 Plan), pursuant to which we issued equity securities to directors, officers, and key employees. No additional stock-based awards will be granted under the 2005 Plan, but awards previously granted under the 2005 Plan will remain outstanding in accordance with their respective terms. As of December 31, 2015, there were 3.2 million shares available for grant under the 2013 Plan.

Stock Options

Options granted as inducement awards have an exercise price equal to the market value of the common stock on the grant date. These options become exercisable in 25% increments on the first through fourth anniversaries of their date of grant, and expire on the tenth anniversary of their date of grant. Options to purchase 1.0 million shares were outstanding under the inducement awards at December 31, 2015, with exercise prices of either $3.79 or $4.26 per share.

Following the third quarter 2015 resignation of Mr. Philpott, vesting was accelerated on his unvested stock options (pursuant to the terms of his employment agreement and inducement award), for which we recognized $0.5 million of accelerated expense in July 2015.

Under the 2013 Plan, all options have been and will be granted at exercise prices equal to the market value of the common stock on the grant date. All such options are exercisable in 25% increments on the first through fourth anniversaries of their date of grant, and expire on the tenth anniversary of their date of grant. As of December 31, 2015, 2013 Plan options to purchase 1.4 million shares were outstanding with exercise prices ranging from $4.67 to $8.85 per share.

All options under the 2005 Plan were granted at exercise prices equal to the market value of the common stock on the grant date. All 2005 Plan options granted prior to 2011 become exercisable in 25% increments on the second through fifth anniversaries of their date of grant and expire on the tenth anniversary of their date of grant. All options granted after 2011 become exercisable in 25% increments on the first through fourth anniversaries of their date of grant, and expire on the tenth anniversary of their date of grant. As of December 31, 2015, 2005 Plan options to purchase 2.3 million shares were outstanding with exercise prices ranging from $6.04 to $27.00 per share.

Options issued from January 2013 through March 2015 vest in full (to the extent not previously vested) upon a change in control, as defined in the applicable equity plan. Options granted to officers since April 2015 or before January 2013 vest in full (to the extent not previously vested) upon a change in control if such options are not assumed or replaced by a publicly-traded successor with an equivalent award (as such terms are defined in such officers’ change-in-control severance agreements). Additionally, 25% of the inducement options granted to Ms. Puckett will vest (if all are not previously vested) in the event her employment is terminated without cause, or if she terminates her employment for good reason (as such terms are defined in her employment agreement).

The following summarizes all stock option activity during the years ended December 31, 2015, 2014, and 2013:



In thousands	Number of Shares		Weighted- Average Option Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (Thousands)
Options outstanding at December 31, 2012	5,106,629		$	14.32

Granted in 2013	1,138,600		8.30
Exercised in 2013	(151,875	)	6.04			$	268
Unvested options forfeited in 2013	(762,062	)	11.97
Vested options expired in 2013	(1,085,580	)	13.47
Options outstanding at December 31, 2013	4,245,712		$	13.65

Granted in 2014	1,002,955		8.01
Exercised in 2014	(78,125	)	6.19			$	61
Unvested options forfeited in 2014	(437,984	)	8.72
Vested options expired in 2014	(268,537	)	17.83
Options outstanding at December 31, 2014	4,464,021		$	11.50

Granted in 2015	1,973,606		5.73
Exercised in 2015	(35,000	)	6.04			$	67
Unvested options forfeited in 2015	(660,733	)	7.96
Vested options expired in 2015	(1,139,148	)	14.89
Options outstanding at December 31, 2015	4,602,746		$	8.74	6.13	$	—

Exercisable at December 31, 2015	1,779,288		$	12.73	3.99	$	—

The aggregate intrinsic value at year end in the table above represents the total pre-tax intrinsic value that would have been received by the option holders if all of the in-the-money options were exercised on December 31, 2015. The pre-tax intrinsic value is the difference between the closing price of our common stock on December 31, 2015 and the exercise price for each in-the-money option. This value fluctuates with the changes in the price of our common stock.

The following table summarizes information about stock options outstanding at December 31, 2015:



Range of Exercise Prices				Number Outstanding	Weighted- Average Exercise Price		Weighted- Average Remaining Life (Years)	Number Exercisable	Weighted- Average Exercise Price
$	0.00	-	6.99	1,605,866	$	4.72	3.54	221,520	$	6.10
$	7.00	-	10.99	1,984,405	$	8.02	6.58	545,293	$	8.41
$	11.00	-	11.99	397,000	$	11.90	3.95	397,000	$	11.90
$	12.00	-	15.99	306,350	$	14.40	3.14	306,350	$	14.40
$	16.00	-	24.49	50,000	$	17.30	2.00	50,000	$	17.30
$	24.50	-	28.85	259,125	$	25.90	0.39	259,125	$	25.90
				4,602,746	$	8.74	6.13	1,779,288	$	12.73

The fair value of each option grant is estimated on the date of grant using the Black-Scholes Option-Pricing Model based on the following weighted-average assumptions used for grants during 2015, 2014, and 2013:



