Stock-Based Compensation and Other Benefit Plans

The following describes stockholder approved plans utilized by us for the issuance of stock-based awards.

2014 Non-Employee Directors’ Restricted Stock Plan

In May 2014, our stockholders approved the 2014 Non-Employee Directors’ Restricted Stock Plan (the “2014 Director Plan”) which authorizes grants of restricted stock to non-employee directors based on a pre-determined dollar amount on the date of each annual meeting of stockholders. The pre-determined dollar amount for determining the number of restricted shares granted is subject to change by the Board of Directors or its committee but was initially set at $150,000 for each non-employee director, except for the Chairman of the Board who will receive an annual grant of restricted shares equal to $170,000. Each restricted share granted to a non-employee director vests in full on the earlier of the day prior to the next annual meeting of stockholders following the grant date or the first anniversary of the grant. During 2018, non-employee directors received shares of restricted stock totaling 85,578 shares at a weighted average grant-date fair value of $10.75 per share.

The maximum number of shares of common stock issuable under the 2014 Director Plan is 1,000,000 leaving 418,680 shares available for grant as of December 31, 2018.

2015 Employee Equity Incentive Plan

In May 2015, our stockholders approved the 2015 Employee Equity Incentive Plan (“2015 Plan”), pursuant to which the Compensation Committee of our Board of Directors (“Compensation Committee”) may grant to key employees, including executive officers and other corporate and divisional employees, a variety of forms of equity-based compensation, including options to purchase shares of common stock, shares of restricted common stock, restricted stock units, stock appreciation rights, other stock-based awards, and performance-based awards. In May 2016, our stockholders approved an amendment to the 2015 Plan which increased the number of shares authorized for issuance under the Plan from 6,000,000 to 7,800,000 shares. In May 2017, our stockholders approved a further amendment to the 2015 Plan which increased the number of shares authorized for issuance under the Plan from 7,800,000 to 9,800,000 shares. Under the 2015 Plan, as amended, grants of stock options and stock appreciation rights will reduce the number of available shares on a 1.00 to 1.00 basis, while full value awards will reduce the number of available shares on a 1.78 to 1.00 basis. At December 31, 2018, 1,313,255 shares remained available for award under the 2015 Plan.

In June 2017, our Board of Directors approved the Long-Term Cash Incentive Plan (“Cash Plan”), a sub-plan to the 2015 Plan, pursuant to which the Compensation Committee may grant time-based cash awards or performance-based cash awards to key employees, including executive officers and other corporate and divisional employees, to provide an opportunity for employees to receive a cash payment upon either completion of a service period or achievement of predetermined performance criteria at the end of a performance period.

Prior to approval of the 2015 Plan, equity-based compensation was provided pursuant to the 2006 Equity Incentive Plan (“2006 Plan”). No additional grants of equity-based compensation may be granted under the 2006 Plan following approval of the 2015 Plan; however, unexpired options and other awards previously granted continue in effect in accordance with their terms until they vest or are otherwise exercised or expire.

The Compensation Committee approves the granting of all stock based compensation to employees, utilizing shares available under the 2015 Plan, as amended. In connection with the retirement of our former Senior Vice President, General Counsel and Chief Administrative Officer on September 30, 2018, the Compensation Committee modified certain outstanding stock-based and other incentive awards. During 2018, we modified the vesting conditions of outstanding unvested restricted stock units, performance-based restricted stock units, stock options, and time-based and performance-based cash awards to allow for continued vesting after his retirement date, and to extend the exercise period of all of his outstanding options from 90 days from the date of retirement to the earlier of (a) 2 years from his retirement date or (b) the original expiration date of the award. As a result of the above modifications, we recognized a charge of $1.5 million for 2018.

In February 2019, the Compensation Committee modified our retirement policy applicable to cash and equity awards granted under either the 2015 Plan or the Cash Plan to include our Chief Executive Officer and those officers who report to our Chief Executive Officer, whom were previously excluded from the retirement policy. In addition, the Compensation Committee also modified the retirement policy for any vested stock options that remain outstanding under the 2006 Plan to extend the exercise period available following the qualifying retirement of eligible employees. As a result of these modifications, we expect to recognize a pretax charge of approximately $4.2 million in the first quarter of 2019. This charge primarily includes the acceleration of expense for previously granted awards for retirement eligible executive officers as well as the incremental value associated with the modifications to extend the exercise period of applicable outstanding options.

