STOCK-BASED COMPENSATION

The Company grants long-term equity-based awards under the 2016 Long Term Incentive Plan (the 2016 Plan). The 2016 Plan, which was approved by the Company's shareholders at its 2016 Annual Meeting, provides for the granting of nonqualified stock options, equity-based stock appreciation rights (SARs), restricted stock awards (RSAs), restricted stock units (RSUs) and stock-settled performance units (PSUs), as well as cash-based performance grants, to employees and non-employee directors of the Company. Under the 2016 Plan, a maximum of 3,500,000 shares were approved for issuance. The 2016 Plan incorporates a fungible share design, under which full value awards (such as RSUs and PSUs) count against the shares reserved for issuance at a rate 2.4 times higher than appreciation awards (such as SARs and stock options). As of June 30, 2018, a maximum of 4,500,278 shares were available for grant under the 2016 Plan. All unvested awards are subject to forfeiture in event of termination of employment, unless accelerated. SAR and RSU awards granted under the 2016 Plan generally include various acceleration terms, including upon retirement for participants aged sixty-two years or older or who are aged fifty-five or older and have fifteen years of continuous service.

The Company also has outstanding awards under the Amended and Restated 2004 Long Term Incentive Plan (the "2004 Plan"), although the 2004 Plan terminated in October 2016 and no additional awards have since been or will be made under the 2004 Plan. The 2004 Plan provided for the granting of nonqualified stock options, equity-based stock appreciation rights (SARs), restricted stock awards (RSAs), restricted stock units (RSUs) and stock-settled performance share units (PSUs), as well as cash-based performance grants, to employees and non-employee directors of the Company.

Under the 2016 Plan and the 2004 Plan, stock-based awards are granted at an exercise price or initial value equal to the fair market value on the date of grant.

Using the fair value of each grant on the date of grant, the weighted average fair values per stock-based compensation award granted during fiscal years 2018, 2017 and 2016 were as follows:



	2018		2017		2016
SARs	$	—	$	3.68	$	3.51
RSAs & RSUs	13.43		11.73		11.18
PSUs	15.74		12.28		12.11

The fair value of SARs granted are estimated on the date of grant using the Black-Scholes-Merton (BSM) option valuation model. The significant assumptions used in determining the estimated fair value of SARs granted during fiscal years 2018, 2017 and 2016 were as follows:



	2018	2017	2016
Risk-free interest rate	N/A	1.99%	1.71%
Expected term (in years)	N/A	6.50	6.00
Expected volatility	N/A	31.50%	30.00%
Expected dividend yield	N/A	0%	0%

The fair value of market-based RSUs and PSUs granted are estimated on the date of grant using a Monte Carlo valuation model. The significant assumptions used in determining the estimated fair value of the market-based awards granted during fiscal years 2018, 2017 and 2016 were as follows:



	2018	2017	2016
Risk-free interest rate	1.66 - 2.59%	1.21%	N/A
Expected volatility	33.4 - 37.1%	36.5%	N/A
Expected dividend yield	0%	0%	N/A

The risk free interest rate is determined based on the U.S. Treasury rates approximating the expected life of the SARs and market-based RSUs and PSUs granted. Expected volatility is established based on historical volatility of the Company's stock price. Estimated expected life was based on an analysis of historical stock awards granted data which included analyzing grant activity including grants exercised, expired and canceled. The expected dividend yield is determined based on the Company's annual dividend amount as a percentage of the strike price at the time of the grant. The Company uses historical data to estimate pre-vesting forfeiture rates.

Stock-based compensation expense was as follows:



	2018			2017		2016
SARs	$	2,252		$	3,533	$	2,774
RSAs, RSUs, & PSUs	6,017			9,609		7,023
Total stock-based compensation expense (recorded in G&A)	8,269			13,142		9,797
Less: Income tax benefit	(1,736		)	—		—
Total stock-based compensation expense, net of tax	$	6,533		$	13,142	$	9,797

Total compensation cost for stock-based payment arrangements for fiscal years 2018 and 2017 includes $1.3 and $5.4 million related to the termination of former executive officers.