	Year Ended December 31,
	2015		2014		2013
Expected term (in years)	6.24		6.25		6.25
Expected stock price volatility	40.60	%	47.10	%	46.59	%
Risk-free interest rate	1.58	%	1.88	%	1.43	%
Expected dividend yield	5.69	%	3.82	%	4.74	%

Expected term is estimated using the simplified method, which takes into account vesting and contractual term. The simplified method is being used to calculate expected term instead of historical experience due to a lack of relevant historical data resulting from changes in option vesting schedules and changes in the pool of employees receiving option grants. Expected stock price volatility is based on the historical volatility from traded shares of our stock over the expected term. The risk-free interest rate is based on the rate of a zero-coupon U.S. Treasury instrument with a remaining term approximately equal to the expected term. Expected dividend yield is based on historical stock price movement and anticipated future annual dividends over the expected term. Future annual dividends over the expected term are estimated to be $0.34 per share.

The weighted-average fair value of options granted during 2015, 2014, and 2013 was $1.36, $2.59, and $2.35, respectively. As of December 31, 2015, there was $3.0 million of total unrecognized compensation cost related to unvested stock options. This cost is expected to be recognized over a weighted average period of approximately 2.87 years.

Unvested Shares

Unvested shares granted as inducement awards or under the 2013 Plan vest in three equal increments on the first three anniversaries of their date of grant. Unvested shares granted from January 2013 through March 2015 vest in full (to the extent not previously vested) upon a change in control, as defined in the applicable equity plan. Unvested shares granted to officers since April 2015 as inducement awards or under the 2013 Plan vest in full (to the extent not previously vested) upon a change in control if such unvested shares are not assumed or replaced by a publically-traded successor with an equivalent award (as such terms are defined in such officers’ change-in-control severance agreements).

Following the third quarter 2015 resignation of Mr. Philpott, vesting was accelerated on his unvested shares (pursuant to the terms of his employment agreement and inducement award), for which we recognized $1.2 million of accelerated expense in July 2015.

The following summarizes all unvested share activity during 2015, 2014, and 2013:



	Number of Shares		Weighted- Average Grant Date Fair Value
Unvested shares outstanding at December 31, 2012	500,453		$	10.95

Granted in 2013	591,931		8.02
Vested in 2013	(297,375	)	11.01
Forfeited in 2013	(108,964	)	8.94
Unvested shares outstanding at December 31, 2013	686,045		$	8.72

Granted in 2014	529,426		7.90
Vested in 2014	(342,613	)	8.98
Forfeited in 2014	(82,720	)	8.37
Unvested shares outstanding at December 31, 2014	790,138		$	8.10

Granted in 2015	836,775		6.38
Vested in 2015	(504,686	)	8.23
Forfeited in 2015	(159,781	)	7.90
Unvested shares outstanding at December 31, 2015	962,446		$	6.57

The fair value of each unvested share is estimated on the date of grant as the closing market price of our common stock on the date of grant. As of December 31, 2015, there was $4.8 million of total unrecognized compensation cost related to unvested shares. This cost is expected to be recognized over a weighted average period of approximately 2.03 years.

Performance Stock Units

Under the inducement awards, the 2013 Plan, and the 2005 Plan performance stock units are a form of share-based award similar to unvested shares, except that the number of shares ultimately issued is based on our performance against specific performance goals over a three-year period. At the end of the performance period, the number of shares of stock issued will be determined by adjusting upward or downward from the maximum in a range between 0% and 100%. Unvested performance stock units granted from January 2013 through March 2015 vest in full at the 100% performance level upon a change in control, as defined in the applicable equity plan. Unvested performance stock units granted to officers since April 2015 as inducement awards or under the 2013 Plan vest in full upon a change in control if such unvested performance stock units are not assumed or replaced by a publicly-traded successor with an equivalent award (as such terms are defined in such officers’ change-in-control severance agreements).

The following summarizes all performance stock unit activity during 2015, 2014, and 2013:



	Number of Shares		Weighted- Average Grant-Date Fair Value
Performance stock units outstanding at December 31, 2012	239,700		$	10.25

Granted in 2013	333,000		7.76
Settled in 2013	—		—
Forfeited in 2013	(102,000	)	9.84
Performance stock units outstanding at December 31, 2013	470,700		$	8.58

Granted in 2014	308,507		7.09
Settled in 2014	—		—
Forfeited in 2014	(175,533	)	9.30
Performance stock units outstanding at December 31, 2014	603,674		$	7.61

Granted in 2015	669,839		4.30
Settled in 2015	—		—
Forfeited in 2015	(572,129	)	7.54
Performance stock units outstanding at December 31, 2015	701,384		$	4.51

The fair value of each performance stock unit is estimated on the date of grant as the closing market price of our common stock on the date of grant, minus the present value of anticipated dividend payments. Periodic compensation expense is based on the current estimate of future performance against specific performance goals over a three-year period and is adjusted up or down based on those estimates. As of December 31, 2015, there was $1.1 million of total unrecognized compensation cost related to performance stock units. This cost is expected to be recognized over a weighted average period of approximately 2.83 years.