Activity under each of these programs is described below.

Stock Options and Cash-Settled Stock Appreciation Rights

Stock options granted by the Compensation Committee are granted with a three year vesting period and a term of ten years. There were no options granted during 2018 or 2017.

The following table summarizes activity for our outstanding stock options for the year ended December 31, 2018:



Stock Options	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (In thousands)
Outstanding at beginning of period	3,965,525		$	7.03
Granted	—		—
Exercised	(602,853	)	6.43
Expired or canceled	(50,946	)	8.04
Outstanding at end of period	3,311,726		$	7.13	4.61	$	4,065

Vested or expected to vest at end of period	3,309,559		$	7.13	4.61	$	4,060
Options exercisable at end of period	2,947,589		$	7.47	4.32	$	3,137

We estimated the fair value of options granted on the date of grant using the Black-Scholes option-pricing model, with the following weighted average assumptions:




	2016
Risk-free interest rate	1.38	%
Expected life of the option in years	5.22
Expected volatility	50.5	%
Dividend yield	—	%

The risk-free interest rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term equal to the expected term of the option. The expected life of the option is based on observed historical patterns. The expected volatility is based on historical volatility of the price of our common stock. The dividend yield is based on the projected annual dividend payment per share divided by the stock price at the date of grant, which is zero because we have not paid dividends for several years and do not expect to pay dividends in the foreseeable future.

The following table summarizes information about the weighted-average exercise price and the weighted-average grant date fair value of stock options granted:



	2016
Weighted-average exercise price of the stock on the date of grant	$	4.32
Weighted-average grant date fair value on the date of grant	$	1.97

All stock options granted for 2016 reflected an exercise price equal to the market value of the stock on the date of grant.

The total intrinsic value of options exercised was $2.3 million, $1.1 million, and $0.1 million for the years ended December 31, 2018, 2017 and 2016, while cash from option exercises totaled $3.9 million, $2.6 million, and $0.7 million, respectively.

The following table summarizes activity for outstanding cash-settled stock appreciation rights for the year-ended December 31, 2018:



Cash-Settled Stock Appreciation Rights	Rights
Outstanding at beginning of period	43,000
Exercised	(18,900	)
Expired or cancelled	(24,100	)
Outstanding at end of period	—

There were no cash-settled stock appreciation rights granted during 2018, and as of December 31, 2018 there were no cash-settled stock appreciation rights outstanding.

Total compensation cost recognized for stock options and cash-settled stock appreciation rights during the years ended December 31, 2018, 2017 and 2016 was $1.5 million, $1.7 million and $2.3 million, respectively. For the years ended December 31, 2018, 2017 and 2016, we recognized tax benefits resulting from the exercise of stock options totaling $0.5 million, $0.3 million and $0.1 million, respectively.

Performance-Based Restricted Stock Units

There were no performance-based restricted stock units granted during 2018 or 2017. In 2016, performance-based restricted stock units were awarded to executive officers and will be settled in shares of common stock based on the relative ranking of our total shareholder return (“TSR”) as compared to the TSR of our designated peer group over a three-year period. The ending TSR price is equal to the average closing price of our shares over the last 30-calendar days of the performance period as set forth in the following table:



	2016
Number of performance-based restricted stock units issued, at target	230,790
Range of payout of shares for each executive	0% - 150%
Performance period begin date	June 1, 2016
Performance period end date	May 31, 2019
Estimated fair value at date of grant	$	5.18

We estimated the fair value of performance-based restricted stock units at the date of grant using the Monte Carlo valuation model, with the following weighted average assumptions:



	2016
Risk-free interest rate	0.95		%
Average closing price ⁽¹⁾	$	4.69
Expected volatility	46.9		%
Dividend yield	—		%

(1)Average closing price of our shares over the 30-calendar days ending May 16, 2016.