Stock Appreciation Rights & Stock Options:

SARs and stock options granted under the 2016 Plan and the 2004 Plan generally vest ratably over a three to five year period on each of the annual grant date anniversaries and expire ten years from the grant date. SARs granted subsequent to fiscal year 2012 vest ratably over a three year period with the exception of the April 2017 grant to the Chief Executive Officer, which vests in full after two years.

Activity for all of our outstanding SARs and stock options is as follows:



	Shares (in thousands)				Weighted Average Exercise Price		Weighted- Average Remaining Contractual Life	Aggregate Intrinsic Value (in thousands)
	SARs		Stock Options		Weighted Average Exercise Price		Weighted- Average Remaining Contractual Life	Aggregate Intrinsic Value (in thousands)
Outstanding balance at June 30, 2017	2,884		54		$	14.47
Granted	—		—		—
Forfeited/Expired	(1,086	)	(39	)	17.62
Exercised	(280	)	—		12.96
Outstanding balance at June 30, 2018	1,518		15		$	12.44	7.54	$	6,617
Exercisable at June 30, 2018	451		15		$	15.42	4.91	$	848
Unvested awards, net of estimated forfeitures	1,066		—		$	13.05	7.60	$	5,766

As of June 30, 2018, there was $1.5 million of unrecognized expense related to SARs and stock options that is to be recognized over a weighted-average period of 0.8 years.

Restricted Stock Units:

RSUs granted to employees under the 2016 Plan and 2004 Plan generally vest ratably over a three to five year period on each of the annual grant date anniversaries or vest entirely after a three or five year period. In addition, the Chief Executive Officer has an outstanding RSU grant that vests upon the achievement of a specified value for the Company's stock over a specified period of time. RSUs granted to non-employee directors under the 2016 Plan and 2004 Plan generally vest in equal monthly amounts over a one year period from the Company's previous annual shareholder meeting date and distributions are deferred until the director's board service ends.

Activity for all of our RSUs is as follows:



	Shares/Units (in thousands)		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
	RSUs		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Outstanding balance at June 30, 2017	809		$	12.77
Granted	322		13.43
Forfeited	(88	)	13.40
Vested	(338	)	13.13
Outstanding balance at June 30, 2018	705		$	12.82	$	11,657
Vested at June 30, 2018	189		$	14.42	$	3,123
Unvested awards, net of estimated forfeitures	486		$	12.16	$	8,035

As of June 30, 2018, there was $3.2 million of unrecognized expense related to RSUs that is expected to be recognized over a weighted-average period of 1.7 years.

Performance Share Units:

PSUs are grants of restricted stock units which are earned based on the achievement of performance goals established by the Compensation Committee over a performance period.

Activity for all of our PSUs is as follows:



	Shares/Units (in thousands)		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)(1)
	PSUs		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)(1)
Outstanding balance at June 30, 2017	441		$	12.74
Granted	176		15.74
Forfeited	(166	)	12.23
Vested	(113	)	15.23
Outstanding balance at June 30, 2018	338		$	13.72	$	5,589
Vested at June 30, 2018	—		$	—	$	—
Unvested awards, net of estimated forfeitures	285		$	13.38	$	4,711

_______________________________________________________________________________


(1)	Includes actual or expected payout rates as set forth in the performance criteria.

In connection with the termination of former executive officers, the Company settled certain PSUs for cash of $0.8 million and $3.2 million during fiscal year 2018 and 2017, respectively.

PSUs granted in fiscal year 2018 have a performance period of three years, after which they will vest to the extent earned. Future compensation expense for these unvested awards could reach a maximum of $4.7 million to be recognized over 2.2 years, if the maximum performance metrics are achieved.

PSUs granted in fiscal year 2017 have a performance period of three years, after which they will vest to the extent earned. Future compensation expense for these unvested awards could reach a maximum of $1.4 million to be recognized over 1.1 years, if the maximum performance metrics are achieved.

PSUs granted in fiscal year 2016 had a performance period of one year. They have been earned and will vest three years from the initial grant date. As of June 30, 2018, there was less than $0.1 million of expense related to the fiscal 2016 PSUs that is expected to be recognized over a weighted-average period of 0.2 years.