Stock Benefit Plans

Pursuant to the Long-Term Incentive Plan, Holdings may grant stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, deferred stock units, performance and cash-settled awards and dividend equivalents to select employees, officers, directors and consultants of Holdings and its affiliates. In May 2015, our stockholders approved an amendment to the Long-Term Incentive Plan that increased the number of shares available for issuance under the Long-Term Incentive Plan by 5,000,000 shares from 28,133,332 shares to 33,133,332 shares.

During the years ended December 31, 2015, 2014 and 2013, stock-based compensation expense related to the Long-Term Incentive Plan was $55.9 million, $139.8 million and $26.8 million, respectively.

As of December 31, 2015, options to purchase approximately 5,862,000 shares of common stock of Holdings and approximately 14,000 shares of restricted stock or restricted stock units were outstanding under the Long-Term Incentive Plan and approximately 6,526,000 shares were available for future grant.

Stock Options

Options granted under the Long-Term Incentive Plan are designated as either incentive stock options or non-qualified stock options. Options are generally granted with an exercise price equal to the fair market value of the common stock of Holdings on the date of grant. While certain stock options are subject to acceleration in connection with a change in control, options are generally cumulatively exercisable in four equal annual installments commencing one year after the date of grant with a ten-year term. Generally, the unvested portion of stock option awards is forfeited upon termination of employment. Stock option compensation is recognized over the vesting period using the graded vesting terms of the respective grant.

The estimated fair value of the majority of our options granted was calculated using the Black-Scholes option pricing valuation model. This model takes into account several factors and assumptions. The risk-free interest rate is based on the yield on United States Treasury zero-coupon issues with a remaining term equal to the expected term assumption at the time of grant. Prior to 2015, the simplified method was used to calculate the expected term (estimated period of time outstanding) because our historical data from our pre-confirmation equity grants was not representative or sufficient to be used to develop an expected term assumption. Beginning in 2015, we have sufficient historical data to develop an expected term assumption and we calculated the expected term using a mid-point scenario with a one-year grant date filter to exclude grants for which vesting could not have yet occurred. Expected volatility of options granted prior to 2013 was based on the historical volatility of similar companies' common stock for a period equal to the stock option's expected term, calculated on a daily basis. Expected volatility of options granted in 2013 and 2014 was based two-thirds on the historical volatility of similar companies' common stock and one-third on our historical volatility for a period equal to the stock option's expected term, calculated on a daily basis. Beginning in 2015, expected volatility is based three-fourths on the term-matching historical volatility of our stock and one-fourth on the weighted-average implied volatility based on forward-looking pricing data on exchange-traded options for our stock. The expected dividend yield is based on our current quarterly dividend and a three-month average stock price. The fair value of stock options on the date of grant is expensed on a straight line basis over the requisite service period of the graded vesting term as if the award was, in substance, multiple awards.

In August 2011, stock option grants were made to the vast majority of full-time employees. Given the then current share limitations of the Long-Term Incentive Plan, certain of the option grants to officers were made contingent upon stockholder approval of an amendment to the plan increasing the number of available shares. This increase in the number of available shares received overwhelming stockholder approval at the May 2012 annual stockholders meeting, satisfying the stockholder approval contingency of such options. The accounting measurement date for these grants was May 2, 2012. At that date, the strike prices of the options were less than the prevailing trading price for the underlying shares and, as a result, these options were valued as in-the-money options. Due to limitations in the Black-Scholes model related to options treated as in-the-money, we elected to value the options using the Hull-White I lattice model with a simplified assumption for the early settlement to value these options. The inherent advantage of Hull-White I lattice model relative to the Black-Scholes model is that option exercises are modeled as being dependent on the evolution of the stock price and not solely on the amount of time that has passed since the grant date. The Hull-White I lattice model uses all of the same assumptions as the Black-Scholes model and also assumes a post-vesting cancellation rate, which treats a canceled option as (i) exercised immediately if it is in-the-money or (ii) worthless if it is out-of-the-money. The post-vesting cancellation rate assumption that was used in the valuation of these options was 0%.

The following weighted-average assumptions were utilized in the Black-Scholes model to value the stock options granted during the years ended December 31, 2015, 2014 and 2013:



	December 31, 2015				December 31, 2014				December 31, 2013
	CEO		Employees		CEO		Employees		CEO		Employees
Risk-free interest rate	1.80	%	1.13	%	1.96	%	1.96	%	1.20	%	2.03	%
Expected life (in years)	6.25		3.91		6.25		6.25		6.25		6.25
Expected volatility	36.04	%	24.85	%	38.69	%	38.81	%	39.21	%	38.98	%
Expected dividend yield	4.28	%	4.46	%	4.78	%	4.87	%	5.24	%	5.08	%

The following table summarizes stock option activity for the year ended December 31, 2015:



(Amounts in thousands, expect per share data)	Shares		Weighted Avg. Exercise Price ($)		Weighted Avg. Remaining Contractual Term	Aggregate Intrinsic Value ($)
Balance at December 31, 2014	6,686		$	25.91
Granted	1,190		$	43.35
Exercised	(1,874	)	$	20.82
Canceled or exchanged	—		$	—
Forfeited	(140	)	$	33.83
Expired	—		$	—
Balance at December 31, 2015	5,862		$	30.89	7.48	$	140,979
Vested and expected to vest at December 31, 2015	5,632		$	30.56	7.42	$	54,895
Options exercisable at December 31, 2015	2,445		$	21.24	6.08	$	82,413

The weighted average grant date fair value of the options granted during the years ended December 31, 2015, 2014 and 2013 was $6.14, $8.86 and $7.78, respectively.