The following table summarizes activity for outstanding performance-based restricted stock units for the year-ended December 31, 2018:



Nonvested Performance-Based Restricted Stock Units	Shares		Weighted-Average Grant Date Fair Value
Outstanding at beginning of period	353,940		$	6.88
Granted	—		—
Vested	(123,150	)	10.06
Forfeited	—		—
Outstanding at the end of period	230,790		$	5.18

Total compensation cost recognized for performance-based restricted stock units was $0.8 million, $1.0 million and $1.0 million for the years ended December 31, 2018, 2017 and 2016 respectively. During the year ended December 31, 2018, the total fair value of performance-based restricted stock units vested was $1.9 million.

Restricted Stock Awards and Units

Time-vested restricted stock awards and restricted stock units are periodically granted to key employees, including grants for employment inducements, as well as to members of our Board of Directors. Employee awards provide for vesting periods ranging from three to four years. Non-employee director grants vest in full on the earlier of the day prior to the next annual meeting of stockholders following the grant date or the first anniversary of the grant. Upon vesting of these grants, shares are issued to award recipients.

The following tables summarize the activity for our outstanding time-vested restricted stock awards and restricted stock units for the year ended December 31, 2018:



Nonvested Restricted Stock Awards (Time-Vesting)	Shares		Weighted-Average Grant Date Fair Value
Nonvested at January 1, 2018	168,714		$	7.24
Granted	135,578		10.38
Vested	(123,714	)	7.29
Forfeited	—		—
Nonvested at December 31, 2018	180,578		$	9.56



Nonvested Restricted Stock Units (Time-Vesting)	Shares		Weighted-Average Grant Date Fair Value
Nonvested at January 1, 2018	1,990,637		$	6.38
Granted	917,901		10.59
Vested	(953,572	)	6.45
Forfeited	(157,428	)	8.01
Nonvested at December 31, 2018	1,797,538		$	8.33

Total compensation cost recognized for restricted stock awards and restricted stock units was $7.8 million, $8.0 million and $8.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. Total unrecognized compensation cost at December 31, 2018 related to restricted stock awards and restricted stock units was approximately $10.9 million which is expected to be recognized over the next 1.8 years. During the years ended December 31, 2018, 2017 and 2016, the total fair value of shares vested was $11.6 million, $10.4 million and $3.9 million, respectively. For the years ended December 31, 2018, 2017 and 2016, we recognized tax benefits resulting from the vesting of restricted stock awards and units of $2.8 million, $1.9 million and $1.5 million, respectively.

Cash-Based Awards

The Compensation Committee also approved the issuance of cash-based awards during 2018 and 2017. The 2018 awards included $1.3 million of time-based cash awards and a target amount of $1.3 million of performance-based cash awards. The 2017 awards included $5.3 million of time-based cash awards and a target amount of $1.3 million of performance-based cash awards. The time-based cash awards were granted to executive officers and other key employees and primarily vest in equal installments over a three-year period. The performance-based cash awards were granted to executive officers and will be paid based on the relative ranking of our TSR as compared to the TSR of our designated peer group. The performance period began June 1, 2018 and ends May 31, 2021 for the 2018 awards, and began June 1, 2017 and ends May 31, 2020 for the 2017 awards, with the ending TSR price being equal to the average closing price of our shares over the 30-calendar days ending May 31, 2021 and May 31, 2020, respectively, with the cash payout for each executive ranging from 0% to 150% of target.

The performance-based cash awards are accrued as a liability award over the performance period based on the estimated fair value. The fair value of the performance-based cash awards is remeasured each period using a Monte-Carlo valuation model with changes in fair value recognized in the consolidated statement of operations. As of December 31, 2018 and 2017, the total liability for cash-based awards was $3.0 million and $1.4 million, respectively.

Defined Contribution Plan

Substantially all of our U.S. employees are covered by a defined contribution plan (“401(k) Plan”). Employees may voluntarily contribute up to 50% of compensation, as defined in the 401(k) Plan. Participants’ contributions, up to 3% of compensation, are matched 100% by us, and the participants’ contributions, from 3% to 6% of compensation, are matched 50% by us. Under the 401(k) Plan, our cash contributions were $3.9 million, $1.4 million and $0.9 million for 2018, 2017 and 2016, respectively. In connection with the cost reduction programs implemented in early 2016, we temporarily eliminated our 401(k) matching contribution beginning in March 2016, and this temporary elimination was lifted in the second quarter of 2017.