The total intrinsic value of options exercised for the years ended December 31, 2015, 2014 and 2013 was $51.1 million, $70.1 million and $57.1 million, respectively. The total fair value of options that vested during the years ended December 31, 2015, 2014 and 2013 was $13.9 million, $19.8 million and $18.0 million, respectively.

As of December 31, 2015, there was $12.9 million of unrecognized compensation expense related to option awards. The weighted-average period over which that cost is expected to be recognized is 2.78 years.

Cash received from the exercise of stock options during the years ended December 31, 2015, 2014 and 2013 was $39.0 million, $37.7 million and $29.8 million, respectively.

Stock, Restricted Stock and Restricted Stock Units

Stock, restricted stock and restricted stock units granted under the Long-Term Incentive Plan may be subject to transfer and other restrictions as determined by the compensation committee of Holdings' Board of Directors. Generally, the unvested portion of restricted stock and restricted stock unit awards is forfeited upon termination of employment. The fair value of stock, restricted stock and restricted stock unit awards on the date of grant is expensed on a straight line basis over the requisite service period of the graded vesting term as if the award was, in substance, multiple awards.

During the year ended December 31, 2011, a performance award was established based on our goal to achieve Modified EBITDA of $500 million by 2015 (the "2015 Performance Award"). "Modified EBITDA” is defined as the Company’s consolidated income from continuing operations, excluding: the cumulative effect of changes in accounting principles; discontinued operations gains or losses; income tax expense or benefit; restructure costs or recoveries; reorganization items (net); other income or expense; gain or loss on early extinguishment of debt; equity in income or loss of investees; interest expense (net); gain or loss on disposal of assets; gain or loss on the sale of investees; amortization; depreciation; stock-based compensation; and fresh start accounting valuation adjustments. Upon achievement of the performance target, up to an aggregate of 2,628,000 shares plus associated dividend equivalent rights ("DERs") become available for issuance to certain key employees, with the total number of shares available for award under the 2015 Performance Award contingent on the level of achievement and timing thereof. The results of operations for the year ended December 31, 2014 exceeded the threshold for a 2014 partial achievement award, resulting in the issuance of a partial achievement award of 1,511,100 shares plus associated DERs in February 2015. Additionally, the results of operations for the year ended December 31, 2015 exceeded the performance target. As such, the remaining 1,314,000 shares available under the 2015 Performance Award plus associated DERs will be issued in February 2016. To date, we have accrued $139.9 million, plus an additional $17.9 million for the associated DERs, for stock-based compensation expense related to the 2015 Performance Award as of December 31, 2015. During the year ended December 31, 2015, we recognized $35.4 million, plus an additional $3.6 million for the associated DERs, for stock-based compensation expense related to the 2015 Performance Award. Based on the closing market price of Holdings' common stock on the last trading day of the quarter ended December 31, 2015, the total unrecognized compensation expense related to the 2015 Performance Award and related DERs was $2.3 million and $0.8 million, respectively, that will be expensed during the first quarter of 2016.

During the year ended December 31, 2014, an additional performance award was established based on our aspirational goal to achieve Modified EBITDA of $600 million by 2017 (the "2017 Performance Award"). The aggregate payout under the performance award to key employees if the target is achieved in 2017 would be 2,400,000 shares plus associated DERs but could be more or less depending on the level of achievement and the timing thereof. There has been no stock-based compensation expense recorded for this performance award because it is not deemed probable that we will achieve the specified performance targets as of December 31, 2015. Based on the closing market price of Holdings' common stock on the last trading day of the quarter ended December 31, 2015, the total unrecognized compensation expense related to this award at target achievement in 2017 is $131.9 million that will be expensed over the service period if it becomes probable of achieving the performance condition. We will continue to evaluate the probability of achieving the performance condition going forward and record the appropriate expense if necessary.

The following table summarizes stock, restricted stock and restricted stock unit activity for the year ended December 31, 2015:



(Amounts in thousands, except per share amounts)	Shares		Weighted Average Grant Date Fair Value Per Share ($)
Non-vested balance at December 31, 2014	17		$	38.83
Granted	1,525		$	46.31
Vested	(1,528	)	$	46.23
Forfeited	—		$	—
Canceled	—		$	—
Non-vested balance at December 31, 2015	14		$	46.60

The weighted average grant date fair value per share of stock awards granted during the years ended December 31, 2015, 2014 and 2013 was $46.31, $41.14 and $38.26, respectively.

The total grant date fair value of the stock awards granted was $70.7 million for the year ended December 31, 2015 and $0.7 million during the years ended December 31, 2014 and 2013. The total fair value of stock awards that vested during the years ended December 31, 2015, 2014 and 2013 was $70.6 million, $3.9 million and $3.6 million, respectively.

Exclusive of the unrecognized stock-based compensation expense related to the 2015 Performance Award discussed above, there was $0.2 million of total unrecognized stock-based compensation expense related to stock, restricted stock and restricted stock units as of December 31, 2015 that is expected to be recognized over a weighted-average period of 0.35 years.

Deferred Share Units

Non-employee directors can elect to receive the value of their annual cash retainer as a deferred share unit award ("DSU") under the Long-Term Incentive Plan whereby the non-employee director is granted DSUs in an amount equal to such director's annual cash retainer divided by the closing price of Holdings' common stock on the date of the annual stockholders meeting. Each DSU represents Holdings' obligation to issue one share of common stock. The shares are delivered approximately thirty days following the cessation of the non-employee director's service as a director of Holdings'.

DSUs vest consistent with the manner in which non-employee directors' cash retainers are paid. The fair value of the DSUs on the date of grant is expensed on a straight line basis over the requisite service period.

During each of the years ended December 31, 2015, 2014 and 2013, approximately 3,000 DSUs were granted at a weighted-average grant date fair value of $46.60, $41.14 and $38.26 per DSU, respectively. The total grant date fair value of DSUs granted during the years ended December 31, 2015, 2014 and 2013, was $0.1 million.

As of December 31, 2015, there was no unrecognized compensation expense related to the outstanding DSUs.

Dividend Equivalent Rights

On February 8, 2012, Holdings' Board of Directors granted DERs to holders of unvested stock options, at which time, approximately 10.0 million unvested stock options were outstanding. The DERs accrue dividends as of the record date of each of Holdings' dividends that will be distributed to stock option holders upon the vesting of their stock option award. Holdings will distribute the accumulated accrued dividends pursuant to the DERs in either cash or shares of common stock. Generally, holders of stock options for fewer than 1,000 shares of stock will receive their accumulated accrued dividends in cash and holders of stock options for 1,000 shares of stock or greater will receive their accumulated accrued dividends in shares of common stock. In addition, Holdings' Board of Directors granted similar DERs payable in shares of common stock if and when any shares are granted under the 2015 Performance Award and the 2017 Performance Award. The DER grants to participants with 1,000 or more unvested stock options and the DER grants related to the performance award were granted contingent upon stockholder approval at the Company's 2012 Annual Meeting of Stockholders of the Company's proposal to amend the Long-Term Incentive Plan to increase the number of shares for issuance under the Long-Term Incentive Plan from 19,333,332 to 28,133,332. On May 2, 2012, our stockholders approved the Long-Term Incentive Plan amendment to increase the number of shares available for issuance.

Holdings' Board of Directors granted approximately 1.2 million, 1.7 million and 1.2 million additional options to the majority of full-time employees of the Company as well as DERs in connection with such options during the years ended December 31, 2015, 2014 and 2013, respectively. Exclusive of stock-based compensation recognized for the DER grants associated with the 2015 Performance Award discussed above, we recorded stock-based compensation for DER grants of $4.5 million, $6.0 million and $7.6 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Employee Stock Purchase Plan

The Six Flags Entertainment Corporation Employee Stock Purchase Plan (the "ESPP") allows eligible employees to purchase Holdings' common stock at 90% of the lower of the market value of the common stock at the beginning or end of each successive six-month offering period. Amounts accumulated through participants' payroll deductions ("purchase rights") are used to purchase shares of common stock at the end of each purchase period. Pursuant to the ESPP, no more than 2,000,000 shares of common stock of Holdings may be issued, as adjusted to reflect the two-for-one stock split in June 2013. Holdings' common stock may be issued by either authorized and unissued shares, treasury shares or shares purchased on the open market. As of December 31, 2015, we had 1,811,000 shares available for purchase pursuant to the ESPP

In accordance with FASB ASC Topic 718, Stock Based Compensation, stock-based compensation related to purchase rights is recognized based on the intrinsic value of each respective six-month ESPP offering period. As of December 31, 2015 and 2014, no purchase rights were outstanding under the ESPP.

Stock-based compensation expense consisted of the following for the years ended December 31, 2015, 2014 and 2013:



	Year Ended December 31,
(Amounts in thousands)	2015		2014		2013
Long-Term Incentive Plan	$	55,862	$	139,788	$	26,829
Employee Stock Purchase Plan	371		250		205
Total stock-based compensation	$	56,233	$	140,038	$	27,034